Strasbourg, 22 November 2007

Dear Mr X,

On 5 March 2006, acting on behalf of the other members of the Board of Directors of the Foundation "Paul Finet”, you submitted a complaint to the European Ombudsman, against the European Commission. Your complaint concerned the request of the Directors to convene the statutory meeting of the Foundation’s Board of Directors.

On 11 April 2006, I forwarded the complaint to the President of the European Commission.

On 5 July 2006, the Commission asked for an extension of the deadline for the submission of its opinion until 30 September 2006.

By letter of 10 July 2006, I decided to grant the Commission’s request. I informed you accordingly by letter of the same day.

The Commission sent its opinion on 9 November 2006. On 14 November 2006, I forwarded it to you with an invitation to make observations, which you sent on 21 December 2006.

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, in summary, as follows:

Background: complaint 1231/2004/MF

The complainant is a member of the Board of Directors of the Foundation "Paul Finet" (hereinafter the “Foundation”) located in Luxembourg. He states that he lodged the complaint on behalf of the other members of the Board of Directors of the Foundation.

The Foundation’s aim is to subsidise higher education for orphans of workers of the European Coal and Steel Community (“ECSC”) company, who were victims of industrial accidents or died as a consequence of an occupational disease.

Pursuant to the Statute of the Foundation, the Commissioner for Social affairs (at the time of the facts described in the complaint, Ms Diamantopoulou) is the President of the Foundation and chairs the Board of Directors of the Foundation, which is composed of officials of the Commission.

On 11 April 2002, the complainant wrote to the Commissioner Diamantopoulou asking for her point of view on the future of the Foundation.

On 5 April 2004, the members of the Board of Directors were informed that the Commission had decided to eliminate a post of secretary in the Foundation. In the complainant's view, this measure prevented the Foundation from working efficiently.

On 27 April 2004, the complainant lodged a first complaint (ref. 1231/2004/MF) with the Ombudsman in which he alleged that the Commission had unfairly decided to eliminate a post of secretary in the Foundation.

On 9 June 2004, given that the complainant appeared not to have made the appropriate prior administrative approaches with the Commission as regards the object of his complaint, the Ombudsman informed him that his complaint was inadmissible on the basis of Article 2(4) of his Statute. The Ombudsman advised the complainant to contact Directorate-General (“DG”) "Employment and Social Affairs" of the Commission and to renew his complaint with the Ombudsman if he should not receive a satisfactory reply from the Commission within a reasonable time.

Present complaint 712/2006/MF

On 5 March 2006, the complainant sent a further letter to the Ombudsman, which, in view of its content, was registered as a new complaint under reference 712/2006/MF.

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

On 16 June 2004, he wrote to DG "Employment and Social Affairs" of the Commission in order to ask it to clarify the situation as regards the Foundation and to take the necessary measures to allow the Foundation to continue to operate.

On 30 June 2004, the Commission informed the complainant that the management of the Secretariat of the Foundation fell within the competence of the Office of management and settlement of Individuals Rights, Mr Kinnock being the Commissioner in charge at the time.

On 8 August 2004, the complainant wrote to Mr Kinnock in order to ask him to convene the statutory meeting of the Board of Directors of the Foundation. On the same day, he sent an identical letter to the Deputy Secretary-General of the Commission and to the Commissioner for Employment and Social affairs, at the time Mr Dimas.

On 23 November 2004, the complainant wrote to the Commissioner for Employment, Social Affairs and Equal opportunities, Mr Spidla, in order to ask him to convene the statutory meeting of the Board of Directors of the Foundation.

On 12 December 2004, the incumbent Commissioner for Employment and Social Affairs replied that the relevant services had started to think about the issues raised by the complainant concerning the administrative functioning and the financing of the Foundation. The Commissioner further informed the complainant that a solution would be found for the future of the Foundation.

