Dear Mr C.,

On 16 March 2001, you made a complaint to the European Ombudsman against the Commission, in your quality as President of the Italian Association "Agenda Locale 21". It relates to the participation of the Association in the programme "Youth for Europe Programme 1997", launched by the Commission.

On 7 May 2001, I forwarded the complaint to the President of the European Commission. The Commission sent its opinion on 13 August, and I forwarded it to you with an invitation to make observations, if you wish so. I have received observations from you on 2 October 2001.

On 15 October 2001, in order to pursue the inquiry on this matter, I asked the Commission to send me a copy of some relevant documents and I informed you accordingly. I received these documents from the Commission on 29 November 2001.

On 6 March 2002, you sent further documents to support your complaint.

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 are the following:

The Association presented a project in the framework of the programme "Youth for Europe Programme 1997" of the Commission. The project was successful and an agreement (contract n° 41978-A.2.1-IT-54-1997-R2) was signed between the institution and the Association. The financial contribution from the Commission would be of a maximum amount of 10000€, corresponding to 48,56% of the estimate of expenditure as indicated in the proposal presented to the Commission.

On 23 October 1997, the complainant received the first instalment from the Commission which amounted to 8000 € , corresponding to 80% of the total sum.

On 5 August 1998, he sent the final report to the Socrates, Leonardo & Youth Technical Assistance Office (hereinafter TAO). On the basis of the report, the TAO proposed the payment of the remaining 20% of the sum, after the approval by the Commission's responsible services.

On 18 December 2000, the complainant received a letter from the TAO, in which it firstly apologised for the delay in processing the final report. Secondly, the TAO stated that after the assessment of the final report made by the Commission's services, it appeared that some of the costs indicated in the report were not justified. The Commission considered that the final eligible costs amounted to 3132 €. It therefore proposed to pay 1519 €. i.e. 48,56% of the sum.

On 2 January 2001, the complainant wrote to the TAO concerning the above. He argued that: (i) the decision to reduce the amount originally agreed was unjustified, since the Association had fully respected the obligations laid down in the contractual agreement; (ii) the Commission had not clearly indicated the costs which it judged as ineligible and (iii) in the letter of 18 December 2000, the right to appeal the Commission's decision was not mentioned.

In its reply of 29 January 2001, the TAO recognised that in the decision of 18 December 2000 there was no mention of possible means of appeals and apologised for it. The complainant was therefore informed that he had the possibility to complain against the concerned decision within 60 days from the receipt of the letter of 29 January 2001, if he so wished. Furthermore, the TAO pointed out that by letter of 3 September 1999 and by fax of 18 November 1999, the complainant was asked to provide supporting documents to justify the alleged incurred costs. The complainant sent the information requested on 21 January 2000. Having re-examined the whole file, the Commission maintained its original decision that only 3 132 € of the costs were duly supported and therefore eligible for the final payment.

On 31 January 2001, the complainant wrote a further letter to the Commission in which he stressed that the institution did not take into account the "Supplementary Agreement 1" agreed between the TAO and the complainant. By letter of 9 January 1998, replying to the complainant's request of 25 September 1997, the Commission agreed that "The participants will not contribute 7 millions ITL as foreseen in the application. The associates of the organisation will work voluntarily to keep expenditure on the same level as the income".

By letter of 23 February 2001, the complainant was informed that the institution's position on the matter was unchanged.

The complainant therefore made a complaint to the Ombudsman, in which he alleged that the Commission's decision to accept only 3 132€ and therefore to partially recover the sum originally granted was not justified because the Association had acted in accordance with the rules governing the project.

The Commission's opinion

In its opinion, the Commission explained the background of the case and basically recalled the content of the exchange of correspondence with the complainant.

It pointed out that despite several requests, the complainant only provided the supporting documents for 3132€. The Commission therefore decided to grant 1519€, amounting to 48,56% of this sum, in accordance with the established rules governing the programme Youth for Europe Programme 1997.

Furthermore, the Commission stressed that at present there are no grounds to change the original decision. It stated, however, that if the complainant should provide the supporting documents for the declared expenditure, it would be ready to reconsider its position.

The complainant's observations

In his observations, the complainant basically maintained his complaint and underlined that his Association has fully respected the rules and that all amendments to the original Agreement have been authorised by the TAO. in the contrary, the Commission did not clearly indicate which expenditure it considers not to be justified and therefore unacceptable.

