Dear Mr D.,

On 9 November 1999 you made a complaint to the European Ombudsman on behalf of the MEDEA Institute concerning the late payment of a subsidy for the year 1998 amounting to € 48.679.

On 18 November 1999, I forwarded the complaint to the President of the European Commission.

By letters of 7 December 1999 and 5 January 2000, you raised a new allegation stating that the Commission seemed to have penalised you for having lodged a complaint with the Ombudsman. By letter of 6 January 2000, I forwarded your letters to President of the Commission and asked the Commission to submit a comment on it by 29 February 2000. I observed that, if the allegation would be true, it would constitute a flagrant violation of the principles of good administration. I therefore asked the Commission to clarify immediately whether the relevant Commission services had penalised a complainant for exercising his right under the Treaty to complain to the Ombudsman.

By letter of 18 January 2000 I also informed the Vice-President of the Commission, Mrs LOYOLA DE PALACIO, of your new allegation. Mrs LOYOLA DE PALACIO replied on 3 February 2000 that the Commission would immediately investigate whether this allegation was true.

By letter of 21 January 2000, you informed me that, since my letter of 6 January 2000, your contacts with the Commission services had significantly improved. The Commission sent its opinion on 6 March 2000 and I forwarded it to you with an invitation to make observations, if you so wished. On 29 May 2000, I received your observations on the Commission's opinion.

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

THE COMPLAINT

According to the complainant, the relevant facts were as follows:

The complainant is the Director General of the MEDEA Institute (European Institute for Research on Mediterranean and Euro-Arab Co-operation) which has annual subsidy contracts with the Commission (DG I-B, External Relations) for its activities.

Problems started when the third contract (March 1998-March 1999) did not get signed. In November 1998, MEDEA presented its financial accounts to DG I-B for the previous contracts. The financial controller of DG I-B carried out an audit on these accounts in January 1999. The Commission auditor was not pleased with the accounts presented and the transfer of funds to MEDEA was blocked until the end of the audit. A new contract was finally signed on 15 July 1999.

The final audit report was notified to the complainant on 30 September 1999 and concluded that € 48.679 would be paid to MEDEA (recovery from MEDEA for the 1996 and 1997 subsidies, compensated by the 1998 subsidy amount still to be paid) as soon as MEDEA approved the conclusions of the audit.

On 8 October 1999, MEDEA wrote to DG I-B, asking for some changes on two points in the audit. These were rejected by the Commission in its letter of 22 October 1999. MEDEA then accepted the Commission’s position by letter of 22 October 1999.

On 29 October 1999, the Commission however informed MEDEA that the amount of € 48.679 would be paid in two separate payments of € 26.879 (to be paid immediately) and € 21.800. The second payment, corresponding to the costs of the realisation of a book/study on Egyptian Law (in the framework of the 1997 activities) would be paid only after the finalisation of this work, for which the deadline was end 1999.

In his complaint to the Ombudsman the complainant therefore alleged that, as decided in the letter of 30 September 1999, DG I-B of the Commission should pay the entire amount of the subsidy of € 48.679 and not only the first part of € 26.879 as decided in the later letter of 29 October 1999.

In his letters of 7 December 1999 and 5 January 2000 to the Ombudsman, the complainant made a second allegation. He observed that, as a result of his complaint to the Ombudsman, the relevant services of the Commission had penalised MEDEA by refusing further discussions not only as regards the payments which are the subject of the complaint, but also as regards the work programme for the year 2000. The complainant also indicated that on 5 January 2000 the book/study on Egyptian Law would be handed over to the Commission.

THE INQUIRY

The Commission's opinion

In its opinion, the Commission observed that since 1996 MEDEA receives an annual subsidy to finance its costs. The payments are split into an advance payment and a final payment. The final payment is only made after the checking of the justification documents concerning the costs made by the beneficiary for the year in question. Unable to determine the exact amount of the costs eligible for the 1996 and 1997 subsidies because of the lack of accuracy and precision of the costs presented by the complainant, the financial manager decided at the end of 1998 to audit the subsidies for 1996 and 1997.

The audit report of 20 May 1999 concluded that there was bad management of community funds and fixed the amounts to be recuperated (€ 97.928 for 1996 and € 37.022 for 1997). These amounts were contested by the complainant.

During the months of June and July 1999 meetings between the complainant, the audit service and the former DG I-B were organised in order to allow the complainant to present new pieces and supplementary financial documents justifying the costs declared and to clarify the points raised in the audit. However, given that the complainant could not provide the necessary justifications to establish the accuracy of the financial information transmitted, the definitive conclusions of the audit fixed the amounts of undue payments for the 1996 subsidy (€ 91.794) and the 1997 subsidy (€ 13.460).

In the meantime it was decided to proceed with prudence and to pay only part of the 1998 subsidy to MEDEA. The 1999 subsidy contract was however signed on 19 July 1999 and an advance of 80 % was paid to MEDEA in July so that it could continue to function. As regards the perspectives for 2000, the Commission had included in its pre draft budget a sum of € 200.000 for MEDEA which was confirmed by the Council and the European Parliament. The complainant's request for subsidy would be dealt with according to normal budgetary procedures.

Moreover, the audit report established that the amount of € 21.600, declared for the carrying out of a study on Egyptian law as part of the 1997 activity programme which was still not finished by the end of July 1999, should be recuperated. The complainant having indicated that the work was just about to be finished, DG I-B intervened in order not to recuperate immediately this sum and to grant a supplementary lapse of time for the finalisation of the study until the end of 1999.

