The background to the complaint

1. The case concerns a claim for reimbursement by the European Commission ('Commission') concerning the performance of a risk, capital transnational investment project partially funded by the Commission, in the context of the Sixth Framework Programme for Research and Development.

2. On 8 November 2006, the Commission entered into a contract with a public undertaking acting in its capacity as the coordinator (the 'Coordinator') of a consortium comprising 16 risk capital fund management entities from various Member States (the 'Framework Contract'). According to this contract, the list of participants in the consortium included the complainant, a private undertaking which provides financial services.

3. On 4 December 2006, the Coordinator and the complainant entered into a consortium agreement concerning the performance of the risk, capital transnational investment project partially funded by the Commission (the 'Consortium Agreement').

4. According to the complainant, it performed the contract between 2006 and 2008. The Commission paid the relevant fees and expenses to the Coordinator, which then paid the complainant.

5. However, following an external audit carried out by an independent firm, on 27 January 2011 the Commission requested the complainant to reimburse an amount of EUR 24,421.54.

6. On 21 February 2011, the complainant wrote to the Commission, indicating that the amount claimed by the Commission corresponded to a daily rate of EUR 400 which the complainant had charged for the participation of third party investors in the project. The complainant added that the Coordinator had explicitly indicated that this amount had been approved by the Commission.

7. On 23 March 2011, the Commission replied that, as indicated in the audit report, the amount of EUR 400, which was mentioned in an annex to the Framework Contract, was an estimate of reimbursable costs that could be incurred per day in relation to each investor. The Commission added that this amount could not be reimbursed without any substantiation and without proof of payment by the project participant. Thus, the Commission maintained its reimbursement claim insofar as there was no evidence that the complainant incurred actual expenses of EUR 400 per day per investor.

8. On 5 April 2011, the complainant reiterated its arguments. Moreover, it provided the Commission with a copy of an e-mail from the Coordinator which, according to the complainant, explicitly confirmed that it would be possible to charge a daily rate of EUR 400. Thus, in the complainant's view, since the Commission's reimbursement claim was based on this daily rate of EUR 400, the Commission should claim reimbursement from the Coordinator (if at all) rather than from the complainant. In addition, the complainant argued that the Commission infringed the principle of equal treatment by claiming reimbursement from only three members of the consortium.

9. On 16 May 2011, and in the absence of a reply from the Commission to this letter, the complainant turned to the Ombudsman.

10. On 21 September 2011, the complainant informed the Ombudsman that, on 19 May 2011, it received a letter from the Commission claiming interest for late payment as from 2 May 2011. The complainant added that, on 14 September 2011, it had replied that the Commission should not claim interest for late payment because the principal amount was in dispute and the complainant had lodged a complaint with the Ombudsman, which had given rise to an inquiry that was still ongoing.

The subject matter of the inquiry

11. The Ombudsman opened an inquiry into the following allegations and claim:

Allegations:

(1) The Commission wrongfully claims the reimbursement of EUR 24,421.54 from the complainant.

(2) The Commission infringed the principle of equal treatment by failing to claim reimbursement from all the participants in the consortium.

Claim:

The Commission should withdraw its reimbursement claim against the complainant.

The inquiry

12. On 8 June 2011, the Ombudsman opened an inquiry into this case and requested the Commission to provide an opinion on the complaint. On 20 October 2011, the Commission provided its opinion, which was forwarded to the complainant for its observations. The complainant submitted its observations on 29 November 2011.

The Ombudsman's analysis and conclusions

A. Allegation that the Commission wrongfully claimed the reimbursement of EUR 24,421.54 from the complainant

Arguments presented to the Ombudsman

13. In its complaint, the complainant indicated that the Commission made all the payments to the Coordinator, who then redistributed the funds among the participants, including the complainant. It added that, in so doing, it followed the instructions given by the Coordinator as regards the invoicing for its participation in the project.

14. In particular, the complainant indicated that the Coordinator explicitly stated that the Commission had approved a daily rate of EUR 400 for the participation of each third party investor ('business angel') in events. According to the complainant, the Coordinator confirmed that the Commission would finance 48% of this amount without the participants having to demonstrate that this amount had been passed on to the investors. The Coordinator indicated that this should be regarded as an incentive for the project participants to find as many potential investors as possible and to cover the travel expenses and daily allowances of such investors. The relevant part of the Coordinator's e-mail of 12 September 2007 states as follows:

"Where in the contract is the agreement to establish an investors and entrepreneurs daily rate of €400?