Further inquiries

After careful consideration of the Commission's opinion and the complainant's observations, the Ombudsman considered it necessary to examine some relevant documents to pursue his inquiry. By letter of 12 October 2001, he therefore asked the Commission to send a copy of the Final Report forwarded by the complainant on 5 August 1998 and of the "Supplementary Agreement 1" agreed between the TAO and the complainant, on 9 January 1998. The Ombudsman informed the complainant of his action and gave the complainant the possibility to send these documents himself, if he so wished. The Commission sent the requested documents on 29 November 2001.

On 6 March 2002, the Ombudsman received further documents from the complainant, which consisted of copies of the correspondence between the Association and the Commission, as well as of some extracts of the final report sent to the institution on 5 August 1998. In the covering letter, the complainant stressed again that the Commission's decision to reduce the grant awarded to the Association was unfair. The Association had given all possible evidence for the expenditure. However, it appears that the Commission did not take into account that it agreed that the participants would not contribute 7 millions ITL and that the associates of the organisation would work voluntarily to keep expenditure on the same level as the income. This amount was therefore impossible to support by receipted invoices or accounting documents. The general principle laid down in Regulation n° 1685/2000(EC)(1) providing that in the case of unpaid voluntary work, the value of that work is determined taking into account the amount of time spent and the normal hourly and daily rate for the work carried out should apply in this case.

THE DECISION

1. The Commission's decision to reduce the grant

1.1 The Association "Agenda locale 21" participated in the programme "Youth for Europe Programme 1997", launched by the European Commission, and the project was successful. The Commission originally agreed to grant the Association 10000€, corresponding to 48,56% of the estimate of expenditure as indicated in the proposal. However, after the evaluation of the final report, it considered that the expenditures were duly justified for only 3132€. It therefore sent a recovery order to the Association.

The complainant, who is the President of the Association, alleged that the Commission's decision to accept only 3132€ and therefore to partially recover the sum originally granted was not justified because the Association has acted in accordance with the rules governing the project.

1.2 Both the Commission and the complainant in their opinion and observations respectively maintained their original positions.

1.3 The complainant argues that the value of unpaid voluntary work performed by members of the association should be counted as expenditure. The complainant states that this amount is impossible to support by receipted invoices or accounting documents, and that Regulation 1685/2000 should apply. Regulation 1685/2000, mentioned by the complainant, does indeed provide for unpaid voluntary work to be eligible expenditure. However, a condition is that its value can be independently assessed and audited. The complainant does not appear to have supplied the Commission with accounting documents that allow the work to be independently assessed and audited.

1.4 This case concerns the obligations arising under a contract concluded between the Commission and the complainant's Association.

1.5 According to Article 195 of the EC Treaty, the European Ombudsman is empowered to receive complaints "concerning instances of maladministration in the activities of the Community institutions or bodies". The Ombudsman considers that maladministration occurs when a public body fails to act in accordance with a rule or principle binding upon it(2). Maladministration may thus also be found when the fulfilment of obligations arising from contracts concluded by the institutions or bodies of the Communities is concerned.

1.6 However, the Ombudsman considers that the scope of the review that he can carry out in such cases is necessarily limited. In particular, the Ombudsman is of the view that he should not seek to determine whether there has been a breach of contract by either party, if the matter is in dispute. This question could be dealt with effectively only by a court of competent jurisdiction, which would have the possibility to hear the arguments of the parties concerning the relevant national law and to evaluate conflicting evidence on any disputed issues of fact.

1.7 The Ombudsman therefore takes the view that in cases concerning contractual disputes it is justified to limit his inquiry to examining whether the Community institution or body has provided him with a coherent and reasonable account of the legal basis for its actions and why it believes that its view of the contractual position is justified. If that is the case, the Ombudsman will conclude that his inquiry has not revealed an instance of maladministration. This conclusion will not affect the right of the parties to have their contractual dispute examined and authoritatively settled by a court of competent jurisdiction.

1.8 It appears that in the present case, the Commission has put forward a coherent and reasonable account of the reasons for which it believes that the reduction of the grant originally foreseen is justified.

In these circumstances, there appears to be no maladministration by the Commission.

Conclusion

On the basis of the Ombudsman's inquiries into this complaint, there appears to have been no maladministration by the European Commission The Ombudsman therefore closes the case.

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

Yours sincerely,

 

Jacob SÖDERMAN

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(1) Commission regulation (EC) No 1685/2000/ of 28 july 2000 laying down detailed rules for the implementation of Council regulation (EC) No 1260/1999 as regards eligibility of expenditure of operations co-financed by the structural funds , O.J. L 193 of 29.07.2000, p. 0039-0048

(2) See Annual Report 1997, pag 22.