(Made in accordance with Article 3 (6) of the Statute of the European Ombudsman(1))

THE COMPLAINT

The present complaint concerns project FAIR 5-CT97-3751 "Optimised Production and Harvesting Technique of the Alternative Crop Stevia Rebaudiana Bertoni". Stevia Rebaudiana is a plant from which sweeteners can be produced. It appears that it could serve as a suitable replacement for growing tobacco. The purpose of the relevant project was to explore this possibility in so far as Southern Europe was concerned. It appears that the project largely consisted of agricultural field trials.

The project ran from 1 February 1998 until (following various extensions) 30 April 2002. It included two project partners (the University of Hohenheim in Germany and Wintersteiger GmbH, an Austrian company), an associated partner (the University of Algarve, Portugal) that later became a full partner and two sub-contractors (Dulsana S.L., a Spanish company, and Sarea GmbH, an Austrian company). The co-ordination of the project was originally in the hands of the University of Huelva, Spain. The total maximum of the Community contribution was set at EUR 808 000.

According to the complainant, who was the person in charge of the project at the University of Hohenheim, it subsequently emerged that the University of Huelva and the person in charge there (Professor O.) were unable to fulfil their obligations under the contract.

In mid-1999, the project partners asked the University of Huelva either to replace Professor O. or to withdraw from the project. The University of Huelva withdrew from the project as from 15 July 1999, and the University of Hohenheim took over the role of co-ordinator.

According to the complainant, the following problems and irregularities on the part of the University of Huelva or Professor O. were discovered:

The University of Huelva did not possess any facilities that could be used for the field trials and therefore had to rely on the facilities of Dulsana. Nevertheless, the University of Huelva initially took the view that no sub-contract with this company needed to be entered into. From June until October 1998, Dulsana advanced some EUR 30 000 in expenses. Professor O. then refused to make any payments to Dulsana, arguing that a contract was needed after all. In February 1999, the University of Huelva finally proposed a draft contract. However, the company found this draft contract unacceptable. Only after heavy pressure had been brought to bear on it by the other participants, did the University of Huelva pay some of Dulsana's invoices. However, an amount of EUR 19 879 remained unpaid. The University of Huelva had invoiced the relevant amount to the Commission, without passing the sum on to Dulsana. In this context, Professor O. had forged the signature of Dr. K. (the person responsible at Dulsana) on four occasions. The University of Huelva had furthermore failed to forward amounts that were due to other participants. It had used project funds to pay for persons that had never worked on the project. In its last report, the University of Huelva reported on trials that had never taken place and used data that had been prepared by Dr. K. back in 1992. Reports submitted by the University of Huelva were identical with scientific papers written by students who were not employed on the project. According to the complainant, the scientific results of the project had been massively falsified.

According to the complainant, the Commission had been informed about these facts in various letters but failed to take adequate action despite the very strong suspicion that fraud had been committed.

In a letter sent on 22 April 2003, Dr. K. brought the alleged irregularities to the attention of the European Court of Auditors. It emerges from this letter that a financial audit was carried out in 2001 and, apparently after the intervention of a German MEP, a scientific audit in 2002. Dr. K. pointed out that of the EUR 30 000 that Dulsana had advanced, EUR 19 879 still remained unpaid. In January 2001, Dulsana took the University of Huelva to court. However, at the time of the letter of 22 April 2003 no hearing had yet taken place in that case. Dr. K. submitted that the contract with the Commission had been subject to the condition that the contractual counterpart (i.e., the University of Huelva) could prove that it had effectively started to work on the project. However, doing so would have necessitated entering into a sub-contract with Dulsana. Given that this had not been done, Dr. K. expressed the view that the contract had never entered into force and that the payments made by the Commission to the University of Huelva were without any legal basis. Dr. K. therefore asked the Court of Auditors to check whether the contract between the Commission and the University of Huelva was in conformity with the law.

In June 2003, the European Anti-Fraud Office ("OLAF") asked the complainant for further information concerning the matter.

In his reply to OLAF of 15 July 2003, the complainant set out his accusations against the University of Huelva and Professor O.

On 12 September 2003, the Commission informed the complainant about the financial situation of the contract. According to this statement, the whole of the maximum EU contribution (EUR 808 000) had been paid. In the complainant's view, the Commission's statement failed to take account of the lack of activity of, and the scientific and administrative improprieties committed by, the University of Huelva.

On 2 October 2003, the complainant objected to this statement to the extent that it accepted costs of the University of Huelva amounting to EUR 112 068. However, the Commission did not react officially to this letter. A meeting was held on 21 April 2004. However, this meeting did not resolve the issues, and it was not possible to agree on common minutes for this meeting.

According to the complainant, the University of Hohenheim incurred substantial additional costs because the University of Huelva had not fulfilled its contract with the Commission.

In his complaint lodged with the Ombudsman in February 2005, the complainant in substance alleged that the Commission had failed properly to handle project FAIR 5-CT97-3751.

The complainant noted that the Commission had not given him access to the relevant documents, that is, the reports on the two audits and further reports drawn up by the Commission's scientific officer, and that he could therefore not comment on them. In this context, the complainant pointed out that the Commission had informed him that the contract was closed, whereas in its decisions refusing access to the said documents it inter alia argued that access could not be granted because a review was ongoing.

The complainant added that, in view of the complex nature of the case, he proposed a meeting to which Dr. K. and Mr V. (the scientific officer of the Commission) should also be invited.

THE INQUIRY

The Ombudsman's approach

On 28 February 2005, the Ombudsman asked the Commission for an opinion on the complaint. The complainant was informed accordingly by a letter sent the same day. In this letter, the Ombudsman explained that he did not consider it necessary, at that time, to convene a meeting such as the one proposed by the complainant.

The Commission's opinion

In its opinion, the Commission made the following comments:

Background

The contract for the relevant project was modified by two amendments signed in 1999 and 2001 respectively.

Amendment no 1 to that contract, which took effect on 15 July 1999, stipulated the following:(2)

• the University of Huelva withdraws from the project and the coordination is taken over by the University of Hohenheim;
• the University of Huelva will submit to the Commission a consolidated cost statement for the work carried out by it up to and including 14 July 1999, and the balance of any unused funds already paid to the University of Huelva shall be transferred to the University of Hohenheim;
• the Community financial contribution originally foreseen for the University of Huelva and not yet paid by the Commission is redistributed among the remaining partners;
• the University of Algarve (hitherto an associated contractor) becomes a contractor;
• the duration of the project is extended by ten months; and
• the Community financial contribution is redistributed among the partners.

The amount of the Community financial contribution originally foreseen for the University of Huelva had been EUR 412 250. This amount was reduced to EUR 143 790 by Amendment no 1. The remainder was redistributed among the remaining partners. No additional Community funding was granted.

The amount of the Community financial contribution originally foreseen for the University of Hohenheim had been EUR 70 750. This amount was increased to EUR 275 210 by Amendment no 1. By signing this amendment, the University of Hohenheim expressly agreed to these conditions and was fully informed of the total available redistributed financial resources for the project.

