Strasbourg, 13 February 2007

Dear Sirs,

On 18 May 2004, you submitted a complaint to the European Ombudsman against the European Commission, on behalf of the Italian consortium "Consorzio per lo Sviluppo di Siracusa" ("CO.SVI.S."). The complaint concerned the Commission's decision of 2 June 2003 not to admit expenditure amounting to EUR 61 206.27, which was incurred by CO.SVI.S. in the framework of the management of the global grant awarded by the institution in 1998 under the European Regional Development Fund ("ERDF") for the development of the area of Syracuse, Italy.

On 16 June 2004, I forwarded the complaint to the President of the Commission. The Commission sent the Italian translation of its opinion on 12 October 2004. I forwarded the translation to you on 20 October 2004 with an invitation to make observations. On 24 November 2004, I received your observations.

By letter of 16 November 2005, I informed you that the examination of your case was ongoing and that I would notify you of the progress of your complaint as soon as possible. I pointed out that every effort would be made to provide this information no later that 31 January 2006. Nevertheless, on 15 February 2006, I wrote a further letter to you in which I stated that additional time would be necessary to conclude the examination of your case and that I would inform you about my decision by the end of March 2006.

After having carefully examined the Commission's opinion and your observations, I considered that it was necessary to conduct further inquiries. On 21 March 2006, I wrote to the President of the Commission asking him to comment on your observations by the end of April 2006. By letter of 21 April 2006, the Commission stressed that, due to the extensive consultation that needed to be undertaken by its services, extra time would be needed to complete its reply. On 3 May 2006, I informed the Commission that I had decided to agree to its request and that the new deadline for its reply was 31 May 2006. On 12 May 2006, I informed you accordingly.

On 9 June 2006, the Commission sent a further letter informing my secretariat of delays in the transmission of its opinion in 17 cases in which the deadline for reply was 30 April 2006. Your case was amongst those 17 cases.

On 16 June 2006, I replied to the Commission. In my letter, I expressed my regret at the fact that the Commission's replies to my inquiries were delayed and that the institution had failed to make a timely and reasoned request for an extension. On 22 June 2006, I informed you of my correspondence with the Commission.

On 11 July 2006, I wrote a further letter to the Commission in which I pointed out that I had still not received its reply to my request of 21 March 2006. I therefore asked the Commission to provide me with either (i) the relevant reply or (ii) a timetable for such a reply by no later than 31 July 2006. On 10 August 2006, I received the translation into Italian of the Commission's reply which I forwarded to you on 16 August 2006 with an invitation to make observations which you sent to me on 26 September 2006.

I am writing now to let you know the results of the inquiries that have been made. I apologise for the length of time taken in order to conclude the present inquiry.

THE COMPLAINT

According to the complainants, who complained on behalf of the Italian consortium "Consorzio per lo sviluppo di Siracusa" ("CO.SVI.S."), the relevant facts are as follows.

By decision C(98) 114 of 22 January 1998 (the "Decision"), the European Commission agreed to award a global grant under the European Regional Development Fund ("ERDF") for the economic development of the area of Syracuse, Italy. On 21 April 1998, a Convention was signed between the Commission and CO.SVI.S., which was designated as the national intermediary body for managing the global grant. According to the relevant provisions, expenditure had to be made by 31 December 2001 and the statements of the expenditure could have been submitted to the Commission until 30 June 2002 in order to be eligible.

On 28 May 2001, CO.SVI.S. asked the Commission: to extend the deadline of 31 December 2001 (which was the date by which expenditure to be covered by the global grant had to be incurred) to 31 December 2002; and to extend the deadline of 30 June 2002 (which the date by which all the accounting in relation to that expenditure had to be submitted to the Commission) to 30 June 2003. CO.SVI.S. justified its request by arguing that most of the beneficiaries of the global grant had faced serious difficulties in carrying out their tasks due to the fact that they had not received the relevant grants on time. By letter of 20 June 2001, the Commission informed CO.SVI.S. that it could not agree to its request for the postponement of the deadlines since a postponement could be authorised only in cases of force majeure.

On 2 June 2003, the Commission informed CO.SVI.S., through the Italian Ministry of Economy and Finance, of its decision that expenditure amounting to EUR 61 206.27 could not be reimbursed since it had been incurred after the deadline of 31 December 2001. On 23 February 2004, the Commission sent a further letter to the Italian Ministry, in which it reiterated its position.

On 22 March 2004, CO.SVI.S. wrote to the Commission and contested its decision not to consider as eligible expenditure incurred after 31 December 2001. CO.SVI.S. took the view that this expenditure was related to the closing of the global grant and that it could not have been incurred before 31 December 2001. CO.SVI.S. also referred to the existence of a precedent which could have been relied upon in favour of CO.SVI.S.

