Dear Mr W.,
On 25 March 1998, you complained to the European Ombudsman on behalf of your client ("the complainant") concerning the European Commission's evaluation of its applications for financial assistance.
On 12 May 1998, I forwarded the complaint to the President of the European Commission. On 13 August 1998 you sent further information to the Ombudsman. By letter of 31 August 1998, I received the opinion of the Commission. I forwarded it to you with an invitation to make observations, which I received on 30 October 1998. On 24 January and 16 March 1999, you sent two letters to the Ombudsman. By letter of 14 June 1999, I wrote to the President of the European Commission asking for a second opinion on your complaint and requesting an inspection of the file. The inspection of the file took place on 19 July 1999. On 3 August 1999, I received the Commission's second opinion and I forwarded it to you with an invitation to make observations, which I received on 3 November 1999. I received further letters from you on 6 December 1999, 21 February, 14 March and 14 June 2000.
On 10 and 21 July 1998, 28 September, 6, 11 and 12 October 1999, 2 and 3 February and on 8 May 2000, I received letters from the complainant.
I am writing now to let you know the results of the inquiries that have been made.

THE COMPLAINT

The complainant is a German NGO supporting refugees, war victims and handicapped persons. The complainant made five applications to DG VIII/B.2 for financial assistance with regards to projects in Zaire, Ethiopia and Zimbabwe. At the date of the complaint, the Commission had rejected four of the applications and its decision on the remaining project was pending almost 15 months.
The complainant alleged that the Commission:

(i) failed to evaluate its applications properly as the evaluation was based on information provided by only one source, the German Social Institute for Social Questions (Deutsches Sozialinstitut für soziale Fragen, hereafter DZI), a private foundation which had given incorrect information on the complainant;

(ii) at no time gave it sufficient opportunity to explain its views on its eligibility for funding, and denied it full access to its file;

(iii) failed to provide clear and consistent reasoning for the rejection of four of its projects;

(iv) had unduly delayed its decision on the fifth project.

THE INQUIRY

The Commission's opinion
In its opinion, the Commission stated the following, in summary:
The Commission evaluated the complainant's applications for financial aid in accordance with the eligibility criteria set up by the General Conditions for the co-financing of projects executed by NGO's in developing countries (hereafter General Conditions).
Among the information that has to be provided by the applicants are figures about the organisation itself and the project proposed. In the present case, the Commission came to the conclusion that the organisation itself was not eligible for funding. The Commission pointed out that it gave clear explanation for its decision to the complainant by letter of 29 July 1996.
As regards the Commission's contacts with the DZI, the Commission stated that in the course of the evaluation of the information provided by the complainant, it contacted the DZI in order to verify a piece of information provided by the complainant in its letter of application to the Commission of 10 March 1993. In this letter, the complainant had stated that it was a certified charitable organisation recommended by the DZI. The DZI informed the Commission by letter of 1 September 1993, that this statement was not correct. It therefore concerned the rectifying of a false statement made by the complainant.
The complainant received a list of all documents which were part of the application procedure with the exception of those documents which related to internal deliberations in the Commission and those originating from third countries.
As regards the alleged delay, the Commission stated that the complainant's applications were dealt with in the same way and as rapidly as the applications of other NGO's. Concerning the fifth application which was submitted in December 1996, the Commission has asked for further information which it subsequently received.
The complainants' observations
In his observations the complainant maintained the complaint.
In relation to the evaluation of the complainant by the DZI, the complainant put forward that the remark made in its letter was based on a legally correct interpretation of the following appraisal made by the DZI in writing : "In principle, we consider the work of the organisation [the complainant] since it has been re-founded, to be a sensible one". The statement made to the Commission was therefore made in line with the DZI's statements.
The Commission is obliged to verify the eligibility of the applying organisation for every new application. This appeared not to have happened. The complainant pointed out that the Regional Tax Office of Friedberg (Hessen), as the competent tax authority, has held and confirmed that the complainant is a charitable and non-profit making organisation fully acknowledged by German tax law and enjoys all tax concessions in favour of such an organisation. The inspection of this tax authority encompassed the four year-period from 1992 to 1995 in which the Commission evaluated the complainant's projects.
The complainant further stated that it did not have access to all the documents concerning the file. Access was only granted to a limited number of documents. It is of the opinion that an inspection of the entire Commission file would be necessary to prove the misconduct of DG VIII/B.2.
The complainant re-iterated the Commission's obligation to provide clear and sufficient reasons for the rejection of an application. Whereas the rejection of one application of 1 October 1992 was based on the lack of qualification of the project itself, the financial assistance for two other projects was denied because the applicant did not fulfil the requirements for the eligibility of a NGO. Further explanations were not provided by the Commission. The grounds for this analysis were not disclosed until 29 July 1996, i.e. almost three years after the denial. A fourth application of 19 June 1995 was refused on the grounds that the suggested project was not sufficiently important. No further explanations were given.
The complainant stated that it can be assumed that - at least in the last case - the application was not rejected on the basis that the organisation itself was not eligible for financial assistance.
The Commission's replies were insufficiently substantiated and furthermore, contradictory and misleading. Therefore, the Commission has violated its obligation as required by Article 253 EC-Treaty (former Article 190).
As regards the alleged delay, the complainant stated that it remained unclear why the Commission cannot decide on the fifth application which is pending since 9 December 1996. The complainant also mentioned a sixth application that was pending since 3 September 1997.