On 23 October 2000, the complainant informed the Commission of his view that the University of Huelva had not executed the project satisfactorily. The University of Hohenheim considered that the Commission should reject all cost statements submitted by the University of Huelva and transfer the corresponding funds to the University of Hohenheim. It also requested that outstanding invoices of Dulsana, a sub-contractor of the University of Huelva, be reimbursed through the University of Hohenheim's own cost statements.

In its reply of 10 November 2000, the Commission confirmed that the complaint would be carefully considered. The letter also explained that in order to be eligible, costs had to be charged by the contractor who had incurred them. Given that Dulsana was a sub-contractor of the University of Huelva and not of the University of Hohenheim, the costs could not be considered to have been borne by the latter and as a consequence could not be considered as eligible costs for the University of Hohenheim.

In order to verify the accusations against the University of Huelva, a financial audit of the cost statements submitted by the latter was conducted by the Commission in January 2001. As a result, certain costs were disallowed or modified. The invoices of Dulsana for 1998 were accepted as eligible costs, as they had been paid by the University of Huelva, whereas Dulsana's invoices for 1999 were not accepted as they had not been paid by the University of Huelva. A total amount of EUR 112 068 was accepted as eligible costs for the University of Huelva. The balance of EUR 31 728 was redistributed and paid to the remaining partners. Of the total amount of EUR 412 250 originally foreseen for the University of Huelva, EUR 300 182 had thus been redistributed among the remaining partners in order to permit them to carry out the rest of the project.

In April 2002, a scientific audit of the work done by the University of Huelva was carried out by external experts. These experts reported about two major problems as regards this work. First, the relationship between the University of Huelva and its sub-contractor Dulsana had been particularly problematic. It appeared that the obligation of the sub-contractor had been badly defined and lacked clarity, resulting in a dispute between the parties as to the exact contractual obligations. Second, the experts identified a number of failures in the execution of the work and also pointed out that the technical annex itself had been unclear and vague in certain areas. The experts arrived at the conclusion that "(...) the first 7 trimesters of the project activities are of a poor quality. A number of subtasks are valuable. The Commission should allow the University of Huelva to claim for that period".

The results of the scientific audit were such that they did not give rise to any further financial adjustments concerning the costs reimbursed to the University of Huelva.

On 25 June 2003, the scientific officer in charge of the file at the Commission was requested by OLAF to provide information on the project. This followed a complaint by Dr. K. to the Court of Auditors, which had transmitted the file to OLAF. On 31 July 2003, the scientific officer in charge supplied OLAF with a note for the file with his personal views on the two audits conducted and on documents submitted by the complainant with the aim, as he stated in his e-mail to OLAF, of still arriving at an amicable settlement between the different parties.

The report on the financial audit, the report on the scientific audit and the above-mentioned note for the file were confidential documents. However, the Ombudsman was welcome to consult them.

The final payment for the project was made by the Commission in September 2003. A letter providing details on the payment was sent to the University of Hohenheim on 12 September 2003. On 2 October 2003, the complainant acknowledged receipt of this letter but declined to approve the final statement of expenditure.

The complainant and Dr. K. subsequently requested a meeting with the Commission in order to discuss the status of the file. This meeting took place on 21 April 2004.

In May and December 2004, Dr. K. and the complainant submitted requests for access to the audit reports of 3 April 2001 and 26 April 2002 and the note of Mr V. dated 31 July 2003. These requests were rejected.

In May 2003, OLAF opened a criminal assistance case. This inquiry was closed in February 2005 with a Final Case Report that contained the following conclusions:

• OLAF confirmed the results of the Commission's audits which indicated that the University of Huelva had not entirely fulfilled its contractual obligations.
• Against this background and due to the fact that the Spanish judicial authorities had opened judicial enquiries into the actions of the University of Huelva and some of its staff, OLAF recommended to the authorizing officer a flagging in the Early Warning System ("EWS") under category W3. OLAF requested an immediate and temporary flagging under category W2 in order to give the authorizing officer concerned time to assess the situation.

A warning under category W2 is based upon findings of serious administrative errors or fraud in relation to third parties that have benefited from Community funds. A warning under category W3 is issued where beneficiaries of Community funds are known to be the subject of judicial proceedings for serious administrative errors or fraud.

Both of these flaggings were introduced in the EWS as of 19 April 2005.

Financial follow-up measures would be taken by the Commission, if deemed necessary, following the outcome of the judicial proceedings.

Comments on the complainant's arguments

In order to allow for a structured approach to the matter, the specific issues raised by the complaint were discussed by the Commission under the points outlined below.

1 Complaint regarding the failure of the University of Huelva (Professor O.) to act properly in both scientific and administrative terms and the Commission's failure to take action in this respect
1.1 No contract was ever set up between the University of Huelva and Dulsana.

This was a matter for the University of Huelva and its sub-contractor Dulsana. The Commission had been informed that a court case was pending in Spain as a result of a complaint by Dulsana against the University of Huelva regarding this issue.

The position taken by the University of Huelva not to reimburse cost claims made in 1999 by Dulsana had been supported by the auditor who had carried out the financial audit.

1.2 Persons who did not work on the project were employed by the University of Huelva using project funding.

The Commission took all reasonable steps to check the financial claims of the University of Huelva. Costs of staff working on the project were reimbursed in accordance with the findings of the above-mentioned audits and the contract. For the second year, the University of Huelva was not able to provide time sheets. As a result, these costs were rejected by the Commission. Finally, one of the conclusions of the scientific audit report was that more than 80 % of the time declared by Ph.D. students on the project was justified.

1.3 The University of Huelva never took action to ensure that it was in a position to fulfil the contract with the Commission.

Based upon the findings of the two audits, the Commission paid EUR 112 068 to the University of Huelva for work carried out in the period between 1 February 1998 and 14 July 1999. The Commission agreed to Amendment no 1, which specified that the University of Huelva withdrew completely from the project. It further agreed to an extension of the project duration in order to provide sufficient time for the remaining partners to complete the project correctly.

1.4 The last letter from the University of Huelva, for the period from 1 February 1999 until 15 July 1999, detailed trials which were never carried out. The data given as documentation were data obtained by Dr. K. in earlier field trials.

See answer under 1.1 and 1.2.

1.5 Reports from the University of Huelva were identical to theses written by students who were not employed on the project.

See answer under 1.1. and 1.2.

1.6 The Commission started the audits only after political pressure and had not acted upon massive indications of fraud.

A financial audit was performed in January 2001, and an additional scientific one in April 2002. The results of the two audits did not confirm the allegations of the University of Hohenheim concerning massive fraud by the University of Huelva. Nonetheless, the matter was also brought to the attention of OLAF which confirmed the results of the audits carried out by the Commission. Depending upon the outcome of the on-going judicial proceedings in Spain against the University of Huelva, the Commission would take the necessary financial measures.

1.7 The Commission refused access to documents concerning the audits. Knowledge of the audit result would have had a direct financial impact on the project.