The complainants sent to the Ombudsman a copy of the letter written by the Presidency of the region of Sicily ( Italy) on 26 March 2004. In this letter, reference was made to a letter dated 8 March 2001, in which the Italian Ministry of Treasury and Economic Programming, replying to a question put to it by the region of Liguria (Italy), concerning the period of eligibility of expenses related to the closing of programmes, explained that those expenses could be considered to be 'eligible' if the statements of the expenditure were presented to the Commission within six months after the closing of the relevant programme. The Ministry of the Treasury and Economic Programming also addressed this letter to the Directorate-General for Regional Policy of the European Commission ("DG REGIO") asking DG REGIO to give an opinion on the issues raised therein. By reply of 15 March 2001, DG REGIO stated that it had no observations to make on the issue.

By letter of 7 April 2004, the Commission confirmed its position not to accept the claim for expenditure submitted by CO.SVI.S.

In their complaint to the Ombudsman, the complainants alleged that the Commission's decision of 2 June 2003 not to accept the claim of EUR 61 206.27 for expenditure incurred by CO.SVI.S. between January and June 2002 was unfair.

The complainants claimed that the Commission should reconsider its decision and accept the claim for EUR 61 206.27 as demanded by CO.SVI.S.

THE INQUIRY

The Commission's opinion

The opinion of the Commission can be in summarised as follows.

During the period 1994-1999, Council Regulation (EEC) No 2052/88 of 24 June 1988 on the tasks of the Structural Funds and their effectiveness and on coordination of their activities between themselves and with the operations of the European Investment Bank and the other existing financial instruments(1), as amended by Council Regulation (EEC) No 2081/93 of 20 July 1993(2), allowed for intervention through the Structural Funds by means of global grants. In accordance with Article 5(2)(c) of this Regulation, financial assistance may be provided by the "provision of global grants, as a general rule, managed by an intermediary designated by the Member State in agreement with the Commission and allocated by the intermediary in the form of individual grants to final beneficiaries."

The relevant intervention was to take place during the so-called 'period of eligibility'. In other words, only expenditure incurred after the starting dates and before the closing dates of such 'periods of eligibility' could be considered eligible for Community funding.

On 22 January 1998, the Commission adopted the Decision. The Decision awarded a global grant under the ERDF of EUR 25 million for the development of the area of Syracuse, Italy. The management of the global grant was to be carried out by CO.SVI.S., the designated national intermediary body. CO.SVI.S. signed a Convention with the Commission on 21 April 1998.

Article 5 of the relevant Decision established that the deadline for the eligibility of expenditure related to these actions was fixed at 31 December 2001(3). Article 13(4) of the Convention established that payments incurred by the intermediary body to execute the grant were to be made by no later than 31 December 2001. Final accounts in relation to such expenditure were to be presented to the Commission by no later than 30 June 2002(4).

In accordance with the Commission Decision No 97/322/EC of 23 April 1997 modifying the decisions approving the Community support frameworks, the single programming documents and the Community initiative programmes in respect of Italy(5) ("Commission Decision 97/322/EC", the above-mentioned deadlines could only have been modified by the Commission on the basis of a reasoned request submitted by the Member State concerned.

In its letters of 20 June 2001 and 4 September 2001, the Commission refused to authorise the request made by CO.SVI.S. on 28 May 2001 to postpone the deadline of 31 December 2001. In these letters, the Commission stated that a postponement of the relevant deadline could only be considered in the event of force majeure.

The Commission's noted that its approach to this issue was subject to certain limitations. For example, in a subsequent note addressed to Member States by DG REGIO on 5 October 2001 concerning the extension of the deadline for payment related to programmes financed under Community structural funds carried out between 1994 and 1999, the Commission had explained that an extension could be authorised in principle in the event of one of two occurrences: (i) a clearly identifiable mistake imputable to the Commission (including technical mistakes); and (ii) force majeure (interpreted as a disaster of great impact) and causes that could be assimilated to force majeure.

In its letter of 26 February 2002 addressed to the Italian Ministry of Economy and Finance, the Commission confirmed that it was impossible to accept the request made by CO.SVI.S. This position was again confirmed during a meeting held in Rome on 30 April 2002 concerning the closing of the 1994-1999 period of planning. All the authorities and bodies responsible for the management of the different programmes in Italy participated in that meeting.

By letters dated 2 June 2003 and 23 February 2004, the competent Italian authorities were informed by the Commission's services that expenses submitted by CO.SVI.S. amounting to EUR 61 206.27 were not eligible and that they should have therefore been deducted from the total allocation granted in favour of the region of Sicily under the EDRF. The Commission confirmed its position by letter dated 7 April 2004 and addressed to the Ministry of Economy and Finance.

The Commission's noted in its opinion that the complainants put forward three arguments to support their complaint to the Ombudsman.

