Strasbourg, 13 March 2006

Dear Mrs K.,

On 11 November 2004, you made a complaint to the European Ombudsman concerning the recovery orders MII00261, MII01728 and MII01825 (for the amount of EUR 17 000), which have been addressed both to the company Film après Film and to the complainant.

On 20 December 2004, I forwarded the complaint to the President of the European Commission. The Commission sent its opinion on 28 February 2005. I forwarded it to you with an invitation to make observations, which you sent on 2 May 2005.

I am writing now to let you know the results of the inquiries that have been made.

I apologise for the length of time it has taken to complete my inquiries.

THE COMPLAINT

The complainant is a film director complaining on behalf of a private company called "Film après Film". In 1996, the Commission launched a Call for Proposals 6/96 within the MEDIA Development Programme. The complainant presented a Project proposal on behalf of the company Film après Film for a documentary film called "Le nuage d'automne est fuyant plus fuyant encore" within the above mentioned Call for Proposals. This full-length documentary film was to capture the story of a young Chinese actress who had left China to become an actress in Paris, because her parents, former actors of the Beijing Opera, had been imprisoned during eight years during Mao's re-education campaign.

The complainant's Project proposal was accepted. On 28 April 1997, she signed on behalf of Film après Film a contract with the Commission under the MEDIA Development Programme. Pursuant to this Contract n° 9606DE10169FR, the Commission provided the complainant with a loan of ECU 17 000(1). In accordance with the clause 2.1 (a) of the General Conditions to the Contract, the complainant was required to repay the first 25 % of the loan 12 months from the date of payment of the first instalment. On 2 June 1998, upon the complainant's request, the Commission extended the deadline for reimbursement of the first 25 % of MEDIA Development loan. On 18 August 1999, as the company had not provided for an Annual Update Package, the Commission informed the complainant that it reserved the right to terminate the loan contract and take the necessary steps to recover the amount of EUR 16 900. In 2000, the Commission sent three recovery orders (MII-00261 for EUR 4 050, MII-01728 for EUR 4 250 and MII-01825 for EUR 4 250 to the complainant. On 31 January 2004, the debit note Nr 3240508573 of EUR 16 800 was sent to the complainant.

On 26 March 2004, the complainant sent a letter to the Commission DG Budget requesting that the Commission waive the debt as her company was unable to reimburse this debt due to its precarious financial situation. Her request was not granted.

On 11 November 2004, the complainant complained to the Ombudsman alleging that the Commission had wrongly refused to waive the foregoing debt of her company.

In her complaint, the complainant explained that EUR 17 000 obtained from the MEDIA Development programme enabled her to participate in a forum organised in Amsterdam, to do a pitching in Barcelona and to film in Beijing in order to obtain proof that the parents of the young Chinese actress would accept to reveal stories of their time in prison. During her visit to Beijing she obtained 22 cassettes of 40' and an excerpt film of 5'. Moreover, she had sent several files to the French TV channels as well as applied for financial support from CNC (Centre national de la cinématographie). However, she had not been able to find a distributor or co-producer. According to the complainant, she had undertaken everything that she could with the loan from the MEDIA Development programme.

The complainant maintained that she had no means to honour her company's debt other than providing the Commission with the cassettes and excerpt film.

THE INQUIRY

The Commission's opinion

The Commission made, in summary, the following remarks in its opinion:

In the framework of the establishment of the MEDIA Development programme a loan was provided for the sum of ECU 17 000 to the company Film après Film represented by the complainant for the development of an audiovisual project entitled "Le nuage d'automne est fuyant plus fuyant encore ". Pursuant to the Contract n° 9606DE10169FR signed on 28 April 1997, the complainant received ECU 8 500 on 21 May 1997 upon the signing of the agreement and another ECU 8 500 on 20 August 1997 upon the approval of the intermediary report.

In accordance with the Contract and its Annexes, the Commission lent to Film après Film an interest-free loan up to a maximum of ECU 17 000 or 50 % of the actual expenditure on the development of the Project. The loan was to be used by Film après Film solely, exclusively and directly to pay the proper costs of the development of the Project as an audiovisual work in accordance with the Contract and on the basis of the annexed Development Budget.

According to clause 2.2 of Annex I of the above mentioned agreement, the repayment of the loan to the Commission should have been carried out as follows:

25 % (ECU 4 250) 12 months from the date of the first instalment (21 May 1998);

25 % (ECU 4 250) 24 months from the date of the first instalment (21 May 1999);

and the outstanding sums at the latest three months after the first day of principal photography of the audiovisual work.

After having received the first order for repayment of the sum of EUR 4 050 (MII00261), the complainant requested the postponement of the repayment of the first payment which was accepted by the Commission. Following this decision, the first payment should have been reimbursed on 21 November 1998 at the latest. However, only two partial repayments amounting to EUR 100 each were made on 20 January 1999 and 22 October 1999 by the complainant.