On 1 September 2005, an interview was organised between the complainant and one of the members of the Cabinet of the Commissioner Mr. Spidla.

On 27 January 2006, the complainant was informed by the Cabinet of Commissioner Spidla that, on the occasion of a meeting between Commissioner Spidla and Commissioner Mr Kallas, the need to find transitional measures for the Foundation had been raised. In the complainant's view, this issue has been pending before the Commission for two years.

In view of the enclosures submitted by the complainant with his complaint, the Ombudsman understood that the complainant submitted the following allegation and claim:

The complainant alleged that the Commission had refused to follow up the request of the Directors of the Foundation to convene the statutory meeting of its Board of Directors. The complainant claimed that the Commission should take the necessary measures to ensure that the Foundation can continue to operate.

THE INQUIRY

The Commission's opinion

The opinion of the European Commission on the complaint was, in summary, as follow:

Historical background

The Foundation “Paul Finet” was created by the High Authority of the European Coal and Steel Community (“ECSC”) in 1965. The Statutes of the Foundation were drawn up on 30 June 1965 and were amended on 25 May 1967, 16 March 1972, 6 February 1975 and 17 March 1988 respectively.

The Foundation is recognised as an "institution of public utility" and is governed by Luxembourg Law of 21 April 1928 concerning Associations and non-profit-making foundations, and more particularly, Title II of the Law on foundations.

Under its statutes, the Foundation has a Board of Directors made up of twenty-two members, at least eleven of whom must be officials or former officials of the European Commission. The Presidency is allocated automatically to the Commissioner in charge of social affairs. The role of the Board of Directors is to manage the business of the Foundation and to carry out all administrative acts. In order to facilitate its role, the Board is assisted by an Executive Committee to whom the everyday management of administration (“administration courante”) of the Foundation has been delegated. This Executive Committee is composed of thirteen members elected by the Board of Directors.

The income of the Foundation consists of voluntary gifts and subsidies, in particular from the Commission, and income from the Foundation's own resources. Until 2003, the Commission granted the Foundation aid, amounting to EUR 220 000 annually, from the budgetary line entitled "Help to the victims of disasters of the coal and steel sector and aid for the orphans". A further amount of approximately EUR 10 000 was granted from budgetary line "Other Commissions functioning under the ECSC". This aid aimed to cover expenses related to statutory meetings.

Until the end of 2003, the administrative management of the Foundation was ensured by a succession of several Commission services. Given that the Foundation did not have its own staff or premises, up to two members of the Commission’s staff were put at the Foundation’s disposal.

The expiry of the ECSC Treaty in July 2002 and the entry into force of the new Financial Regulation led the Commission to reconsider the appropriateness of its participation in the Foundation. It has to be pointed out that these considerations took place in a wider context, which led to a Commission decision(1) concerning its participation, in general, in bodies governed by private law.

After having consulted its relevant services, the Commission decided to cease making certain members of its staff available to the Foundation and to review the assignment of a budget line to the Foundation.

The Commission further stated that the lack of a legal basis for assisting the Foundation, which resulted from the expiry of the ECSC Treaty in July 2002, led its services to conclude that, when drawing-up of the budget 2004, the renewal of the budget line referred to above need not be envisaged. These decisions were communicated in good time to the Foundation in the context of statutory meetings. In particular, these decisions were due, on the one hand, to the decrease in the quantity of aid granted each year, and on the other hand, to the increase of the Foundation’s own resources, which, in 2003, amounted to EUR 972 668.15. It was calculated that these resources would make it possible to cover six years of activity without making use of new Community subsidies.

As regards the substance of the complainant’s allegation and claim

As regards the complainant’s allegation that the Commission had refused to follow up the request of the Directors of the Foundation to convene the statutory meeting of the Board of Directors, the Commission stated that the internal rules of procedure of the Foundation’s Board of Directors established that the Board of Directors "is convened by its President, or in the event where he is unavailable, by the administrator required to chair the meeting according to Article 3 below”.