The first concerned the content of the Convention signed between the Commission and CO.SVI.S. The complainants stated that: (i) the Convention established that payments to CO.SVI.S. could have been made until 31 December 2001, and the statements in relation to that expenditure could have been submitted to the Commission until 30 June 2002; (ii) there was no indication in the Convention that the expenditure related to the closing of the programme had to be met by CO.SVI.S. The complainants also noted that it was logical that CO.SVI.S. had to incur certain expenditure related to the closing of the programme. They also pointed out that CO.SVI.S. had to re-organise itself, in terms of personnel, in order to carry out the obligations relating to the closing of the Programme.

As regards this argument, the Commission's noted that the deadline of 31 December 2001 was, in accordance with the Convention, the deadline by which all expenditure had to be made. There was no indication in the Convention that a different deadline could be arranged.

The second argument concerned the delay in receiving payment amounting to EUR 5 million (received on 21 November 2001) and EUR 7.5 million (received on 4 January 2002).

As regards this second argument, the Commission's noted that the services of the Commission had dealt with the request for payment of EUR 7.5 million and EUR 5 million promptly. The requests were received on 8 and 28 August 2001 and the relevant bank transfers had been made on 5 and 18 September 2001 respectively. Any delays in payment, which the complainants alleged occurred, would not have justified an extension of the deadline for submitting the relevant expenses since any such delays had not been the consequence of a mistake by the Commission. Further, any such delays did not constitute a case of force majeure.

The third argument concerned a 'precedent' arising as a result of the letter sent by DG REGIO to the Ministry of Treasury and Economic Programming on 15 March 2001.

As regards this argument, the Commission pointed out in its opinion that it was difficult to identify a precedent favouring CO.SVI.S. in the letter in question, given that the Commission had not taken a stance in that letter as regards the extension of the deadline.

The Commission went on to note that the expenses incurred by the intermediary body during the closing procedure occurred after the deadline for submitting expenses had elapsed. It noted that the Commission's services were subject to strict limitations when dealing with requests for extensions of the relevant deadlines, in view of the fact that these extensions could result in an uncontrollable situation when closing different programmes. The Commission did not contest the fact that CO.SVI.S had incurred expenses linked to the closing of the programme, but rather contested the eligibility of the relevant expenditure. In any case, the expenses related to the closing procedure could have been met with national funds, as indicated in datasheet no 16 ("Alternative funding of co-financed projects") annexed to Commission Decision 97/322/EC.

The Commission further noted that the deadline of 31 December 2001 for incurring expenses was a general deadline and was not established only in relation to the global grant managed by CO.SVI.S.

The Italian authorities and CO.SVI.S., in its role as an intermediary body, had been informed promptly and on several occasions about the Commission's position concerning the final deadline for the eligibility of the relevant expenses. The request for an extension of this deadline had received a negative reply from the Commission's services, which informed CO.SVI.S. that an extension could only have been granted in presence of force majeure. The latter had not submitted any evidence in this regard.

The Commission concluded by stating that the Commission's services had acted in accordance with the content of the decision of 22 January 1998 and of the Convention signed between the Commission and the intermediary body.

The complainants' observations

The observations made by the complainants in response to the Commission's opinion can be summarised as follows.

All the expenses incurred by CO.SVI.S. were incurred in order to provide a service for the Commission. Furthermore, since the total amount of the expenses had not exceeded the funds allocated to CO.SVI.S. for carrying out its tasks, and this task had been properly completed, the fact that the Commission had finally accepted only some of these expenses constituted a case of unjust enrichment on the part of the Commission.

As regards the Commission's point that the expenses relating to the closing procedure could have been met using national funds, this possibility had not been taken into consideration because CO.SVI.S. activities should, according to the complainants, have been entirely financed through Community funds.

Contrary to the point made by the Commission that its services had always processed payments on time, a delay had in fact occurred in relation to the payment made by the Commission in September 2001 and the crediting of the funds took place only on 4 January 2002. It had therefore, according to the complainant, been impossible to comply with the deadline of 31 December 2001.

As regards the Commission's point that the letter of DG REGIO to the Ministry of Treasury and Economic Programming of 15 March 2001 could not be considered as relevant since the Commission had simply stated that it had no observations on the issue submitted to it, the absence of such observations should, on the contrary, be considered to constitute a tacit agreement with the position expressed by the Italian Ministry of the Treasury and Economic Programming in its letter of 8 March 2001(6).

Finally, CO.SVI.S. had never contested the fact that the deadline of 31 December 2001 was a general deadline. However, the fact that other administrations involved in the management of global grants had expressed certain concerns showed that objective difficulties existed in relation to such management.

Further inquiries
Request for further information

After having examined the Commission's opinion and the complainants' observations, the Ombudsman considered that it was necessary to conduct further inquiries. On 21 March 2006, he therefore wrote to the Commission.