FURTHER INQUIRIES

After a careful examination of the Commission's opinion and the complainant's observations thereon, the European Ombudsman addressed the European Commission to obtain more detailed information on the procedures followed by the Commission. In particular, the Ombudsman addressed the following question to the Commission: "on what information did the Commission base its evaluation of the complainant's applications, in particular as regards its quality as NGO?"
Furthermore, the Ombudsman asked to inspect the Commission's file on the case in order to establish exactly what material it contained.
The inspection of the file
The inspection of the file was carried out by the Ombudsman's services on 19 July 1999.
Amongst other documents apparently unrelated to the case, the file contained the Commission's correspondence with the complainant and with other aid organisations in Germany. It further contained internal notes on the assessment carried out by the official concerned. The Commission noted that it did not consider the organisation eligible for funding. It stated that it based its evaluation on different pieces of information which it received though written and oral contacts, and it named these sources.
The correspondence from the Commission to the complainant indicated that the rejection of the complainant's application of 1 October 1992 was based on the lack of qualification of the project itself. The financial assistance for two other projects of 14 July 1992 and of 30 October 1992 was denied on the ground that the applicant did not fulfil the requirements for the eligibility of a NGO. A fourth application of 19 June 1995 was refused on the grounds that the suggested project was not sufficiently important. No further explanations were provided by the Commission. In a letter dated 29 July 1996, i.e. almost three years after the rejection of the first applications, the Commission informed the complainant that it was considered to be ineligible for funding as an organisation.
The Commission's second opinion
In its second opinion, the Commission stated that there is no automatic right to receive financial assistance.
Concerning the evaluation of the complainant's quality as NGO, it appears from the file very clearly, that on the basis of the information provided the complainant could not be considered eligible for funding. For verification and completion purposes, the service concerned had to compare the provided data with those held by other bodies, in particular the DZI and the 'Plattform deutscher NRO.'
The verification led to the following results: The administrative capacities of the NGO were insufficient as the operational costs lay at 37.7 %. Furthermore, the complainant was for years only the German arm of a bigger American NGO, the Inter Aid International, and it therefore did not have any administrative capacities of its own. The complainant never submitted any proof of its functional and financial independence from the parent NGO in the United States. The transparency of its structures and activities was further limited by the fact that its director, Dr. Koch, was at the same time the director of another NGO "Welthilfe e.V.". It proved to be impossible to separate the mandate and the budget of these two NGO's. The Commission stated that based on information provided to it, it had reason to believe that the complainant did not only aim to serve as a small NGO in the field of development aid, but that it also aimed to serve profit-making purposes.
Furthermore, the statement in the complainant's letter to the Commission claiming that the DZI considered the complainant eligible for funding proved to be incorrect. With this action the complainant breached the principles of good faith.
In exercising its discretion the Commission adheres to the legal provisions in force, in particular the General Conditions and the Financial Regulations of the EU.
Article 2 paragraph 7 of the General Conditions refers to the aspects of administrative capacities which include the NGO's guarantees for accountable administration and for a low risk of fraud.
According to Articles 2 and 3 of the Financial Regulations, the budgetary means are to be used in accordance with sound financial management […], for this purpose the mobilisation of Community resources must be preceded by an evaluation to ensure that the resultant benefits are in proportion to the resources applied. The Commission insists that it acted in accordance with the provisions in force.
As regards the alleged delay, no decision has yet been taken on the fifth application because the current eligibility of the complainant for funding needs to be addressed.
The complainants' observations
The complainant maintained that it was at all times in line with the rules laid down in the General Conditions, also as regards the amount of the administrative costs of the complainant. Financial aid was actually granted by the Commission to the complainant's application of 1990, at a time when the financial costs of the complainant were much higher than in 1993.
The Commission failed to verify the correctness of its statements through its own analysis or through an independent expert opinion, such as statements from the German tax authorities. The latter was offered to the Commission by the complainant in personal discussions. The former head of unit of DG VIII, Mr. Bernard Ryeland, promised to the complainant during a personal talk to initiate an analysis by an independent accountancy firm, a promise which was not kept.
As regards the alleged delay, the complainant re-iterates that the Commission is obliged to respond to applications in due time. The complainant is not aware of any other NGO which still awaits a decision of a grant for financial aid three years after the formal application.
Finally, the complainant asked the Ombudsman to arrange for a meeting between the complainant and the services of the Commission and the Ombudsman in order to deal with its pending applications. This request is dealt with under point 4.4 of the decision below.