This is supported in pages 101-104 of Annex 1. There is mention here of the budget's reflection of "the cost of the time and expertise of the investors and relevant professionals in attending these events" (p. 102). Further "costs are also included for their time in preparation and during the event and afterwards in due diligence (average 5 days per investor) for an average of two transnational events". It says that WP3 "reflects the costs of the involvement of investors and experts and within the partner organisations to come together directly and virtually to share experience and best practice." (p. 101)

The figure of €400 is supported by the tables on page 102 which details the activities of international business investors. This should be used as the justification for these claims. This is a contract that has been agreed and signed by the European Commission in its entirety. Therefore we consider this enough to use this as a basis for the claiming this amount against investors time. This is exactly why we objected to those organisations which tried to charge more than €400 for their investors times (even though we know that their time is worth more than that)."

15. Therefore, in the complainant's view, any misunderstanding between the Commission and the Coordinator should be solved directly between them. For these purposes, the complainant should be regarded as a third party acting in good faith and thus should not suffer the negative consequences of any misunderstanding between the Commission and the Coordinator.

16. It its opinion, the Commission argued, as a preliminary point, that all the members of the consortium (and not only the Coordinator) are bound by the Framework Contract, pursuant to Article 1(2) thereof. The Commission added that the Coordinator could not, under any circumstances, be regarded as acting on behalf of the Commission.

17. As regards the claim for reimbursement, the Commission argued that it can be deduced from pages 102 and 103 of Annex I to the Framework Contract ('Description of Work') that the costs necessary for the participation of third party investors in the project had been estimated at EUR 400 per person per day. The Commission added that Annex II to the Framework Contract ('General Conditions') made it clear that flat-rate financing is not available for any category of direct costs but only for indirect costs (Article II.22).[1] According to the Commission, the above-mentioned amount indicated in Annex I could therefore not be regarded as a flat-rate or as a daily price that the Commission would have agreed to pay to the project participants. Instead, the Commission argued, this amount should be regarded as an estimate of eligible direct costs. Furthermore, and pursuant to Article II.19 of the General Conditions, eligible costs must be "actual, economic and necessary for the implementation of the project" and must be recorded in the accounts of the participant to the project that incurred them.

18. Therefore, in the absence of any evidence that the complainant incurred costs of EUR 400 per day per investor, the Commission concluded that this sum should not be regarded as eligible costs. Thus, as established in Articles II.29 and II.31 of the General Conditions, the Commission claimed reimbursement of the amount from those participants which had unduly received it, in the present case, the complainant. The Commission added that it could not claim reimbursement of these sums from the Coordinator or from any other participant to the project.

19. In its observations, the complainant indicated that the Commission failed to consider the responsibility of the Coordinator for giving incorrect instructions to the participants. The complainant argued that, in practice, the Coordinator became the leader of the consortium and gave instructions concerning the performance of the various tasks and the invoicing of costs.

20. Although the complainant recognised that it was a party to the Framework Contract, it noted that this contract had been negotiated between the Commission and the Coordinator. Moreover, the complainant noted that the Coordinator drafted the Consortium Agreement for the participants to the project and implied that the Coordinator failed to include a provision in this agreement concerning its overall responsibility acting as Coordinator.

21. The complainant submitted that it had followed, in good faith, the instructions given by the Coordinator. It added that, in the absence of such instructions, it would have requested the investors partially to cover their own travel and daily expenses.

The Ombudsman's assessment

22. As a preliminary matter, the Ombudsman considers it important to underline that the complainant is bound by the provisions of the Framework Contract signed by the Commission and the Coordinator. This conclusion results from the Framework Contract[2] and the Consortium Agreement.[3] Furthermore, the complainant recognised in its observations that it adhered to the Framework Contract and that therefore it is bound by the obligations arising from it.

23. In view of the foregoing, the Framework Contract should constitute the starting point of the Ombudsman's analysis as regards the eligible costs for the purposes of the Commission's financing.

24. The Ombudsman considers that the interpretation of the Framework Contract and the conclusion reached by the Commission appear to be correct, for two main reasons.