The refusal of access to the relevant documents was based on the following reasons:

* the need to protect the on-going investigations;

* the need to protect the privacy and integrity of natural persons;

* the need to protect the internal decision-making process of the Commission;

* the fact that the relevant documents do not touch upon a predominantly general interest, also in view of the fact that both the University of Hohenheim and Dulsana have private interests in this issue.

Even if further funds had to be recovered from the University of Huelva, this would not have a further financial impact on the project because the money recovered would have to be returned to the general budget of the Commission and could not be redistributed to the contractors of the project.

2 Complaints relating to the conduct of the Commission with regard to the final payment
2.1 The failure of the University of Huelva to execute the technical and administrative obligation under the contract was not taken into account in the final payment.

See answer under 1.3.

2.2 Additional costs for the coordination of the project incurred by the University of Hohenheim were rejected by the Commission.

By signing Amendment no 1 to the contract, the University of Hohenheim agreed to the conditions for the transfer to it of the role of coordinator and to the adjusted budget based on that transfer. The indicative financial tables annexed to the amendment foresaw an increase of the contribution of the Commission for the University of Hohenheim from EUR 70 750 to EUR 275 210. The final amount actually paid was higher, namely, EUR 343 818. This was possible due to the fact that a large part of the original contribution foreseen for the University of Huelva was redistributed to the University of Hohenheim and that other partners in the project spent less than originally foreseen.

2.3 No official answer was provided in reply to the University of Hohenheim's refusal to accept the final payment. The Commission's version in the minutes of the meeting of April 2004 does not accurately reflect the issues discussed.

An acknowledgement of receipt was sent by e-mail on 3 February 2004. Contractors normally react where the Commission refuses to pay certain claims and if the amount paid by the Commission has not reached the maximum that could have been paid. However, in the present case the Commission had already made payments up to the maximum amount of its contribution.

It had indeed not been possible to reach an agreement concerning the conclusions of the meeting in April 2004.

2.4 The Commission claims that the contract is closed. The argument that the contract is under review is, however, at the same time used as a reason to deny access to documents under Regulation 1049/2001.

Article 2 of the contract stipulates that "the contract should be regarded as completed on the date of the final payment due by the Commission". A distinction had to be made between the project completion and later reviews. It was possible for a project to be completed whilst it was at the same time subject to a financial audit or review.

The Commission's response to the complainant's conclusions

When faced with disagreements among project partners, the Commission had a duty to respect the principle of equality and any decision taken needed to be based on a balanced assessment of the situation. That was why the Commission conducted two audits in order to verify the claims made by the University of Hohenheim.

None of the facts raised by the complainant justified his allegations that there had been maladministration by the Commission. The results of the audits had been taken into account in the reduction of the Community financial contribution to the University of Huelva. With respect to the accusations of fraud, the results of the audits could not confirm this but the Commission would take the necessary financial follow-up measures, depending on the outcome of the judicial proceedings that the Spanish authorities had initiated against the University of Huelva.

The complainant's observations

In his observations, the complainant maintained his complaint and made a number of comments concerning the account of the relevant facts that had been presented by the Commission.

As regards the individual issues

As regards the substance of his case, the complainant's comments may be summarised as follows (using the numbering of issues adopted by the Commission):

1.1 As far as the University of Huelva was concerned, 95 % of the work related to field trials. However, since the University did not possess any facilities for such field trials, the conclusion of a sub-contract was a necessity. This was also in conformity with Articles 3.2 and 2.2 (c) of the General Conditions applicable to the contract (the "General Conditions"). The fact that the sub-contract was not a private matter between the contractor and the sub-contractor was confirmed by the fact that Article 3.3 of the General Conditions granted the Commission the same rights of control concerning the subcontractor that it had as regards the contractor.

On 15 July 2003, the University of Huelva paid the main claims of Dulsana.

It was not clear how the auditors had been able to recognise invoices presented by Dulsana in 1998, given that no sub-contract had existed at that time.

1.2 Nearly all the reports submitted by the University of Huelva consisted in their entirety of translations of papers submitted by students. It was thus to be asked what work had been carried out by those collaborators who had been paid out of the project budget. Article 19.1.1 of the General Conditions stipulated that only the costs of actual hours worked on the project "by scientific professional, post-graduate or technical staff" could be charged.

1.3 There had been a fundamental breach of contract by the University of Huelva which should have resulted in a complete repayment of the advance received by the University.

1.4,1.6

The Commission had failed to address the allegation that there had been scientific misconduct on the part of the University of Huelva. Professor O. had acted fraudulently by using the results of earlier work by Dr. K.

1.7 There was an overriding public interest in the disclosure of the relevant documents, given that the proper usage of public funds was at issue.

Article 1.1 of the contract provided that the contractors were to carry out their obligations "jointly and severally" and Article 1.2 stipulated that contractors "shall use reasonable endeavours to achieve the results intended for the Project and to fulfil the obligations of a defaulting Contractor". It was therefore logical and mandatory on contractual grounds that the sums which are retrieved by the Commission from a partner who does not fulfil his obligations should be placed at the disposal of the project. This had already been requested on 23 October 2000.

2.3, 2.4

The complainant had several times drawn the Commission's attention to the suspicion that Professor O. had forged the signature of Dr. K. The Commission had never dealt with this issue. All the invoices of Dulsana submitted by the University of Huelva should therefore be checked in order to ascertain the authenticity of Dr. K.'s signature.

Conclusion

The Commission's conclusions were based on two audits. However, many elements concerning the scientific misdemeanour of the University of Huelva had only become known to the Commission after these audits had been concluded.

The claim that the amount of EUR 112 068 should be taken away from the University of Huelva and given to the University of Hohenheim was maintained.

The complainant further stated that he again asked for access to the audit reports. He also asked the Ombudsman to clarify the facts by questioning Mr V., the Commission's scientific officer in charge of the case. In the complainant's view, it was not sufficient only to examine the note the latter had written on 31 July 2003.

Further inquiries

After careful consideration of the Commission's opinion and the complainant's observations, it appeared that further inquiries were necessary.

The Ombudsman's request for further information

On 20 September 2005, the Ombudsman therefore asked the Commission for a reply to the following questions:

(1) In his observations, the complainant made inter alia the following statements:

• As far as the University of Huelva was concerned, 95 % of the work related to field trials. However, since the University did not possess any facilities for such field trials, the conclusion of a sub-contract was a necessity. This was also in conformity with Articles 2.2 (c) and 3.2 of the General Conditions applicable to the contract. No such sub-contract had however been concluded. The University of Huelva had therefore never been in a position properly to implement the project. There had thus been a fundamental breach of contract by the University of Huelva which should have resulted in a complete repayment of the advance received by the University.
• The Commission had failed to reply to the allegation that there had been scientific misconduct on the part of the University of Huelva. Professor O. had acted fraudulently by using the results of earlier work by Dr. K.
• The Commission had failed to address the suspicion that Professor O. had forged the signature of Dr. K.

Could the Commission please comments on these statements?

(2) In his observations, the complainant referred to certain provisions of the General Conditions applicable to the contract. Could the Commission please provide a copy of these General Conditions?