In his letter, the Ombudsman noted that, in their observations, the complainants had referred to a letter sent by the Italian Ministry of Treasury and Economic Programming to the region of Liguria on 8 March 2001 in reply to a letter that the region had sent to the Italian Ministry on 22 February 2001. It appeared, from the content of the letter of 8 March 2001, that the Italian Ministry had been asked by the region of Liguria to give its view on the possibility of considering as eligible the expenditure related to the closing activities of a relevant programme, even though it had been incurred after the deadline. The Italian Ministry took the view that this expenditure could be considered as eligible and invited the Commission to make observations if it so wished. In its reply of 15 March 2001, the Commission stated that it had no observations to make. The Ombudsman deemed it necessary to verify the precise meaning of the Commission's letter of 15 March 2001. The Ombudsman therefore asked the Commission to comment on this point.

The Ombudsman also referred to the content of a note addressed by the Commission to the Member States on 5 October 2001. In this note, the institution listed two cases where an extension of the relevant deadline would in principle be granted: a clearly identifiable mistake imputable to the Commission (including a technical mistake), and force majeure (interpreted as a disaster of great impact) and causes that could be assimilated to force majeure. However, it appeared that, in its letter to CO.SVI.S. of 20 June 2001, the institution stated that an extension of the deadline could only be granted in the case of force majeure. The Ombudsman therefore asked the Commission to comment on this apparent discrepancy.

Request for a further opinion

In their observations, the complainants submitted that, since the total amount of expenses incurred by CO.SVI.S. had not exceeded the funds allocated to CO.SVI.S. for carrying out its tasks and since these tasks had been properly completed by to CO.SVI.S., the Commission's decision finally to accept only part of these expenses constituted a case of unjust enrichment on its part. This was a new allegation that was not made in the original complaint. Since it appeared to be necessary to conduct further inquiries in the present case, the Ombudsman considered it appropriate to ask the Commission to give an opinion on this further allegation.

The Commission's reply

In its reply, the Commission made the following points.

Concerning the content of the letter of 15 March 2001, in which the Commission stated that it had no observations to make on the position expressed by the Italian Ministry of Treasury and Economic Programming that the expenditure related to the closing activities of a relevant programme could be reimbursed, even though although it had been incurred after the relevant deadline, the Commission recognised that the content of this letter was unclear. The Commission regretted this lack of clarity. However, it emphasised that the rules governing the ERDF for the period 1994-1999, which were applicable to the global grant in question, were indeed clear. The final deadline for payments was 31 December 2001 and this deadline could only have been modified through an explicit decision of the Commission. The Commission had not taken such a decision in the present case. The position taken by the Italian authorities, to consider as eligible the expenditure related to the closing activities of a relevant programme, even though it had been incurred after the relevant deadline, appeared to be contrary to the existing rules. The Commission could not have adopted a position which diverged from these rules.

Concerning the apparent discrepancy between the content of its note addressed to the Member States on 5 October 2001 and that of the letter addressed to CO.SVI.S. on 20 June 2001, the Commission stressed that the apparent discrepancy was due to the fact that, when dealing with the request submitted by CO.SVI.S. for an extension of the relevant deadline, it did not appear necessary to examine whether the conditions concerning a clearly identifiable mistake imputable to the Commission were met. The sole aspect to be taken into consideration was the existence of force majeure. Furthermore, the Commission explained that the note of 5 October 2001 was a general informative note, and therefore all the cases under which an extension of the relevant deadline would in principle be granted were taken into consideration in that letter.

Concerning the allegedly unjust enrichment by the Commission as a consequence of the fact that CO.SVI.S. did not use all the funds allocated to it, the Commission stressed that only the eligible expenditure concerning the individual measures of the relevant Decision awarding the grant could have been taken into consideration. The Commission could not co-finance expenditure other than the expenditure which was allocated for each measure and which was made within the relevant deadline. If, as had happened in the present case, certain funds had not been used during the period of eligibility concerned, they should be returned to the Community budget. An alternative interpretation which would imply that unused funds would have remained in the hands of the beneficiaries, would constitute unjust enrichment for the beneficiaries, and would have been contrary to the principle of sound financial management as foreseen by Article 274 of EC Treaty.

The Commission finally referred to a meeting that had been held between its services and CO.SVI.S. on 17 October 2005 in the context of the procedure established by Article 24 of Regulation 4253/88(7) concerning the reduction, suspension and cancellation of assistance. Since the arguments submitted by CO.SVI.S. during this meeting were not accepted by the Commission, on 11 May 2006 the institution had adopted decision C(2006) 1983 concerning a partial cancellation of the amount of the global grant originally awarded to CO.SVI.S.

The complainants' observations

In their observations, the complainants reiterated their disagreement with the Commission's decision to declare inadmissible the expenditure of EUR 61 206.27 incurred by CO.SVI.S.