25. First, the Ombudsman notes that pages 101 and 102 of Annex I to the Framework Contract ('Description of Work') indicate the following: "The budget for this workpackage [...] reflects the significant costs entailed in bringing 100 investors across the partner regions to attend 2 transnational presentation events for selected KBBs. Our extensive experience has shown that investors require incentives for travel and accommodation in order to attend transnational presentation events [...] the budget therefore reflects the costs of the time and expertise of the investors and relevant professionals in attending these events [...]. The costs of this workpackage includes the travel of between 5 and 12 business angels and early stage investors (described as "third parties") from most of the partner agencies to attend transnational presentation events. Costs are also included for their time in preparation and during the event and afterwards in due diligence (average 5 days per investor) for an average of two transnational events".

26. The above passage suggests that the amount of EUR 400 per day per investor was an estimate of the maximum eligible costs that could be incurred during a number of days for the investors' travel, accommodation, daily subsistence and eventual financial compensation for their time. Therefore, it appears that the EUR 400 per day was not an amount that could be claimed by the complainant as a "payment" for its own services (including for arranging the participation of international investors in events). There is no explicit support in the Framework Contract for the complainant's argument that this should be regarded as an incentive for the project participants to find as many investors as possible. On the contrary, it appears that the relevant amount was intended to be passed on to the investors themselves in the form of travel expenses, accommodation expenses, daily subsistence and eventual financial compensation for their time.

27. Second, and as the Commission correctly pointed out, in order to be eligible the costs must be "actual".[4] This means that the participant should have effectively incurred these costs in order to obtain the Commission's financing. Therefore, contrary to the complainant's assertion, in the absence of evidence that it effectively incurred costs of EUR 400 per day per investor (e.g., travel expenses, daily subsistence allowances or financial compensation for the investor's time), it was not entitled to obtain the Commission's financing for this amount.

28. In view of the foregoing, the Ombudsman concludes that, pursuant to the Framework Contract, it appears that the complainant was not allowed to claim payment of EUR 400 per day per investor who participated in the relevant events, in the absence of any evidence that it incurred actual costs for that amount. In fact, the complainant's main argument concerns the instructions allegedly given by the Coordinator in this respect. The Ombudsman will now address this issue.

29. As regards the instructions allegedly given by the Coordinator, the Ombudsman notes that the Commission has not addressed in its opinion the role played by the Coordinator in relation to the disputed issue. However, this appears to be due to the fact that the Commission considers that the Coordinator cannot be regarded as acting on behalf of the Commission.

30. The Ombudsman agrees that the Coordinator was not the Commission's representative. Moreover, there is no indication that the Commission approved these alleged instructions or was even informed of this. Therefore, the instructions allegedly given by the Coordinator were based on its own interpretation of the Framework Contract without the specific involvement of the Commission.

31. However, it cannot be ignored that the Coordinator played an important role as the intermediary between the Commission and the participants in the project in question. Moreover, it cannot be excluded that the complainant may have been led to believe in good faith that the Commission encouraged or even requested the Coordinator to provide guidance to the project participants. In view of this, it is necessary to establish whether in reality the Coordinator gave the instructions which the complainant alleges.

32. First, as regards the nature of the Coordinator's e-mail, the Ombudsman considers that the Coordinator did not issue "instructions" to the project participants. Instead, it provided further information in the relevant e-mail concerning the daily rate of EUR 400. Thus, the project participants were not instructed by the Coordinator to charge any specific rate. At most, they received further information from the Coordinator as to the circumstances under which they could eventually claim reimbursement from the Commission.

33. Second, and most importantly, as regards the content of the Coordinator's e-mail, that communication did not unequivocally indicate that the project participants were entitled to charge (and keep) a daily rate of EUR 400 per day per investor. The Coordinator stated the following: "Therefore we consider this enough to use this as a basis for the claiming this amount against investors time. This is exactly why we objected to those organisations which tried to charge more than €400 for their investors times (event though we know that their time is worth more than that)." Therefore, the Ombudsman takes the view that this e-mail may be interpreted as indicating that the project participants could claim reimbursement from the Commission up to an amount of EUR 400 per day per investor, without facing any objections by the Commission. However, this statement did not suggest that these costs did not need to be actually incurred by the project participant.

34. Therefore, the Ombudsman considers that the Coordinator did not instruct the complainant to charge a daily rate of EUR 400 per day per investor, which the complainant would be able to keep, even in the absence of any evidence that it incurred actual costs for that amount.