(3) In its opinion, the Commission referred to proceedings pending before Spanish judicial authorities. Does the Commission have any more specific information regarding the subject of these proceedings?

The Ombudsman informed the complainant accordingly. As regards the complainant's suggestion that the Commission official who appeared to have dealt with the matter be heard, the Ombudsman pointed out that he would await the Commission's reply to his request for information before deciding whether further inquiries were needed. In his observations on the Commission's opinion, the complainant had noted that he "again" asked for access to the documents concerned. The Ombudsman therefore informed the complainant that his inquiry concerned the request for access that had been rejected on 26 January 2005 and that any new request for access that he might wish to make now should be submitted directly to the Commission.

The Commission's reply

In its reply, the Commission presented the following comments:

As regards facts

The technical annex to the contract foresaw two sub-contractors for the University of Huelva, namely, the "Los Bresnos" farm (where Dr. K. was manager at the time) for supplying the test site and Sera GmbH to make several tests.

On 1 October 1998, the University of Huelva, in its capacity as coordinator of the project, asked the Commission for permission to substitute the "Los Bresnos" farm with another farm in the area, rented through Dulsana, a company set up by Dr. K. especially for this purpose. The reason given to the Commission was that the "Los Bresnos" farm had been damaged by heavy rainfall. The Commission approved this substitution on 29 October 1998.

A progress meeting was held on 27/28 January 1999. According to the mission report drawn up by the Commission's scientific officer, work on the project was progressing well. However, the report mentioned the inexperience of the University of Huelva regarding the rules for managing Community-funded research projects. It also mentioned that there were apparent financial problems between the University of Huelva and its sub-contractor Dulsana which, however, seemed to have been solved immediately after the meeting because the University of Huelva had paid all invoices to the satisfaction of Dulsana.

In March 1999, another team meeting was held, where the differences of opinion between the University of Huelva on the one hand and the University of Hohenheim and Dulsana on the other hand came to the surface openly with accusations by both parties. In June 1999, a further team meeting was held to discuss the further participation of the University of Huelva in the project.

An amendment to the contract, which took effect on 15 July 1999, was signed in order to resolve the differences noted above.

In April 2002, a scientific audit of the work done by the University of Huelva was carried out by external experts. The complainant and Dr. K. submitted to these experts a note for the file setting out their views on the work done by the University of Huelva. In this note, the University of Hohenheim alleged that Professor O. had told Dr. K. already in 1999 that he had forged his signature in order to accelerate the project. The complainant and Dr. K. met and spoke with the experts during their on-the-spot visit to the University of Huelva.

In May 2002, the University of Hohenheim and Dulsana submitted another detailed note for the file to the Commission's scientific officer, repeating earlier accusations and offering their views on a number of issues they had discussed with the external experts. In this note, the alleged forging of Dr. K.'s signature was again mentioned.

As regards the Ombudsman's questions
- First question -

The Commission does not intervene in the contractual arrangements that participants in Community-funded projects make with their sub-contractors. There was also no contractual obligation for participants to submit copies of signed sub-contracts to the Commission.

The positions taken by the parties as to why no sub-contract had been established were as follows:

According to the University of Huelva, by the time the contract with the Commission was signed in March 1998, Dr. K. had left the "Los Bresnos" farm and it was decided to continue the work with the new company set up by him, that is to say, Dulsana. Professor O. tried to formalise the contractual relationship with Dulsana through a written sub-contract. A first draft was submitted to Dr. K. and returned with suggestions for changes. These changes were unacceptable to the University of Huelva. Late in 1998, a new draft was submitted to Dr. K., who did not react. Meanwhile, Dulsana continued to submit invoices for work done during the first year of the project, and Professor O. agreed to pay them so as not to jeopardise the project.

According to the University of Hohenheim and Dulsana, the University of Huelva and Professor O. were to be blamed for the fact that no sub-contract was concluded. Dr. K. approached the University of Huelva in April 1998 in order to conclude a sub-contract but Professor O. considered this to be unnecessary. At the end of July 1998, Dr. K. presented his first invoice to the University of Huelva, for which Professor O. asked for a change in format. When presenting the corrected invoice for a second time, Professor O. said that there was a need for a formal sub-contract before the invoice could be paid. Professor O. asked Dr. K. to prepare this sub-contract, but then did not agree with its contents and the budget proposed for the trials. Dr. K. finally received a draft sub-contract in February 1999 which was unacceptable to him.

It appeared from the audits conducted by the Commission and the information provided by the parties that the project started with some delay due to the change in location of the test facility. This change could not be attributed to any fault of the University of Huelva. Dulsana carried out a number of tasks for the project in the absence of a formal written sub-contract. This seemed to be based upon oral agreements between the University of Huelva and Dulsana which, in turn, were based on the provisions of the technical annex to the contract. It was not clear to the Commission why Dr. K. had started carrying out work without a signed sub-contract. There was not enough evidence for the Commission to conclude that the failure to reach agreement on a sub-contract was solely attributable to the University of Huelva.

Regarding the eligibility of costs submitted by the University of Huelva, the principle used by the Commission was effort-based, not result-based. In other words, if the contractor can show that it made best efforts to carry out his tasks, the Commission is contractually obliged to reimburse his costs even if the expected results may only have been achieved partially (or in some extreme cases not at all). Furthermore, even if the Commission had decided not to reimburse the invoices of Dulsana for the first year, this would not have meant that the other costs of the University of Huelva would have been ineligible.

As a consequence, the Commission rejected the allegation that the University of Huelva had breached Article 2.2 and Article 2.3 of the General Conditions and that the Commission should therefore have required a repayment of the full amount of the advance received by the University.

By signing Amendment no 1 to the contract, the participants agreed to the redistribution of funds. The fact that the University of Hohenheim spent more on the project than the Community contribution it received was its own risk.

- Second question -

As regards the allegation that the University of Huelva, in its progress report covering the period from 1 February 1999 until 15 July 1999, published results of trials that never took place and that the relevant progress report contains results obtained by Dr. K. in 1992, this issue is being investigated by the Spanish judicial authorities (see below). This question should therefore be inadmissible, as it falls under Article 2(7) of the Ombudsman's Statute. However, it should be underlined that the staff costs submitted by the University of Huelva for the period concerned had in any event been refused by the Commission because the University of Huelva could not present the necessary time sheets and because there were doubts as to whether the work had really been carried out.

As regards the allegation that the reports of the University of Huelva were identical to papers drawn up by undergraduate students, it had been confirmed during the financial and scientific audits that the relevant research work had been carried out by three PhD candidates and a number of undergraduate students. The thesis work done by the undergraduate students was reported in the scientific reports submitted by the University of Huelva to the Commission. This work was in agreement with what was described in the technical annex as the tasks to be executed. The University of Huelva did not submit cost statements for undergraduate students. The three PhD candidates charged by the University of Huelva to the project were effectively employed and paid by the University of Huelva. Time sheets for the first year (February 1998 - January 1999) were submitted to the Commission by the University of Huelva. This was not the case for the second period (February 1999 - July 1999), and the staff costs for this period, as already explained, were not accepted by the Commission. It was also confirmed during the technical audit conducted in April 2002 that the manpower charged by the University of Huelva to the project was acceptable in view of the work executed. It was normal practice that undergraduate students are assisted and guided in their work by postgraduate students. The costs of the latter can be charged to the project, as foreseen in Article 19.1.1 of the General Conditions, according to which "personnel costs shall be limited to (...) postgraduate or technical staff engaged in research (...)".