The complainants referred again to the letter sent by the Commission on 15 March 2001 to the Ministry of Treasury and Economic Programming. In their opinion, this letter should be considered as evidence that the Commission tacitly agreed with the position, expressed by the Italian Ministry, that expenditure related to the closing of programmes could be considered as eligible, provided the expenditure was incurred, and submitted, within six months after the closing of the relevant programme. The fact that the Commission recognised that the wording of the relevant letter was unclear and regretted it did not offer any remedy as regards the consequences originating from the misleading information contained in that letter.

The complainants reiterated their argument that there had been a certain delay in the allocation of funds to CO.SVI.S. In particular, EUR 7.5 million had only been received by CO.SVI.S at the beginning of January 2002. This represented an irregularity in the Commission's behaviour.

Finally, the complainants reaffirmed their position that there had been unjust enrichment on the part of the Commission.

THE DECISION

1 The Commission's allegedly unfair decision not to admit expenditure of EUR 61 206.27

1.1 By Decision C(98) 114 of 22 January 1998 (the "Decision"), the European Commission agreed to award a global grant under the European Regional Development Fund ("ERDF") for the economic development of the area of Syracuse, Italy. On 21 April 1998, a Convention (the "Convention") was signed between the Commission and CO.SVI.S., which was designated as the national intermediary body for managing the global grant, and on whose behalf the complainants submitted their complaint.

On 28 May 2001, CO.SVI.S. asked the Commission: to extend the deadline of 31 December 2001 (which was the date by which expenditure to be covered by global grant had to be incurred) to 31 December 2002; and to extend the deadline of 30 June 2002 (which was the date by which all the accounting in relation to that expenditure had to be submitted to the Commission) to 30 June 2003. CO.SVI.S. justified its request by arguing that most of the beneficiaries of the global grant had faced serious difficulties in carrying out their tasks, due to the fact that they had not received the relevant grants on time. The Commission informed CO.SVI.S. that it could not agree to its request for the postponement of the deadlines since a postponement could be authorised only in the case of force majeure.

On 2 June 2003, the Commission informed CO.SVI.S., through the Italian Ministry of Economy and Finance, of its decision that expenditure amounting to EUR 61 206.27 could not be reimbursed since it had been incurred after the deadline of 31 December 2001.

In their complaint to the Ombudsman, the complainants alleged that the Commission's decision was unfair.

1.2 In its opinion, the Commission stated that only expenditure incurred after the starting date and before the closing date (that is, during the 'period of eligibility') could be considered eligible for Community funding. Article 5 of the relevant Decision established that the deadline for the eligibility of expenditure related to these actions was 31 December 2001. Article 13(4) of the Convention established that payments incurred by the intermediary body, in order to execute the grant were to be made by no later than 31 December 2001 and its final accounts were to be presented to the Commission by no later than 30 June 2002.

The Commission's noted that its approach to this issue was subject to certain limitations. For example, in a subsequent note addressed to Member States by DG REGIO concerning the extension of the deadline for payment related to programmes financed under Community structural funds carried out between 1994 and 1999, the Commission had explained that an extension could be authorised in principle in the event of one of two occurrences: (i) a clearly identifiable mistake imputable to the Commission (including a technical mistake); and (ii) force majeure (interpreted as a disaster of great impact) and causes that could be assimilated to force majeure.

The Commission made reference to the three arguments put forward by the complainants.

The first argument concerned the content of the Convention signed between the Commission and CO.SVI.S. The complainants stated that: (i) the Convention established that payments to CO.SVI.S. could have been made until 31 December 2001, and the statements in relation to that expenditure could have been submitted to the Commission until 30 June 2002; and (ii) there is no indication in the Convention that the expenditure related to the closing of the programme had to be met by CO.SVI.S. The complainants also noted that it was logical that CO.SVI.S. had to incur certain expenditure related to the closing of the programme. CO.SVI.S. They also pointed out that CO.SVI.S. had to re-organise itself, in terms of personnel, in order to carry out the obligations relating to the closing of the Programme.

As regards this argument, the Commission's noted that, in accordance with the Convention, the deadline of 31 December 2001 was the deadline by which all expenditure had to be made. There was no indication in the Convention that a different deadline could be arranged for.

As regards the second argument, which concerned the alleged delays in receiving payment amounting to EUR 5 million and EUR 7.5 million, the Commission noted that the delays alleged by the complainants would not have justified an extension of the deadline for submitting the relevant expenses, since they had not been the result of a mistake or of force majeure. Furthermore, the Commission's services had dealt with the request for payment of EUR 7.5 million and EUR 5 million promptly. The requests were received on 8 and 28 August 2001 and the relevant bank transfers had been made on 5 and 18 September 2001 respectively.

The third argument concerned the letter sent by DG REGIO to the Ministry of Treasury and Economic Programming on 15 March 2001. In its opinion, the Commission pointed out that it was difficult to identify a precedent favouring CO.SVI.S. in the letter in question, given that the Commission had not taken a stance in that letter as regards the extension of the deadline.