35. The Ombudsman agrees with the Commission's view that, in case it has to claim reimbursement of sums unduly paid, this request must be addressed to the beneficiary of the sums in question, in the present case, the complainant. This results from Article II.31.1 of the General Conditions, which establishes that "[i]f any amount is unduly paid to the contractor or if recovery is justified under the terms of the contract, the contractor undertakes to repay the Commission the sum in question on whatever terms and by whatever date it may specify".

36. In view of the foregoing, the first allegation should be rejected as unfounded.

B. Allegation of discrimination and related claim

Arguments presented to the Ombudsman

37. In its complaint, the complainant alleged that the Commission infringed the principle of equal treatment by failing to claim reimbursement from all the participants to the project. It added subsequently that the Commission also infringed the principle of equal treatment by requesting interest for late payment only from some participants to the project. In its observations, the complainant further indicated that the Commission should claim reimbursement (if at all) at the same time from all the participants to the project and without requesting interest for late payment.

38. In its opinion, the Commission indicated that it decided to carry out audits in relation to four participants to the project. Since the audits revealed a systemic problem concerning the costs for the participation of third party investors, the Commission started desk checks of the costs claimed by the other participants that were not covered by the audit. The Commission further suggested that it would also claim reimbursement from the other participants if the review of the costs they claimed was "negative".

The Ombudsman's assessment

39. As a preliminary matter, the Ombudsman recalls that the Court of Justice has consistently held that the general principle of equal treatment requires comparable situations not to be treated differently and different situations not to be treated alike, unless such treatment is objectively justified.[5]

40. The Ombudsman considers that, in principle, all the participants to the project appear to be in a comparable situation for the purposes of the present case. However, the Ombudsman does not agree with the complainant's argument that the Commission infringed the principle of equal treatment.

41. First, the Ombudsman notes that the fact that the Commission decides to carry out audits in relation to certain participants to a project does not necessarily oblige it to carry out audits on all the other participants.

42. Second, it appears that, after the audits performed revealed a systemic problem concerning the costs claimed for the participation of third party investors, the Commission decided internally to review the costs claimed by the participants to the project which were not covered by the audits. Moreover, the Commission has suggested that it will claim reimbursement from the other participants if the outcome of this review is "negative".

43. Therefore, the Ombudsman considers that the Commission did not infringe the principle of equal treatment by claiming reimbursement from certain participants to the project.

44. Thus, the Ombudsman concludes that the second allegation should be rejected as unfounded.

45. In view of the fact that the two allegations put forward in the present case should be rejected, the Ombudsman concludes that the claim that the Commission should withdraw its reimbursement request against the complainant should equally be rejected.

46. Finally, as regards the complainant's additional claim that the Commission infringed the principle of equal treatment by claiming interest for late payment from those participants that failed to comply with its request for reimbursement, it should be noted that the issue of interest for late payment is not part of the Ombudsman's inquiry. Moreover, in view of the Ombudsman's conclusions in relation to the underlying complaint, there are no grounds to take the issue of interest up for inquiry.

C. Conclusion

On the basis of his inquiry into this complaint, the Ombudsman closes it with the following conclusion:

No maladministration has been found.

The complainant and the Commission will be informed of this decision.

 

P. Nikiforos Diamandouros

Done in Strasbourg on 26 June 2012

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[1] Pursuant to Article II.21 of the Framework Contract, indirect costs are those "which cannot be identified by the contractor as being directly attributed to the project but which can be identified and justified by its accounting system as being incurred in direct relationship with the eligible direct costs attributed to the project".

[2] In particular, Article 1(2) of the Framework Contract, which states as follows: "The consortium is composed of the contractor acting as coordinator and the following legal entities, who shall accede to the contract in accordance with the procedure referred to in Article 2, as contractors assuming the rights and obligations established by the contract with effect from the date on which it enters into force". Moreover, this provision listed the names of the participants to the project, including the complainant.

[3] Article 12(1) of the Consortium Agreement concluded between the Coordinator and the complainant explicitly indicates that the Framework Contract and its work programme are an integral part of the Consortium Agreement. The Consortium Agreement further establishes that the members of the consortium, such as the complainant, had to charge their fees and expenses in accordance with the Framework Contract and the indicative table of estimated eligible costs (Article 5(2) of the Consortium Agreement).

[4] Article II.19 of the General Conditions.

[5] See, for instance, Case C-133/09, József Uzonyi v Mezogazdasági és Vidékfejlesztési Hivatal Központi Szerve, judgment of 30 September 2010, not yet published in the ECR, paragraph 31.