On 25 April 2000, the Commission sent to the complainant a second order for the reimbursement of EUR 4 250 (MII01728) and reminded the complainant that a sum of EUR 4 050 of the first payment remained unpaid. The Commission underlined to the complainant that all the remaining sums should be paid before 28 April 2000.

As no additional repayments were made, the Commission informed the complainant on 23 June 2000 that it had decided to end the agreement and to require, on the basis of clause 2.3 i of the general conditions, an immediate reimbursement of the remaining sum in its entirety. The complainant should have paid EUR 16 800 corresponding to the amount of money lent by the Commission minus EUR 200 already paid by the complainant. A third order for repayment (MII01825) for the sum of EUR 8 500 was addressed to the complainant.

The entire sum to be recovered, namely EUR 16 800 was registered into the accounting system of the Commission under number SI2.293537 (debit note n° 3240508573) with a due date of 15 February 2004, date after which the interest following REFI tariff of the European Central Bank + 1,5 % per year could be reclaimed from the complainant.

The complainant has not made any repayments regarding the sum of EUR 16 800.

DG Budget sent a reminder letter on 8 April 2004 and a formal notice on 4 June 2004. The complainant reacted by an undated letter to which she referred in an e-mail of 27 April 2004 describing her difficult financial situation and requested the waiver of the debt. On 27 April 2004, the Accounting Service (DG Budget) replied by e-mail explaining that they do not have the power to waive a debt, as this competence is in the present case solely vested in the authorising officers of DG Education and Culture and DG Information Society as from 1 January 2005. On 4 June 2004, the accounting services sent a formal notice letter to the complainant regarding her debt of EUR 16 800.

The complainant indicated again by a letter of 15 June 2004 that she had no possibility to reimburse the debt and informed the Commission of her complaint to the European Ombudsman.

The waiver of a recovery is a prerogative of the responsible authorising officer and it is possible only in exceptional circumstances listed in Article 73 of the Financial Regulation and Article 87 of its implementing provisions. These provisions provide for three limited and exhaustive situations in which the waiving of a recovery could be envisaged:

• the estimated cost of the recovery would exceed the amount of the debt to be recovered and the waiver would not harm the image of the Communities;
• the amount receivable cannot be recovered due to its age or the insolvency of the debtor (requiring a proven liquidation by letter of liquidator or bankruptcy and/or the striking off from the commercial register; bankruptcy of the debtor with confirmation of the trustee in bankruptcy (in French: curateur d'absence d'actifs);
• the recovery is detrimental to the principle of proportionality.

These provisions do not create a right to waiver, but on the contrary limit the possibilities for a waiver to circumstances which are not present in the case at hand.

The company in question is in fact still registered as a private company and neither in liquidation or bankruptcy(2). The Commission underlined that according to the complainant, the company terminated its activity on 20 March 2003. However, the Commission argued that, according to a letter sent by the complainant on 11 November 2004, she was still looking for a TV channel and a producer. The Commission maintained that the complainant had on many occasions invoked her financial difficulties without ever providing any proof of insolvency or without requesting an apportionment of the debt.

The Commission argued that the complainant is not within one of the above mentioned categories and, therefore, it is not possible for the Commission to waive the debt.

In accordance with Article 85 of the implementing provisions of the Financial Regulation, the Commission may allow additional time for payment only at the written request of the debtor, with due indication of the reasons, and provided that the debtor undertakes to pay interest and she lodges a financial guarantee covering the debt outstanding in both the principal sum and the interest.

The complainant has not made such an instalment request, but has limited herself to affirm the impossibility of the reimbursement.

The Commission underlined that the complainant received a reply to her letter of 26 March 2004 by e-mail and ordinary mail on 27 April 2004. The authorising officer confirmed the debt and the accounting services sent her a formal notice on 4 June 2004.

The Commission considered that it had acted in accordance with the principles of good administration and requested that the Ombudsman reject the complaint.

The complainant's observations

The complainant maintained her complaint and made, in summary, the following observations. According to the complainant, Film après Film financial resources, no office, no car, no computer, no employees or projects. Moreover, the complainant argued that she does not even have enough financial resources needed to strike off her company from the commercial register.

As regards the complainant's attempts to obtain another producer for her project and to make Film après Film functioning again, she affirms that these attempts were not successful.

The complainant explained that she trusted that the MEDIA Development programme would provide for the support needed for her to produce films. According to her, she has tried to reimburse part of the sum whilst it was still possible. However, this is no longer possible. The complainant suggested that she could work without pay for the MEDIA Development programme.