Finally, the Commission did not contest the fact that CO.SVI.S had incurred expenses linked to the closing of the programme, but rather contested the eligibility of the relevant expenditure. The Commission also pointed out that, as indicated in datasheet no 16 ("Alternative funding of co-financed projects") annexed to Decision 97/322/EC, the expenses related to the closing procedure could, in any case, have been met from national funds.

1.3 In their observations on the Commission's opinion, the complainants essentially maintained their position concerning the alleged unfairness of the institution's decision not to admit the expenses amounting to EUR 61 206.27.

The complainant noted that the possibility, suggested by the Commission, that the expenses relating to the closing procedure could have been met using national funds had not been taken into consideration because, according to the complainants, CO.SVI.S. activities should have been entirely financed through Community funds.

The complainants stressed that all expenses incurred by CO.SVI.S. were for the purposes of providing a service for the Commission. Furthermore, since the total amount of expenses had not exceeded the funds allocated to CO.SVI.S. for carrying out its tasks, and since these tasks had been properly completed, the fact that the Commission had only partially accepted these expenses constituted a case of unjust enrichment on its part.

In relation to the Commission's point that its services had always processed payments on time, the complainants argued that, on the contrary, a delay had occurred between the execution of the payment made by the Commission in September 2001 and the crediting of the funds to CO.SVI.S., which took place only on 2 January 2002. It had therefore been impossible to comply with the deadline of 31 December 2001.

The letter of DG REGIO to the Ministry of Treasury and Economic Programming of 15 March 2001 should be considered as constituting evidence that the Commission tacitly agreed with the position previously expressed by the Italian Ministry(8).

1.4 In his request of 21 March 2006 for further information, the Ombudsman noted that, in their observations, the complainants had referred to a letter sent by the Italian Ministry of Treasury and Economic Programming to the region of Liguria on 8 March 2001. In its letter, the Ministry took the view that certain expenditure related to the closing activities of a relevant programme could be considered as admissible, even though it had been incurred after the 31 December 2001 deadline. The Ministry invited the Commission to make observations on the position taken by the Ministry, if it so wished. In its reply of 15 March 2001, the Commission stated that it had no observations to make. Since the precise import of the Commission's letter of 15 March 2001 was unclear, the Ombudsman asked the institution to comment on this point.

The Ombudsman also referred to the content of a note addressed by the Commission to the Member States on 5 October 2001. In this note, the institution listed two cases where an extension of the relevant deadline would in principle be granted: a clearly identifiable mistake imputable to the Commission (including a technical mistake), and force majeure (interpreted as a disaster of great impact) and causes that could be assimilated to force majeure. However, it appeared that in its letter to CO.SVI.S. of 20 June 2001 the institution stated that an extension of the deadline could only be granted in the case of force majeure. The Ombudsman therefore asked the Commission to comment on this apparent discrepancy.

Furthermore, in their observations, the complainants raised a new allegation, that is, that because the total amount of the expenses incurred by CO.SVI.S. had not exceeded the funds allocated to CO.SVI.S. for carrying out tasks which it had been properly completed, the Commission's decision finally to accept only part of these expenses constituted a case of unjust enrichment on its part. This constituted a new allegation and the Ombudsman considered it appropriate to ask the Commission to give an opinion on it.

1.5 In its reply, the Commission recognised that the content of the letter of 15 March 2001 was unclear and regretted it. However, it emphasised that the rules applicable to the global grant in question were indeed clear. The final deadline for payments was 31 December 2001 and this deadline could only have been modified through an explicit decision of the Commission. The Commission had not taken such a decision in the present case.

As regards the apparent discrepancy between the content of its note addressed to the Member States on 5 October 2001 and that of the letter addressed to CO.SVI.S. on 20 June 2001, the Commission stressed that, when dealing with the request submitted by CO.SVI.S. for an extension of the relevant deadline, it did not appear necessary to examine whether the conditions concerning a clearly identifiable mistake imputable to the Commission were met. The only issue which was necessary to consider in the context of that letter was the issue of force majeure. In contrast, the note of 5 October 2001 was a general informative note, and therefore all the cases in which an extension of the relevant deadline could, in principle, be granted were considered in that letter.

Concerning the alleged unjust enrichment by the Commission, the Commission noted that it could not co-finance expenditure other than expenditure covered by the grant and made within the relevant deadline. If, as had happened in the present case, certain funds had not been used during the period of eligibility concerned, they should be returned to the Community budget. An alternative interpretation, which would imply that unused funds could remain in the hands of the beneficiaries, would give rise to unjust enrichment on the part of the beneficiaries. Any such alternative interpretation would thus have been contrary to the principle of sound financial management as foreseen by Article 274 of EC Treaty.