The definitive conclusions of the audit and the proposal of compensation of the undue amounts of 1996 and 1997 with the 1998 subsidy were communicated to the complainant on 30 September 1999 after the consultation of the financial controller. The complainant having contested certain points of the definitive conclusions, an exchange of correspondence took place in October 1999.

As regards the book/study on Egyptian law, the Commission informed MEDEA by letter of 29 November 1999 that it would proceed with the payment of € 11.000 but that the amount of € 10.800 would only be paid when the work was finalised. The Commission services consider that a certain financial prudence has to be applied before paying the entire amount of a work which had to be handed over by end 1998. On 5 January 2000 the work was handed over to the Commission, but after verification it appeared that it was not in conformity with the specifications of the contract. Consequently the Commission was not able make the final payment. The complainant was informed by letter of 19 January 2000.

As regards the second allegation, the Commission observed that it never penalised MEDEA because of the complaint to the Ombudsman. A meeting with the complainant was indeed cancelled in December 1999. This decision was taken in order to respect the complaint procedure started by the complainant (the text of the complaint has still not arrived at the responsible services). Once the complaint had been analysed, the contacts with MEDEA were taken up again on 4 January 2000 and the complainant was received on 5 January 2000, i.e. one day before the sending of the second complaint to the President of the Commission. During this meeting a second meeting was planned for 13 January 2000 in order to discuss the activity programme for 2000. The Commission added that the draft 2000 activity programme and the 1999 activity report were officially handed over to the Commission only on 12 January 2000. During this meeting the Commission asked the complainant to make some modifications to the activity programme. Once those modifications would be received and accepted, the Commission services would sign the 2000 subsidy, in conformity with the applicable procedures.

The complainant's observations

In his observations the complainant observed that MEDEA had been credited by the Commission with € 10.800 corresponding to the outstanding amount which was due for the realisation of the work on Egyptian law. The complainant thanked the Ombudsman for his help in this case.

As regards the allegation that he would have been penalised for having complained to the Ombudsman, the complainant observed in his letter of 21 January 2000 that, since the Ombudsman's letter of 6 January 2000, his relations with the Commission services had significantly improved. He stated that on 13 January 2000 he could present the work programme of MEDEA for the year 2000 to the Head of Unit of the DG Relex and that the Commission had given assurances that the difficulties were on their way to be solved.

THE DECISION

1 The alleged non-payment of the outstanding part of the subsidy

1.1 The complainant alleged that, as decided in the letter of 30 September 1999, DG I-B of the Commission should pay the entire amount of the subsidy of € 48.679 and not only the first part of € 26.879 as decided in the later letter of 29 October 1999. The complainant thus claimed that the Commission should also pay the outstanding amount of € 21.800 corresponding to the costs of the work on Egyptian law. The Commission observed that it would proceed with the payment of € 11.000, but that the amount of € 10.800 would only be paid when the work was finalised. However, after verification it appeared that it was not in conformity with the contract specifications. The Commission could therefore not proceed with the payment.

1.2 The Ombudsman notes that, as it appears from the Commission's opinion, the reason why the Commission did not pay immediately the amount corresponding to the costs of the work on Egyptian law was that the complainant had not finalised this work by the dead-line which was initially foreseen for the end of July 1999. After having first indicated that this amount should be recuperated, the Commission finally agreed to grant a supplementary lapse of time to the complainant for the finalisation of the work until the end of 1999. The work was finally handed over to the Commission on 5 January 2000.

1.3 In November 1999, the Commission informed the complainant that it would already pay the first part of € 11.000. However, given that the final work was not in conformity with the contract specifications, the Commission refused to pay that outstanding amount of € 10.800.

1.4 However, in May 2000, the complainant informed the Ombudsman that the Commission had finally proceeded with the payment of the outstanding € 10.800 and thanked him for his help in this matter. The Ombudsman therefore considers that with regard to this aspect of the case, the Commission has taken steps to settle the matter to the satisfaction of the complainant.

2 The alleged penalisation because of the lodging of a complaint

2.1 The complainant alleged that, as a result of his complaint to the Ombudsman, the relevant services of the Commission had penalised MEDEA by refusing further discussions not only as regards the payments which are the subject of the complaint, but also as regards the work programme for the year 2000.

2.2 The Commission stated that it had never penalised the complainant because of the complaint to the Ombudsman. The Commission indicated that a meeting with the complainant had been cancelled in December 1999 in order to respect the complaint procedure started by the complainant, and given that the text of the complaint had still not arrived at the responsible services. However, the Commission afterwards received the complainant on 5 January 2000, as well as on 13 January 2000 to discuss the activity programme for 2000. Moreover, on 21 January 2000, the complainant informed the Ombudsman that since the Ombudsman's letter of 6 January 2000 to President Prodi, his relations with the Commission services had significantly improved.

2.3 On basis of the above considerations, the Ombudsman found that with regard to this aspect of the case, the Commission has taken steps to settle the matter to the satisfaction of the complainant.

3 Conclusion

It appears from the European Commission's comments and the complainant's observations that the Commission has taken steps to settle the matter and has thereby satisfied the complainant. The Ombudsman has therefore decided to close the case.

 

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

Yours sincerely,

 

Jacob SÖDERMAN