THE DECISION

1 The material considered in the evaluation of the complainant's applications
1.1 The complainant alleged that its applications for financial assistance to the Commission were not evaluated properly, as the evaluation was exclusively based on an opinion provided by the German Social Institute for Social Questions (DZI).
1.2 The Commission stated that it evaluated the complainant's application in accordance with the General Conditions, which included the verification of the information provided by the applicants as regards both the organisation itself and the project proposed. For verification and completion purposes, the service concerned compared the provided data with those held by other bodies, in particular the DZI and the Plattform deutscher NRO.
1.3 The Ombudsman's inspection of the Commission's file revealed that the latter had written and oral contact with several different sources other than the DZI in order to evaluate the complainant's eligibility. The Ombudsman finds therefore, that the allegation that the Commission based its evaluation exclusively on information provided by the DZI, is not correct. Therefore, no maladministration was found concerning this aspect of the case.
2 The right to be heard and access to the file
2.1 The complainant alleges that the Commission did not give it full access to its file and did not hear its views on the question of its eligibility for funding.
2.2 As regards access to the file, the complainant does not appear to have submitted any application for access in accordance with the relevant legal provisions . The Ombudsman therefore deals with this aspect of the complaint only in respect of the right to be heard.
2.3 As regards the four projects for which funding was rejected by the Commission, the evidence available to the Ombudsman is that: (a) the complainant applied for funding; (b) the Commission decided that the complainant is ineligible for funding; (c) this decision adversely affected the interests of the complainant; (d) the Commission informed the complainant of its decision and the reasons for it and; (e) the complainant had the opportunity to contest the decision both orally and in writing. In these circumstances, the Ombudsman finds that there has been no violation of the right to be heard and there is therefore no maladministration in relation to this aspect of the case.
3 The reasoning given to the complainant for the rejection of its applications
3.1 The complainant alleged that the Commission failed to provide clear and consistent reasoning for the rejection of four of its projects.
3.2 The Commission replied that it had provided the complainant with clear reasoning on the rejection of the applications, the reason being that the organisation itself was not eligible for funding.
3.3 The evidence available to the Ombudsman is that the Commission rejected some of the complainant's applications on the grounds that the particular projects were not eligible for financial assistance and others on grounds related to the complainant's eligibility to receive funding. Only at a later stage, some three years after the first application, did the Commission clarify the matter by explaining to the complainant that it is considered to be ineligible as an applying organisation. The Commission has provided no justification for this delay, which appears excessive.
4 Undue delay in dealing with the pending applications
4.1 The complainant alleges that the fact that the Commission has taken no decision on its last two applications, made in 1996 and 1997, constitutes excessive delay.
4.2 The Commission stated that the issue of the complainant's eligibility needs to be clarified before the pending applications can be dealt with.
4.3 Principles of good administrative behaviour require that applicants receive a reply to their applications within a reasonable time. The Commission has not provided any adequate explanation as to why it has been unable to clarify the question of the complainant's current eligibility or ineligibility for funding in order to deal with the complainant's fifth and sixth applications made in 1996 and 1997. This constitutes an instance of maladministration.
4.4 The complainant asked the Ombudsman to arrange for a meeting with the Commission in order to deal with its pending applications. This is not appropriate, since it is for the Commission to deal with applications for funding and to assess the eligibility of projects and organisations.
5 Conclusion
On the basis of the European Ombudsman's inquiries into this complaint, it appears necessary to make the following critical remarks:

1 The evidence available to the Ombudsman is that the Commission rejected some of the complainant's applications on the grounds that the particular projects were not eligible for financial assistance and others on grounds related to the complainant's eligibility to receive funding. Only at a later stage, some three years after the first application, did the Commission clarify the matter by explaining to the complainant that it is considered to be ineligible as an applying organisation. The Commission has provided no justification for this delay, which appears excessive.

2 Principles of good administrative behaviour require that applicants receive a reply to their applications within a reasonable time. The Commission has not provided any adequate explanation as to why it has been unable to clarify the question of the complainant's current eligibility or ineligibility for funding in order to deal with the complainant's fifth and sixth applications made in 1996 and 1997. This constitutes an instance of maladministration.

Given that the above aspects of the case concern procedures relating to specific events in the past, it is not possible to pursue a friendly settlement of the matter. The Ombudsman therefore closes the case.
The President of the European Commission will also be informed of this decision.
Yours sincerely
Jacob SÖDERMAN