1.6 In their observations on the Commission's reply, the complainants basically maintained the position already expressed in their complaint and observations.

1.7 The Ombudsman notes that Article 5 of the Commission Decision C(98) 114 clearly established that the deadline for the eligibility of expenditure incurred when implementing the grant was fixed at 31 December 2001. All accounts in relation to that expenditure had to be submitted by 30 June 2002. Furthermore, he notes that Article 13(4) of the Convention signed on 21 April 1998 between the Commission and CO.SVI.S., clearly established that payments by the intermediary body, namely, CO.SVI.S., to implement the grant were to be made by no later than 31 December 2001 and final accounts to the Commission were to be presented by no later than 30 June 2002.

The fact that certain costs might necessarily have been incurred after 31 December 2001 (for example, costs incurred in order to submit accounts by 30 June 2002) does not imply that such costs must necessarily be paid for from Community funds. Indeed, contrary to the position taken by the complainants, there is no indication that all expenditure incurred by CO.SVI.S. should have been entirely financed through Community funds. The Ombudsman notes, in this respect, that the Decision itself refers to co-financing and that datasheet no 16 annexed to Decision 97/322/EC. refers to the alternative funding of co-financed projects. The Ombudsman further notes that Article 2(1) of the Convention also refers to a global grant co-financed by the EDRF.

Furthermore, the Decision, by clearly stating that only expenditure incurred by 31 December 2001 will constitute eligible expenditure, whilst stating that the documentation as regards that expenditure can be submitted by 30 June 2002, clearly implies that at least a certain amount of the preparation of accounts could take place after 31 December 2001, and that expenditure incurred after 31 December 2001 in order to prepare those accounts would not constitute eligible expenditure.

1.9 While the Decision is clear as regards which expenditure would be met by Community funds, it must be examined whether the Commission was responsible for misleading the beneficiary as regards the correct meaning of the Decision.

The complainants argue that the letter of DG REGIO of 15 March 2001 to the Ministry of Treasury and Economic Programming led them to believe that expenditure incurred by CO.SVI.S. after 31 December 2001 would constitute eligible expenditure and would be paid for from the grant.

In the letter of 15 March 2001, the Commission's services stated that that they had no comments to make as regards the letter sent by the Italian authorities on 8 March 2001, in which the Italian authorities implied that expenditure which was necessary to prepare the submission of accounts could be deemed to be eligible expenditure.

The Ombudsman notes that the letter of the Italian authorities of 8 March 2001 does not specifically state whether that expenditure in question would be reimbursed by the Commission through the grant or by the Italian authorities in the context of their role as a co-financing authority. As noted at point 1.8 above, the Italian authorities could choose, in the context of co-financing, to cover any additional expenditure incurred which might not be covered by the grant. Thus, the Ombudsman considers that it was reasonable for the Commission to interpret the letter 8 March 2001 as constituting an acknowledgement on the part of the Italian authorities that expenditure incurred after 31 December 2001 would be paid for from national funds.

Further, if the Italian authorities had intended to imply in the letter of 8 March 2001 that, despite the clear rules set out in the Decision itself, Community funds would cover certain expenditure incurred after 31 December 2001, they should have expressly stated this in the letter, and requested the Commission to comment thereon. However, the letter of 8 March 2001 made no such clear statement.

In this respect, the Ombudsman considers that the letter DG REGIO of 15 March 2001 does not constitute evidence that the Commission agreed to cover expenditure incurred after 31 December 2001.

While the position taken by the Commission in its letter of 15 March 2001 could legitimately have been understood as to mean that it simply took note of the position adopted by the Italian authorities that they would cover expenditure incurred after 31 December 2001, it would have been preferable, in order to avoid any possible misunderstanding, if the Commission had expressly stated that this indeed was its understanding. The Ombudsman notes that the Commission itself has recognised that the content of its letter was unclear and has regretted this lack of clarity.

1.10 The Ombudsman considers that, as indicated by the Commission, it appears that CO.SVI.S. had neither established nor invoked any case of force majeure to support his request of 28 May 2001.

1.11 Concerning the complainants' argument that a significant delay occurred between the execution of the payment made by the Commission in September 2001 and the crediting of the funds (and for this reason, according to the complainants, it had therefore been impossible to comply with the deadline of 31 December 2001), the Ombudsman notes that, from the documents forwarded to him by the complainants, it emerges that two bank transfers were indeed made in favour of CO.SVI.S., respectively on 21 November 2001 (for EUR 5 million) and on 27 December 2001 (for EUR 7.5 million). It emerged, however, that the entity making these bank transfers was the Italian Ministry of the Treasury.