- Third question -

As regards the alleged forgery of signatures, this issue is being investigated by the Spanish judicial authorities (see below) and thus also falls under Article 2(7) of the Ombudsman's Statute.

However, it was useful to note that the Commission had paid an amount of 3 226 555 Spanish Pesetas to the University of Huelva for 10 invoices of Dulsana for work carried out during the first year of the project. It was verified during the financial audit carried out in January 2001 that the University of Huelva had effectively reimbursed these amounts to Dulsana. The invoices for the second year had been refused as ineligible, as already explained.

- Fourth question -

A copy of the General Conditions was provided to the Ombudsman.

- Fifth question -

Dulsana had sued the University of Huelva in a Spanish court over the unpaid invoices. It emerged from the information supplied to the Ombudsman by the complainant that an out-of-court settlement had been agreed in that case in 2003.

The following information had been provided by OLAF regarding the ongoing judicial proceedings in Spain:

• A criminal investigation had been opened on 30 December 2003 by the Criminal Court N o 2 of Moguer (Huelva-Spain).
• This investigation had been opened as a result of a complaint presented by Dr. K. against a professor of the University of Huelva, in relation to irregularities in the management of contract FAIR-CT97-3751. According to the complainant in that case, the professor concerned had produced fake reports in order to justify (unduly) the Community funds that had been granted.
• The complainant in that case had been interviewed by the investigating judge. Two experts had been appointed to produce a report on the matter.
• In July 2004, a complement to the complaint had been presented to the court. In this complement, the complainant in that case alleged that the person concerned had forged his signature on a number of invoices.
• As of September 2004, the investigation was still on-going.

Conclusion

For all the above-mentioned reasons, the Commission could not accept the complainant's request for it to claim back the complete advance paid to the University of Huelva and to then transfer it to the University of Hohenheim.

The Commission had taken all appropriate steps in order to determine the eligibility of the costs claimed by the University of Huelva and to ensure that the project could continue after the withdrawal of that University.

As regards the allegations that the University of Huelva committed scientific fraud and that the signature of Dr. K. had been forged, these accusations were being investigated by the Spanish judicial authorities.

The complainant's observations

In his observations, the complainant made the following comments:

Given that the University of Huelva did not possess the necessary facilities to carry out field trials, a sub-contract necessarily had to be concluded. However, no such sub-contract had been entered into with Dulsana by the time the University of Huelva left the project.

Already in March 1998, Dr. K. had held talks with the University of Huelva which also covered the sub-contract with Dulsana. At a further meeting in April 1998, this sub-contract had been discussed in detail. Ms J. from the University of Huelva had pointed out that a sub-contract was mandatory. In mid-May 1998, Dr. K. had been asked to submit the necessary documents (articles of association, contract for renting the farm and bank details). These documents were received at the University of Huelva on 9 June 1998. Professor O. subsequently took the view that no sub-contract was needed.

What appeared to be a cat-and-mouse game had then started, which probably only served the purpose of not having to pay Dulsana's invoices and of calling the project as such into question. At the request of Professor O., Dr. K. had to change the invoices five times, without any payment being made or any date for payment being mentioned. In the end, Professor O. changed his mind and insisted that a sub-contract was after all necessary. Dr. K. had subsequently submitted a draft in October 1998. In November 1998, Professor O. had declared that he did not agree with this draft. Two meetings were then convened. However, both these meetings had been cancelled by Professor O. at short notice. In November 1998, Dr. K. had turned to the complainant in his capacity as chairman of the steering committee set up under the contract.

The University of Huelva made payments to Dulsana only after substantial delays and in part only after it had left the project. Payments for 1998 were made on 22 April, 14 July and 27 October 1999, whereas the payment for 1999 was only made on 14 July 2003. The University of Huelva had thus for more than one year operated with funds that were foreseen for the sub-contractor. According to the minutes of the meeting on 28 January 1999, Professor O. had accused the University of Huelva of having used the project funds for other purposes. It was also a fact that the University of Huelva had dismissed a scientific assistant who had been working on the project with effect from the end of 1998 on the grounds that no liquid funds were available further to employ this person. This fact had been raised in the letter addressed to the University of Huelva by the steering committee on 28 January 1999.

The behaviour of the University of Huelva had nearly caused the relevant project to fail.

The financial audit had not been carried out properly. The report on this audit contained allegations and guesses concerning Dr. K. that appeared to have served as the basis for the Commission's decision.

In the view of the Commission's scientific officer, the University of Huelva had deliberately avoided to make payments to Dulsana.

There was no known rule to support the Commission's view that it would have had to pay the University of Huelva in any event, regardless of whether a sub-contract was concluded. Having approved the report of the University of Huelva for the first year of the project, the Commission was now afraid of legal complications in case it were to annul this approval.

The real facts were as follows: in the 17 months of its participation (i.e., 45 % of the total duration of the project), the University of Huelva had started 2 % of the tasks that were foreseen and had used 27 % of the project funds for this purpose. There had been no prospect that the project would be completed in accordance with the contract. This had been the reason for the problems between the parties involved. The lack of a sub-contract with Dulsana and the failure to pay the latter had only been the tip of the iceberg.

The University of Huelva had not been in a position to carry out this project in terms of both administration and staff, and it had unfortunately not even tried to do so. No one could seriously maintain that preparing a draft sub-contract which covered two pages takes more than a year.

The Commission's statement that it was normal practice that undergraduate students are assisted and guided in their work by postgraduate students confirmed the complainant's case. The technical reports that had been handed in were nothing else than translations into English of papers drawn up by undergraduate students. Apart from the signed timesheets, there was no proof for the work of the PhD candidates employed and paid by the University of Huelva. It was completely unclear what contribution these persons could have made towards the project.

The University of Huelva had been in charge of tasks 1 and 5 set out in the technical annex to the contract. It had declared 18.5 working months for task 1 and 18 working months for task 5. However, some 90 % of the work carried out had been covered by papers drawn up by undergraduate students. Thus, the Commission's view that a total of 21.5 months was eligible did not have any basis whatsoever. At most, 3.25 months could be considered eligible. All this had been known to the Commission since 9 July 2002, when the complainant provided it with a complete synopsis (i) of the texts of the papers prepared by the undergraduate students and (ii) of the relevant reports.

The Commission had stated that it was obliged to reimburse a contractor if the latter was able to show that it made best efforts to carry out research and the tasks identified in the contract. However, the University of Huelva had not made such efforts in the present case. The Commission had contented itself with technical reports that did not signify anything and that were of a cosmetical nature. It appeared that the Commission knowingly accepted that it had been defrauded.

