Dear Mrs H.,
On 20 January 1998, you addressed a complaint to the European Ombudsman concerning the alleged failure of the European Commission (DG XVI) to take any action as regards the complaint you sent to the institution on 5 May 1997. In your letter you explained that the Spanish authorities could be committing a potential fraud to the EC budget by misusing the Community funds assigned to the construction of a local road MA-125 in Málaga, Spain. You had previously sent on 11 December 1996, another complaint to the Ombudsman (ref.: 1137/31.12.96/EH/es/jma) on the same subject matter which had been declared inadmissible on the grounds that no previous administrative approaches had been made.
On 2 March 1998, I forwarded your complaint to the President of the European Commission with a request for comments by the end of May 1998. On 26 May, the Commission sent its opinion, which I forwarded to you on 17 June, with an invitation to make observations. On 22 July 1998, you sent your observations.
I am writing now to let you know the result of the inquiries that have been made.

THE COMPLAINT

In her first letter to the Ombudsman of 11 December 1996, the complainant referred to a number of problems concerning the preparation and the construction of a local road MA-125 in Málaga (Spain). The project was being funded with Community Funds. Her main claim related to the fact that construction work had begun without a previous expropriation of the affected land, and hence that no compensation to the affected landowners had taken place. By doing so, the complainant believed that the responsible Spanish authorities might be appropriating part of the costs originally foreseen, with the ensuing fraud to the EC budget.
Since the complainant had not contacted the European Commission as the Community institution responsible for the administration of EC funds, the Ombudsman had to declare the complaint inadmissible by letter dated 17 December 1997, on the basis of article 2, par. 4 of his Statute(1).
Following this correspondence, the complainant wrote on 5 May 1997 to the Director-General of DG XVI (Regional Policy and Cohesion) of the Commission, informing him of the problems which in her view were occurring in the construction of the local road MA-125. She asked the Commission to open an inquiry about the use of the Community funds invested in this project, and underlined her belief that this was a case of fraud to the budget established for the European Union.
Since she received no reply from the Commission, the complainant lodged a complaint with the European Ombudsman in January 1998. She complains about the failure of the Commission to take any action as regards her fraud allegations.

THE INQUIRY

The Commission's opinion
In its opinion, the Commission confirmed that its services had received a letter from the complainant in May 1997 denouncing a number of problems in the construction of road MA-125 in Málaga, which was being funded with EC funds. The Commission quoted some of her claims, including the modification of the existing road plans, the beginning of the work without any previous notification to the affected landowners, or the allegedly illegal entry into these properties. The Commission had been asked in that letter to stop the works and investigate whether Community funds were properly being used.
The Commission explained that Member States are primarily responsible for the development of the projects. In the context of the partnership principle, the Commission's role is to monitor the process, to ensure sound financial management of EC funds, and to evaluate its intervention.
The Commission considered that the problems involved in this case related exclusively to a case of land expropriation. Therefore it concluded that it was up to the national authorities to deal with the problem. Moreover, since the complainant had begun judicial proceedings before the Spanish Courts, the Commission considered that it could not interfere in a judicial case at a national level. According to the Commission, it was clear that the letter from the complainant did not concern the violation of any community policy.
Furthermore, the Commission had been informed by the Spanish national authorities that the responsible local authorities had already negotiated with all affected landowners the compensatory amounts for the expropriation of their properties. All of them had agreed on the amount being proposed, except for the complainant. It was confirmed that judicial proceedings had been started in relation to her case.
Since the Commission had concluded that there had neither been misappropriation of community funds nor abuse of process from the national authorities, it decided not to pursue the case further. It stated that it could not interfere in a local case already dealt with by the national authorities, and which was the subject of judicial proceedings. This position had been taken in line with the subsidiarity principle, which informs EC regional development policy.
The Commission services, however, regretted not having respected the general duty to reply to any citizens' request. It recognised that it should have sent a reply to the complainant's letter in order to explain that the national authorities had exclusive competence in the present case.
The complainant's observations
In her observations, the complainant maintained her claims. She pointed out that her main claim to the Commission had not been the expropriation of her land, but instead a potential fraud to the EU budget. In her view, Community contributions to the project had been calculated on the basis of a percentage of total expenditure, which should have included indemnities for expropriations. As a result of the failure of the local authorities to compensate the local owners, EC funds had been given in excess, with a potential benefit for the local authorities involved in the project.
The complainant had not asked that the Commission intervene in the judicial proceedings since that was beyond the powers of the institution. She stressed that her claim concerned the Commission's role to properly control the use of EU funds.

THE DECISION

On the basis of the statements made by the complainant, and the comments submitted by the European Commission, the Ombudsman has reached the following conclusions:
1. Reply to the letter of complaint submitted by the complainant
1.1. On 5 May 1997, the complainant sent a letter to the Director General of DG XVI, referring to a series of facts which showed, in her view, that the responsible Spanish authorities were not complying with the obligations imposed upon them by Community law. The responsible Commission's services did not reply to that letter.
1.2. The Commission stated in its opinion that it regretted not having complied in this case with the general duty to reply to any citizens' request. It recognised that its services should have sent a reply to the complainant in order to explain to her that the national authorities were the competent ones to deal with the problem.
1.3. Since the Commission has recognised this failure and apologised to the complainant, no further remarks by the Ombudsman therefore appear to be necessary.
2. Assessment by the Commission of the claims made by the complainant
2.1 In the complainant's view, the Commission failed to properly investigate the facts brought to its attention. The allegations referred to a number of irregularities regarding the development of road project MA-125 financed with Community funds in Malaga. They evidenced a potential fraud to the EU budget, since the amounts foreseen for the compensation of landowners affected by the project had not been paid.
2.2. If the Commission chooses not to pursue an inquiry into the matter, there must be some reasoning supporting such course of action. Those reasons should provide the basis for any potential inquiry by the European Ombudsman in order to ensure that no maladministration has taken place.
2.3. The Commission has argued that the alleged facts related only to questions of land expropriation which were being addressed by national courts. The institution added that it had been informed by the national authorities that payments to affected landowners were being made. It also pointed out that all landowners had agreed on the compensation proposed, except for the complainant, who had started judicial proceedings.
2.4. In reviewing the course of action chosen by the Commission, the European Ombudsman finds that the institution acted within the limits of its legal authority and therefore no instance of maladministration has been established.
3. Conclusion
On the basis of the European Ombudsman's inquires into this complaint, there appears to have been no maladministration by the European Commission. 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

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(1) "A complaint [...] must be preceded by the appropriate administrative approaches to the institutions and bodies concerned".