The procedure laid down in Article 10(2) of the Convention signed by the Commission and CO.SVI.S. on 21 April 1998 states that all payments related to the global grant and made by the Commission would be credited to the Ministry of the Treasury and subsequently transferred to the intermediary body. Thus, it appears that the Commission made the bank transfers to the Ministry of the Treasury in September 2001. The Ministry of the Treasury thereafter delayed making the transfers until 21 November 2001 and on 27 December 2001 respectively.

The length of time between the execution of the payment made by the Commission and the crediting of the relevant funds on the bank account of CO.SVI.S. does not therefore appear to be imputable to the Commission.

1.12 In light of the above, the Ombudsman considers that the Commission's decision rejecting the request made by CO.SVI.S. for a postponement of the deadline of 31 December 2001 was taken on the basis of the relevant applicable rules.

Consequently, the Commission's decision that expenses amounting to EUR 61 206.27 were not eligible because they had not been submitted within the relevant deadline was also taken on the basis of the relevant applicable rules.

1.13 In view of the above, the Ombudsman considers that there has been no maladministration by the Commission as regards this aspect of the case.

2 The allegedly unjust enrichment by the Commission

2.1 The complainants alleged that since the total amount of the expenses made by CO.SVI.S. had not exceeded the funds allocated to CO.SVI.S. for carrying out tasks which it had properly completed, the Commission's decision to finally accept only part of these expenses constituted a case of unjust enrichment on its part.

2.2 In its opinion, the Commission emphasised that only the eligible expenditure concerning the individual measures of the relevant Decision awarding the grant could have been taken into consideration. The Commission could not co-finance expenditure other than that covered by the grant and made within the relevant deadline. If, as had happened in the present case, certain funds had not been used during the period of eligibility, the funds should be returned to the Community budget.

The Commission further stressed that any alternative interpretation, according to which unused funds would have remained in the hands of the beneficiaries, would constitute unjust enrichment on the part of the beneficiaries and would have been contrary to the principle of sound financial management as foreseen by Article 274 of EC Treaty.

2.3 The Ombudsman notes that Article 4 of the Commission Decision C(98) 114 established that the modalities in the awarding of grants could be modified on the basis of possible adjustments to be made with respect to the availability of funds and to the budgetary rules in accordance with the procedure laid down in Article 25(5) of Regulation 4253/88(9). Article 25(5) of the said Regulation foresees that "(...) [t]he Commission shall, in cooperation with the Member State, make any necessary adjustment to the volume or conditions of assistance as initially approved and to the schedule of the payments envisaged".

2.4 In light of the conclusions reached in points 1.12 and 1.13 above, the Ombudsman considers that the Commission's decision to reduce its financial assistance in view of the fact that CO.SVI.S has failed to comply with its obligation concerning the deadline for accounting for the relevant expenditure cannot be considered as a case of unjust enrichment on the part of the Commission.

2.5 In view of the above, the Ombudsman considers that there has been no maladministration by the Commission as regards this aspect of the case.

3 The complainants' claim

3.1 In their complaint to the Ombudsman, the complainants claimed that that the Commission should reconsider its decision and admit expenditure of EUR 61 206.27 as demanded by CO.SVI.S.

3.2 On the basis of his conclusions reached in point 1.13 above, the Ombudsman considers that the complainants' claim must fail.

4 Conclusion

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

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

Yours sincerely,

 

P. Nikiforos DIAMANDOUROS

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(1) OJ 1988 L 185, p. 9.

(2) Council Regulation (EEC) No 2081/93 of 20 July 1993 amending Regulation (EEC) No 2052/88 on the tasks of the Structural Funds and their effectiveness and on coordination of their activities between themselves and with the operations of the European Investment Bank and the other existing financial instruments, OJ 1993 L 193, p. 5.

(3) The relevant text reads as follows: "(...) Il contributo comunitario riguarda le spese connesse alle operazioni previste dalla sovvenzione globale che saranno state oggetto, nello stato membro, di disposizioni giuridicamente vincolanti, e per le quali le necessarie risorse finanziarie saranno state specificatamente impegnate al più tardi il 31 dicembre 1999. La data limite per la contabilizzazione delle spese relative a queste azioni è fissata al 31 dicembre 2001."

(4) The relevant text reads as follows "(...) I pagamenti effettuati dall'intermediario in esecuzione della sovvenzione globale dovranno avere luogo entro il 31.12.2001 e la rendicontazione alla Commissione delle spese sostenute dall'intermediario per l'esecuzione della suddetta sovvenzione dovrà avvenire non oltre il 30.6.2002."

(5) OJ 1997 L 146, p. 11.

(6) See footnote 1.

(7) Council Regulation (EEC) No 4253/88 of 19 December 1988, laying down provisions for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments, OJ 1988 L 374, p. 1.

(8) See footnote 1.

(9) Council Regulation (EEC) No 4253/88 of 19 December 1988, laying down provisions for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operation of the European Investment Bank and the other existing financial instruments, OJ 1988 L 374, p. 1.