Access had been requested to the reports on the audits. The Commission had taken the view that the disclosure of these documents would seriously affect its internal decision-making process. Now that the Commission had made available an internal report it was to be assumed that it would disclose all the reports.

The complainant concluded by reiterating his request that the Ombudsman should hear the person who had been the Commission's scientific officer concerning the relevant project.

The inspection of the Commission's file

Having examined the further information provided by the Commission and the complainant's observations, the Ombudsman considered that it was necessary to inspect the Commission's file. In his letter informing the complainant, the Ombudsman also reminded the latter that, as regards the issue of access to documents, the present inquiry concerned the decision taken in January 2005 and that subsequent developments were thus irrelevant in this context. The Ombudsman therefore repeated the advice he had already given previously, i.e., that any new request for access that the complainant might wish to make now should be submitted directly to the Commission.

The inspection of the Commission's file was carried out on 25 January 2007.

In particular, the following documents were examined:

* Financial Audit Report of 3 April 2001;

* Scientific Audit Report of 26 April 2002;

* Note for the file by Mr V., dated 31 July 2003, on the "Audit of the University of Huelva"; and

* Final Case Report of 16 February 2005, drawn up by OLAF.

In reply to a question to that effect, the representatives of the Commission pointed out that they had no firm knowledge regarding the court proceedings in Spain, but that it appeared that the case was still pending.

A copy of the report on this inspection was sent to the complainant for his observations.

In his reply, the complainant informed the Ombudsman that he considered that the documents that had been inspected would provide information on the matter. However, he repeated his suggestion that the Ombudsman should also put questions to a Mr V. who had dealt with the case.

In a letter of 7 February 2008, the complainant again suggested that the relevant official should be heard.

THE DECISION

1 The relevant facts

1.1 The present complaint concerns the handling of project FAIR 5-CT97-3751 "Optimised Production and Harvesting Technique of the Alternative Crop Stevia Rebaudiana Bertoni" by the European Commission. Stevia rebaudiana is a plant from which sweeteners can be produced. It appears that it could serve as a suitable replacement for growing tobacco. The relevant project had the purpose of exploring this possibility in so far as Southern Europe was concerned.

1.2 The project ran from 1 February 1998 until (after various extensions) 30 April 2002. It included two project partners (the University of Hohenheim in Germany and Wintersteiger GmbH, an Austrian company), an associated partner (the University of Algarve, Portugal) that later became a full partner and two sub-contractors (Dulsana S.L., a Spanish company, and Sarea GmbH, an Austrian company). The co-ordination of the project was originally in the hands of the University of Huelva, Spain. The total maximum of the Community contribution was set at EUR 808 000.

1.3 According to the complainant, the person in charge of the project at the University of Hohenheim, it subsequently emerged that the University of Huelva and the person in charge there (Professor O.) were unable to fulfil their obligations under the contract. In mid-1999, the project partners asked the University of Huelva either to replace Professor O. or to withdraw from the project. An amendment to the contract was drawn up, pursuant to which the University of Huelva withdrew from the project as from 15 July 1999, and the University of Hohenheim took over the role of co-ordinator.

1.4 The amount of the Community financial contribution originally foreseen for the University of Huelva had been EUR 412 250. As a result of the above-mentioned amendment, this amount was reduced to EUR 143 790. The remainder was redistributed among the remaining partners.

1.5 On 23 October 2000, the complainant informed the Commission of his view that the University of Huelva had not executed the project satisfactorily and that the Commission should reject all cost statements submitted by the University of Huelva and transfer the corresponding funds to the University of Hohenheim.

1.6 In order to verify the accusations against the University of Huelva, a financial audit of the costs statements submitted by the latter was conducted by the Commission in January 2001. As a result, certain costs were disallowed or modified. A total amount of EUR 112 068 was accepted as eligible costs for the University of Huelva. The balance of EUR 31 728 was redistributed and paid to the remaining partners.

1.7 In April 2002, a scientific audit of the work done by the University of Huelva was carried out by external experts. These experts reported about two major problems as regards this work. First, the relationship between the University of Huelva and its sub-contractor Dulsana had been particularly problematic. Second, the experts identified a number of failures in the execution of the work. The experts arrived at the conclusion that "(...) the first 7 trimesters of the project activities are of a poor quality. A number of subtasks are valuable. The Commission should allow the University of Huelva to claim for that period". The results of the scientific audit were such that they did not give rise to any further financial adjustments concerning the costs reimbursed to the University of Huelva.

1.8 In a letter sent on 22 April 2003, Dr. K. (the person in charge at Dulsana), brought the alleged irregularities of the University of Huelva to the attention of the European Court of Auditors. The Court of Auditors informed the European Anti-Fraud Office ("OLAF"). In June 2003, OLAF asked Mr V., the scientific officer in charge of the file at the Commission, to provide information on the project. On 31 July 2003, Mr V. supplied OLAF with a note for the file in which he set out his personal views on the issues involved

1.9 In December 2003, and at the request of Dr. K., a Spanish court opened a criminal investigation against Professor O. in relation to irregularities in the management of contract FAIR-CT97-3751. According to the complainant in that case, the professor concerned had produced fake reports in order to justify (unduly) the Community funds that had been granted. In July 2004, a complement to the complaint was presented to the Spanish court. In this complement, it was alleged that the person concerned had forged Dr. K.'s signature on a number of invoices.

1.10 In February 2005, OLAF closed its examination. It concluded that the results of the Commission's audits indicated that the University of Huelva had not entirely fulfilled its contractual obligations. Against this background and due to the fact that the Spanish judicial authorities had opened judicial inquiries into the actions of the University of Huelva and some of its staff, OLAF recommended a flagging of the University of Huelva in the Commission's Early Warning System ("EWS"). A corresponding entry in the EWS was made on 19 April 2005.

1.11 On 10 February 2005, the complainant turned to the Ombudsman.

2 Alleged failure to grant access to documents

2.1 In May and December 2004, Dr. K. and the complainant submitted requests for access to the Commission. The documents to which access was requested were (1) the report on the financial audit (dated April 2001), (2) the report on the scientific audit (dated 26 April 2002), and (3) Mr V.'s note for the file dated 31 July 2003. These requests were rejected by the Commission.

2.2 In his complaint to the Ombudsman, the complainant mentioned this refusal without submitting clear allegations or claims in this context. However, in its opinion, the Commission interpreted the complainant's comments as alleging that it had incorrectly denied access to the relevant documents and as a claim for access to these documents. It is therefore appropriate to deal with this allegation and claim in the present inquiry.

2.3 In its opinion, the Commission submitted that its decision to refuse access had been justified by (i) the need to protect the on-going investigations, (ii) the need to protect the privacy and integrity of natural persons, (iii) the need to protect the internal decision-making process of the Commission, and (iv) the fact that the relevant documents did not touch upon a predominantly general interest.

2.4 In his observations, the complainant submitted that there was an overriding public interest in the disclosure of the relevant documents, given that the proper usage of public funds was at issue. The complainant further stated that he again asked for access to these documents.