THE DECISION

1 The Commission has wrongly refused to waive the complainant's debt

1.1 The complainant alleged that the Commission has wrongly refused to waive her debt. In 2000, the Commission sent to the complainant three recovery orders: MII-00261 for EUR 4 050, MII-01728 for EUR 4 250 and MII-01825 for EUR 8 500. On 31 January 2004, the debit note Nr 3240508573 of EUR 16 800 was sent to the complainant. On 26 March 2004, the complainant sent a letter to the Commission DG Budget requesting that the Commission waive the debt as her company was unable to reimburse its debt due to its precarious financial situation. The request was rejected.

1.2 In its opinion, the Commission maintained that the waiving of a recovery is a prerogative of the responsible authorising officer and it is possible only in exceptional circumstances listed in Article 73 of the Financial Regulation and Article 87 of its implementing provisions. These provisions provide for three limited and exhaustive circumstances in which the waiving of a recovery could be envisaged:

• the estimated cost of the recovery would exceed the amount of the debt to be recovered and the waiver would not harm the image of the Communities;
• the amount receivable cannot be recovered due to its age or the insolvency of the debtor (requiring a proven liquidation by letter of liquidator or bankruptcy and/or the striking off from the commercial register; bankruptcy of the debtor with confirmation of the trustee in bankruptcy (in French: curateur d'absence d'actifs);
• the recovery is detrimental to the principle of proportionality.

These provisions do not create a right to waiver, but on the contrary limit the possibilities for a waiver to circumstances which are not present in the case at hand.

1.3 The Commission maintained that the company in question is in fact still registered as a private company and neither in liquidation or bankruptcy(3). The Commission underlined that according to the complainant, the company terminated its activity on 20 March 2003. However, according to a letter sent by the complainant on 11 November 2004, she was still looking for a TV channel and a producer. The Commission upheld that the complainant had on many occasions invoked her financial difficulties without ever providing any proof of insolvency or without requesting an apportionment of the debt. The Commission argued that the complainant does not fall within anyone of the above mentioned three categories and, therefore, it is not possible for the Commission to waive the debt.

1.4 The Ombudsman recalls that Article 73 of the Financial Regulation(4) provides that:

"Where the responsible authorising officer by delegation is planning to waive a recovery of an established amount receivable, he/she shall ensure that the waiver is in order and complies with the principle of sound financial management and proportionality in accordance with the procedures and the criteria laid down in the implementing rules. The waiver decision must be substantiated."

Moreover, Article 87 of the Implementing Provisions of the Financial Regulations(5) which is based on Article 73 of the Financial Regulation provides that:

"The authorising officer responsible may waive recovery of all or part of an established amount receivable only in the following cases:

(a) where the foreseeable cost of recovery would exceed the amount to be recovered and the waiver would not harm the Community's image;

(b) where the amount receivable cannot be recovered in view of its age or the insolvency of the debtor;

(c) where recovery is inconsistent with the principle of proportionality."

1.5 The Ombudsman observes that, under Article 87 of the Implementing Provisions of the Financial Regulations, the Commission is allowed to waive recovery of a debt only in the cases provided for in that Article. In the present case, the complainant asked the Commission to waive her company's debt, in essence on the basis of the above-mentioned provision referring to "insolvency of the debtor". The Commission rejected the request, mainly because the complainant's company was neither in liquidation or bankruptcy, and no proof of insolvency of the debtor had been offered by the complainant. In this regard, the Ombudsman notes that the complainant has not called into question the accuracy of these facts on which the Commission based its contested decision.

1.6 In light of the above, the Ombudsman considers that the Commission has provided adequate and reasonable grounds for its decision to reject the complainant's request for a waiver of the recovery of her company's debt . The Ombudsman, therefore, does not accept the complainant's allegation that the Commission has wrongly refused to waive her debt.

1.7 Hence, the Ombudsman finds no maladministration by the Commission regarding the matter.

2 Conclusion

On the basis of the Ombudsman's inquiries into this complaint, there appears to have been no maladministration by the European Commission. The Ombudsman therefore closes the case.

The President of the European Commission will also be informed of this decision.

Yours sincerely,

 

P. Nikiforos DIAMANDOUROS

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(1) ECU = EUR. The Commission refers to EUR in its correspondence to the complainant from 18 August 1999 onwards.

(2) The Commission has annexed to its opinion a copy of the recovery order MII-00261 with a copy of an information sheet dated 10 January 2005 containing the details of the existence of a private company called Film après Film at the Registrar of the French Commercial Tribunal in Paris.

(3) The Commission has annexed to its opinion a copy of the recovery order MII-00261 with a copy of an information sheet dated 10 January 2005 containing the details of the existence of a private company called Film après Film at the Registrar of the French Commercial Tribunal in Paris.

(4) Council Regulation (EC, Euratom) N° 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 L 248, p. 1).

(5) Commission Regulation (EC, Euratom) N° 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) N° 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 L 357, p. 1).