Nevertheless, Article 1 of the internal rules of procedure(2) further stipulates that the Board of Directors can also be convened if a request is made by at least seven administrators.

The Commission stated that the resignation of three of the members of the Board of Directors, who were all officials in office at the Commission in March 2004, did not prevent administrators from convening, on their own initiative, a meeting of the Board of Directors.

As regards the complainant’s claim that the Commission should take the necessary measures to ensure that the Foundation can continue to operate, the Commission stated that, pursuant to the Foundation’s Statutes, it was under no obligation to do so.

As regards the secondment of staff, the fact that several staff members of the Commission were, in the past, put at the Foundation’s disposal, with a view to ensuring the everyday management (“administration courante”) of the Foundation, the Commission pointed out that this practice only resulted from its goodwill.

As a conclusion, the Commission underlined that it was aware that the Statutes of this Foundation, which had remained unchanged since 1988, were no longer appropriate. The Commission already informed the Foundation of its intention to find a final and overall solution. This had yet to be defined by the still serving members of the Board of Directors. In this context, the Commission has initiated the necessary steps to remedy this situation to the satisfaction of all the parties concerned.

The complainant's observations

In his reply, the complainant maintained his complaint and made, in summary, the following further comments;

The Commission’s decision of 4 August 2004 had not been forwarded to the Members of the Board of Directors of the Foundation.

As regards the issue of the legal basis for the Commission’s participation in the management of the Foundation, the complainant stated that the Commission’s decision of 4 August 2004 allowed for the possibility that the Commission put an end to its participation to the Foundation. It did not imply that the Commission was obliged to do so.

THE DECISION

1 The Commission’s alleged refusal to follow up on the request of the Directors of the Foundation "Paul Finet" to convene the statutory meeting of its Board of Directors

1.1 The complainant is a member of the Board of Directors of the Foundation "Paul Finet" (the “Foundation”). The aim of the Foundation is to subsidise higher education for orphans of workers of the European Coal and Steel Community (“ECSC”) company who were victims of industrial accidents or died as a consequence of an occupational disease. Pursuant to the Foundation’s Statutes, the Commissioner for Social affairs is the President of the Foundation and has to chair its Board of Directors. On 5 April 2004, the members of the Board of Directors were informed that the Commission had decided to cease to second a secretary to the Foundation. In the complainant's view, this prevented the Foundation from working efficiently. The complainant requested the Commission to take the necessary measures that would allow the Foundation to continue to operate, namely, to convene the statutory meeting of its Board of Directors. In his complaint to the Ombudsman, the complainant alleged that the Commission had refused to follow up on the request of the Directors of the Foundation to convene the statutory meeting of its Board of Directors.

1.2 In its opinion, the Commission stated that it was not obliged to convene a meeting of the Board of Directors. In any event, nothing prevents the other members of the Board of Directors, provided they meet the requirements for a necessary quorum, from convening meeting of the Board of Directors.

1.3 As a preliminary remark, the Ombudsman would like to point out that the Statutes of the Foundation, as well as the internal rules of procedures of the Foundation’s Board of Directors, are provisions of private law, rather than provisions of public law. Nevertheless, the Ombudsman is of the view that the Commission should nonetheless act in accordance with principles of good administration in all its spheres of activity, including in its role within the Foundation.

1.4 The Ombudsman notes that Article 1 of the internal rules of procedures of the Foundation’s Board of Directors states the following:

“[t]he Board of Directors is convened by its President or, in case he should be unavailable, by the administrator required to preside the meeting (…).

It is also convened upon request of at least seven administrators.

The Board of Directors is convened at least once a year (…)”(3)

1.5 It therefore emerges that, in order to comply with the internal rules of procedures of the Foundation’s Board of Directors, the Board of Directors must be convened at least once a year. The President of the Board of Governors, that is, the Commissioner for Social Affairs, should convene the meeting when he considers it appropriate. However, the Ombudsman notes that there is no strict obligation that the President should convene the Board of Directors at a precise moment, given that a certain number of the other members of the Board of Directors may also convene the meeting.