2.5 In his observations on the Commission's reply to a request for further information made by the Ombudsman, the complainant expressed the expectation that the Commission would now disclose all the relevant reports.

2.6 The Ombudsman notes that the complainant has not provided him with copies of the requests for access made by himself or by Dr. K. However, copies of the replies given to these letters by the Commission were supplied to him. From these replies, it appears that these requests were made on the basis of Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents(3) ("Regulation 1049/2001"). The Ombudsman considers that only this regulation is thus relevant for the present case and that there is no need to examine whether the Commission might have been obliged to grant access to the said documents on the basis of other grounds, such as for example the contract it had entered into concerning project FAIR 5-CT97-3751.

2.7 The Ombudsman notes that only Dr. K. appears to have made a confirmatory application for access and that this confirmatory application was rejected on 20 August 2004, whereas the complainant does not seem to have made use of this possibility when his initial application of 10 January 2005 had been rejected on 26 January 2005. Article 2(4) of the Ombudsman's Statute requires complainants to make all the appropriate administrative approaches before turning to him. As regards public access to documents, making a confirmatory application counts among these appropriate prior approaches. Strictly speaking, the Ombudsman would therefore not be in a position to deal with the complainant's case in so far as his own request for access is concerned. It should be noted, however, that the Commission has not argued that this part of the complaint should be considered inadmissible. It should further be noted that the complainant also objects to the rejection of the request for access made by Dr. K., who did make all appropriate prior approaches. The Ombudsman therefore considers that he is not prevented from dealing with the substance of the Commission's position on this point.

2.8 As regards the merits of the relevant obligation, the Ombudsman considers that he can be brief. Article 4(2)(iii) of Regulation 1049/2001 provides that access shall be refused where disclosure would undermine the protection of the purpose of "inspections, investigations and audits, unless there is an overriding public interest in disclosure." At the time when the requests for access were made, OLAF was carrying out an investigation concerning the substance of the allegations of irregularities that had been made against the University of Huelva and Professor O. The Commission's view that the disclosure of the relevant documents might have threatened to undermine this investigation cannot be considered to be unreasonable. There is therefore no need to consider the other reasons on which the Commission has based its decisions in this respect. It is true that the complainant has argued that there is an overriding interest in disclosure, given that the proper usage of public funds was at issue. The Ombudsman considers, however, that such a general consideration cannot be considered as establishing an overriding interest in disclosure in the present case.

2.9 No maladministration is therefore found as regards this aspect of the case.

2.10 In order to avoid possible misunderstandings, the Ombudsman considers it important to stress that his inquiry necessarily focuses on the decisions rejecting the requests for access made by Dr. K. and the complainant in 2004 and early 2005. It is obviously possible that a different conclusion might have to be reached if the Commission were now confronted with a request for access to the relevant documents. Among other things, and as mentioned above, it should be noted that the investigation conducted by OLAF was closed in February 2005. However, in order to make the Commission reconsider its position, the complainant would have to submit a new request for access to it. The Ombudsman has already informed the complainant accordingly on several occasions during the present inquiry.

3 Alleged failure properly to handle the relevant project

3.1 The complainant alleges that the Commission has failed properly to handle the relevant project. In the complainant's view, the University of Huelva and Professor O. committed a series of irregularities and the Commission failed to react adequately to these alleged irregularities. It appears that the complainant expected the Commission to disallow all or most of the costs declared by the University of Huelva, to reclaim the relevant amounts and to distribute them among the remaining actors carrying out the project.

3.2 The complainant has made detailed comments on the alleged irregularities of the University of Huelva and Professor O. to which, in his view, the Commission failed to react adequately. In so doing, the complainant has raised numerous issues. The Ombudsman considers that it would not make sense for him to try and examine every one of these arguments. Instead, the Ombudsman takes the view that his inquiry should focus on the most important issues in this context.

In the Ombudsman's view, these issues can be summarised as follows: (i) the alleged failure to ensure that a sub-contract was concluded with Dulsana; (ii) the alleged failure of the University of Huelva to carry out its tasks under the contract; (iii) the fact that costs were claimed for postgraduate staff whereas the reports drawn up by the University of Huelva mostly consisted of papers drawn up by undergraduate students; (iv) the alleged usage of data obtained by Dr. K. in earlier field trials; and (v) the alleged forgery of Dr. K.'s signature on invoices presented to the Commission.

The Ombudsman's approach to contractual cases

3.3 The present case concerns the obligations arising for the Commission under a contract entered into by it in relation to a specific project.

3.4 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 which is binding upon it(4). 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.

3.5 However, the Ombudsman considers that the scope of the review that he can carry out in such cases is necessarily limited. 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.

3.6 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.

As regards the allegedly fraudulent behaviour

3.7 The Ombudsman considers that it is appropriate to deal first with the last two of the issues mentioned in point 3.2, that is to say, the alleged usage by the University of Huelva of data obtained by Dr. K. in earlier field trials; and the alleged forgery of Dr. K.'s signature on invoices presented to the Commission. As regards these issues, the Commission submitted, in its opinion, that the audits it had carried out had not confirmed the accusations of fraud that had been presented against the University of Huelva and Professor O. The Commission added, however, that these issues were now the subject of judicial proceedings that were pending in Spain and that, depending on the outcome of these proceedings, it would take the necessary financial follow-up measures. In its reply to the Ombudsman's request for further information, the Commission argued that the complaint was inadmissible in so far as these issues were concerned, since they fell under Article 2(7) of the Ombudsman's Statute.

3.8 The Ombudsman notes that it emerges from the information provided by the Commission that judicial proceedings appear to be pending against Professor O. before a Spanish court. It further appears that these proceedings concern the allegations of fraud to which the complainant referred in his complaint, that is to say, the alleged presentation of fake reports to the Commission and the alleged forgery of Dr. K.s signature. Article 2(7) of the Ombudsman's Statute stipulates that the Ombudsman has to declare a complaint inadmissible or terminate his inquiry into a complaint if there are (or have been) legal proceedings "concerning the facts which have been put forward" by the complainant. It should however be noted that the present complaint is directed at the Commission, whereas the judicial proceedings in Spain concern Professor O. Since the court case pending in Spain thus does not concern the allegations made by the complainant against the Commission, Article 2(7) of the Ombudsman's Statute is not applicable.

3.9 However, the Ombudsman considers that the position adopted by the Commission concerning these issues is eminently reasonable. In the Ombudsman's view, it is clearly appropriate for the Commission to await the outcome of the judicial proceedings pending in Spain before deciding whether any further action needs to be taken as regards the financing of the contract concerned. It appears useful to mention that the Commission has also taken the precautionary step of entering the University of Huelva in its EWS.

