Background to the complaint

1. The complainant, an NGO, implemented four EU funded projects in Belarus. The projects, funded under the European Instrument for Democracy and Human Rights, focused on freedom of expression and independent journalism^[1].

2. The Commission audited the complainant’s books and decided that the complainant should repay EUR 8 620. On 8 August 2017, the complainant turned to the Ombudsman to challenge this decision.  

The inquiry

3. The Ombudsman opened an inquiry into the fairness of the Commission’s decision to recover funds.

4. In the course of the inquiry, the Ombudsman received the reply of the Commission on the complaint and, subsequently, the comments of the complainant in response to the Commission's reply.

Arguments presented to the Ombudsman

5. The Commission considered that its decision to recover funds was fully justified and lawful. It provided detailed explanations why it considered different cost items ineligible. In particular, the Commission said that:

•   Regarding bonuses, the complainant failed to prove that they had been granted in a manner ensuring equal treatment of personnel under any project requiring similar expertise regardless of the funding source. Moreover, the bonuses were not included in the project budgets, which suggests that they were granted on discretionary grounds to staff members working on EU projects.
•   Regarding double booking of time on different projects, the Commission said that the activity performed by the relevant staff in a third country was not foreseen in the description of the action. Moreover, the project was to be implemented in Belarus and not in a different country.
•   Regarding fuel expenses, the Commission said that the complainant merely provided receipts from gas stations but failed to provide a list of distances covered, the average consumption of the vehicles used and how the amount that was necessary for the project was calculated. The complainant argued that its activities in Belarus were illegal but did not set out how the related security risk was relevant in this regard.
•   Regarding exchange rates, the Commission said that it had drawn the complainant’s attention to the applicable rules in good time and that the complainant applied exchange rates inconsistently to different contracts.

6. The Commission acknowledged that the complainant had acted in good faith. Nevertheless, some of the costs claimed by the complainant were ineligible in accordance with the relevant rules. As such, the Commission was legally required to recover these costs. The Commission considered that it was not relevant, from a legal perspective, that the projects were implemented successfully in a very difficult environment and that the financial shortcomings may have been minor. The contract is clear and the Commission is required to act in accordance with the law.

7. The complainant disputed the Commission’s assessment. It considered that the Commission’s reply was too rigid and that its recovery claim was disproportionate. The audits were carried out in a way that did not allow the auditors to perform the audits satisfactorily. In the complainant’s view, the Commission applied a ‘zero risk of financial error policy’. The Commission should not seek to recover such small amounts when the organisation in question acted in good faith and disputes the findings. The complainant further contended that the EU guidelines and communication were not always fully clear. The complainant further noted that the resources invested in recovering the funds were disproportionate, bearing in mind the amounts involved. The entire procedure, involving four audits, imposed on the complainant a disproportionate administrative and budgetary burden.

The Ombudsman's assessment

8. The Ombudsman appreciates that the implementation of these projects must have been challenging considering the political context. The Commission also seems to have been satisfied with the outcome. The fact that certain accounting errors were actually made in the Commission’s favour suggests that the complainant acted in a good faith throughout. It also appears that the errors identified were altogether of a relatively minor nature.

9.  The Ombudsman is mindful of the fact that the complainant is a non-governmental organisation with limited resources. Non-governmental organisations face a variety of specific challenges when they implement EU-funded projects and undergo subsequent audits. The four audits arranged several years after the projects had been completed undoubtedly represented a significant administrative burden for the complainant.

10. When taking decisions, EU institutions have to ensure that measures taken are proportionate to the aim pursued. In the case at hand, the Commission’s aim was to guarantee the sound financial management of EU resources. It is quite possible that, in this case, the cost of these audits and the follow-up administrative procedure for the EU exceeded the amount ultimately recovered. However, when the audits started, their outcome was obviously unknown and the auditing concerned the total expenditure, which in this case amounted to EUR 3 307 380^[2]. As such, the Commission’s actions in this case were in line with the principle of proportionality.

11. The Ombudsman further notes that it is not sufficient to show that a project has been carried out in order for the payment of a grant to be justified. Those who benefit from EU grants must produce evidence that the amounts claimed are in fact fully in line with the actual costs incurred and that they comply with all applicable rules. This is essential for the public to trust how EU institutions deal with taxpayer money.

12. The complainant argued that, even if mistakes were made and inaccuracies occurred, this should not result in a recovery of part of the grant.

13. The Ombudsman has thoroughly reviewed all material provided by the parties and was unable to identify any manifest shortcoming in the Commission’s assessment of the individual cost items considered ineligible. The Ombudsman finds that the Commission’s explanations, summarized in paragraph 5 above, are convincing and reasonable.

14. The Ombudsman thus considers that there was no maladministration by the Commission in this case.

Conclusion

Based on the inquiry, the Ombudsman closes this case with the following conclusion:

There was no maladministration.

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

 

Emily O'Reilly
European Ombudsman

Strasbourg, 21/06/2019

[1] Grant Agreements EIDHR/2010/214-845 Media Education for Democracy in Belarus, EIDHR/2010/227-079 Support to Freedom of Expression via Broadcasting and New Media in Belarus, EIDHR/2011/246-869 Support to Independent Print Media in Belarus, EIDHR/2012/294-176 Support to Freedom of Expression via Broadcasting and New Media in Belarus.

[2] The Commission recovered EUR 8 620, that is, some 0,26% of the total EU contribution.