1.6 The Ombudsman notes that while there is no strict obligation in the rules of procedure for the Commission to convene the Board of Directors at a certain moment, it remains to be examined whether principles of good administration would have required the Commission to exercise its prerogative to convene the Board of Directors as requested by the complainant.

1.7 The Ombudsman notes that the Commission has stated in its opinion that it has reconsidered the appropriateness of its participation in the Foundation in the broader context of a review of its participation in bodies governed by private law. The Ombudsman also notes that the Commission has observed that its financial contribution to the Foundation is no longer justified in light of the expiry of the ECSC Treaty in July 2002, the diminished role of the Foundation and the fact that the Foundation has significant resources of its own. In view of these developments, which would appear to call into question the continued use of public resources to manage and fund the Foundation, it would appear to be in accordance with principles of good administration for the Commission to use its prerogative to convene the Board of Directors in order to deal with the future of the Foundation and, specifically, to deal with the Commission's future participation in the Foundation.

1.8 The Ombudsman notes, however, that the Commission already informed the Foundation of its intention to find a final and overall solution. This had yet to be defined by the still serving members of the Board of Directors. In this context, the Commission has initiated the necessary steps to remedy this situation. The Ombudsman presumes that these steps will necessarily involve convening the Board of Directors once the overall solution for the Commission's participation has been decided upon.

1.9 In light of this development, the Ombudsman concludes that no further inquiries are necessary as regards the complainant’s allegation.

2 The complainant's claim

2.1 The complainant claimed that the Commission should take the necessary measures to ensure that the Foundation can continue to operate.

2.2 In its opinion, the Commission stated that it was under no obligation to guarantee the proper functioning of the Foundation.

2.3 The Ombudsman notes that that it emerges from Article 4 of the Foundation’s Statutes that “[t]he administration of the Foundation is attributed to a Board of Directors made up of twenty-two members, whose eleven at least have to be officials or former officials of the European Commission. The Presidency is allocated automatically to the member of the Commission particularly in charge, within the College, of social affairs”(4).

The Ombudsman further notes that Article 5 of the said Statutes provides that “[t]he Board of Directors enjoys the widest powers to manage the Foundation’s businesses [sic], and to carry out all the administrative acts concerning its object”.

The Ombudsman notes that it emerges from the above that the Commission obviously has an important role to play in the Foundation, given that it presides over the Foundation and that half of the Members of the Foundation’s Board of Directors have to be officials or former officials of the Commission. However, the Ombudsman did not found any provision in the Foundation’s Statute or in its internal rules of procedures that would oblige the Commission as an institution to ensure that the Foundation continues to operate.

In particular, the Ombudsman notes that no provision in the Foundation’s Statute or in the internal rules of procedure compelled the Commission to put a member of its staff, in this case, a secretary, at the Foundation’s disposal.

2.4 In light of the above, the Ombudsman concludes that the complainant’s claim cannot be sustained.

3 Conclusion

On the basis of the Ombudsman's inquiries into this complaint, no further inquiries are necessary as regards the complainant’s allegation and that the complainant's claim cannot be sustained. The Ombudsman therefore closes the case.

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

Yours sincerely,

 

P. Nikiforos DIAMANDOUROS

---

(1) Decision C (2004) of 4 August 2004 of the European Commission on the new lines of conduct of its participation in bodies of private law.

(2) In French, in the original text: « Règlement d’ordre intérieur du Conseil d’Administration de la Fondation Paul Finet arrêté par le Conseil d’Administration du 14 novembre 1966, modifié le 30 juin 1972, le 4 janvier 1975 et le 19 janvier 1989 ».

(3) Translation from the original French version.

(4) Translation from the original French version.