As regards the absence of a sub-contract with Dulsana

3.10 As regards the University of Huelva's alleged failure to ensure that a sub-contract was concluded with Dulsana, the Commission submitted, in its opinion, that the absence of such a sub-contract was a matter for the parties concerned. The Ombudsman is not convinced by this argument. The complainant has put forward, without being contradicted by the Commission, that most of the work to be carried out by the University of Huelva related to field trials and that the University did not possess any facilities for such field trials. It would thus appear that in order to be able to fulfil its obligations under the contract, the University of Huelva was dependent on assistance from Dulsana, which disposed of facilities for field trials. In these circumstances, the Ombudsman considers that it could indeed have been expected that the conclusion of a sub-contract with Dulsana would have been one of the first priorities of the University of Huelva. The complainant's argument that this would also have been in conformity with the General Conditions applicable to the contract (the "General Conditions") appears to be reasonable. However, it appears that no such sub-contract was ever agreed to between these two parties.

3.11 The complainant appears to consider that the responsibility for the failure to conclude such a sub-contract lay entirely and exclusively with the University of Huelva. The Commission has not taken a position on this issue but pointed out that the University of Huelva and Professor O. consider that the responsibility lies rather with Dulsana. However, and for the reason set out below (in point 3.13), the Ombudsman considers that there is no need further to examine this issue.

3.12 The complainant has furthermore argued that the behaviour of the University of Huelva constituted a fundamental breach of contract and that the Commission should therefore have ordered it to repay all the money that the Commission had advanced to it. In addition to that, the complainant submitted that the contract with the Commission had been subject to the condition that the contractual counterpart (i.e., the University of Huelva) could prove that it had effectively started to work on the project. However, doing so would have necessitated entering into a sub-contract with Dulsana. Given that this had not been done, the complainant took the view that the contract had never entered into force and that the payments made by the Commission to the University of Huelva were without any legal basis.

3.13 The Ombudsman is not convinced by these arguments. However, there would appear to be no need to examine these legal issues in more detail. First of all, it should be noted that the parties involved started to work on the project and continued to do so even though no sub-contract between the University of Huelva and Dulsana had been concluded. In particular, it is clear that Dulsana carried out certain tasks concerning this project and submitted invoices for this work to the University of Huelva. The absence of a sub-contract between the University of Huelva and Dulsana, however regrettable it may have been, thus did not prevent the parties concerned from effectively starting work on the project.

It should furthermore be borne in mind that the complainant himself pointed out that in mid-1999 the other project partners had asked the University of Huelva either to replace Professor O. or to withdraw from the project. The parties then adopted Amendment no 1 to the contract, pursuant to which the University of Huelva withdrew from the project as from 15 July 1999, and the University of Hohenheim, on whose behalf the complainant dealt with the project, took over the role of co-ordinator. As the Commission has correctly observed, by signing this amendment to the contract, the University of Hohenheim agreed to the conditions for the transfer to it of the role of coordinator and to the adjusted budget based on that transfer. It is obvious that the actual or perceived problems resulting from the absence of a sub-contract between the University of Huelva and Dulsana were known to all parties concerned at that time. If the University of Hohenheim or the complainant had considered that the failure to conclude such a sub-contract should oblige or induce the Commission to ask the University of Huelva to repay all the money it had been given by the Commission, such a demand would have had to be made before Amendment no 1 was signed. Given that no such demand appears to have been made or agreed at the time, the Ombudsman takes the view that the Commission has put forward a coherent and reasonable explanation of the reasons for its approach concerning this issue.

As regards the alleged failure of the University of Huelva to carry out its tasks under the contract

3.14 The complainant has argued that the University of Huelva failed to carry out the tasks assigned to it by the contract and that the Commission should therefore have asked it to repay the advance that had been made to it. This argument is reiterated and set out in great detail in the complainant's observations on the Commission's reply to the request for further information.

3.15 The Commission submitted that it had taken all reasonable steps to check the financial claims of the University of Huelva. It pointed in particular at the fact that both a financial and a scientific audit had been carried out in the present case. The Commission added that the results of the audits had been taken into account in the reduction of the Community financial contribution to the University of Huelva.

3.16 The Ombudsman has carefully examined the reports on the two audits that were made available to him on the occasion of the inspection of the Commission's file. He has also studied the two notes (dated 5 March 2001 and 31 July 2003 respectively) in which Mr V., the scientific officer in charge of the case at the Commission, set out his views on the issues concerned. The complainant has repeatedly invited the Ombudsman to take the testimony of Mr V. However, the Ombudsman considers that the information set out in the above-mentioned, detailed notes are fully sufficient to acquaint him with Mr V.'s views and to enable him to decide what conclusions need to be drawn for the present case.

3.17 Having examined all the above-mentioned material, the Ombudsman considers that the findings of the auditors do not appear to be unreasonable as regards all the issues examined by them apart from the question of staff costs, which will be discussed separately in point 4 below. It is true that the observations on the detailed results of these audits, which were made by Mr V. in the above-mentioned notes, do not appear to be without merit. It should be recalled, however, that in cases like the present one, the Ombudsman does not carry out a minute review of all the financial and scientific aspects involved by a certain project but limits himself to checking whether the Commission has put forward a coherent and reasonable account of the reasons underlying its approach. The Ombudsman considers that the Commission has done so in the present case. In the Ombudsman's view, and upon a thorough examination of all the information that was made available to him, a stricter approach might well also have been justified. The Ombudsman cannot even exclude that the Commission might have been entitled to recover the entire advance it had forwarded to the University of Huelva, as the complainant had suggested. However, the Ombudsman considers that it cannot be his role to substitute his own assessment for that of the Commission, provided that the latter appears reasonable. As already mentioned above, the Ombudsman considers that this is the case here.

3.18 For the sake of completeness, it should be mentioned that the complainant did not only criticize the way in which the University of Huelva carried out its duties with regard to the substance of the project, but also referred to the fact that the university had failed to pay or delayed paying invoices submitted by Dulsana. However, the complainant also mentioned that Dulsana had taken the University of Huelva to court over this issue and that the latter paid Dulsana's main claims in July 2003. The Ombudsman therefore considers that there is no need for further inquiries into this issue.

As regards staff costs

3.19 The complainant alleges that the reports of the University of Huelva were identical to papers drawn up by undergraduate students and that the Commission failed to take adequate action in this respect. It appears that the complainant considers that the Commission should have disallowed the staff costs that the University of Huelva had declared in this context.

3.20 In its opinion, the Commission noted that costs of staff working on the project had been reimbursed in accordance with the findings of the above-mentioned audits and the contract. For the second year, the University of Huelva had not been able to provide time sheets. As a result, these costs had been rejected by the Commission. The Commission added that one of the conclusions of the scientific audit report had been that more than 80 % of the time declared by PhD students on the project was justified.

3.21 In its reply to the Ombudsman's request for further information, the Commission submitted that it had been confirmed during the financial and scientific audits that the relevant research work had been carried out by three PhD candidates and a number of undergraduate students. The work done by the undergraduate students had been reported in the scientific reports submitted by the University of Huelva to the Commission. This work had been in agreement with what was described in the technical annex of the contract as the tasks to be executed. The University of Huelva had not submitted cost statements for undergraduate students. The three PhD candidates charged by the University of Huelva to the project had effectively been employed and paid by the University of Huelva. Time sheets for the first year (February 1998 - January 1999) had been submitted to the Commission by the University of Huelva. This was not the case for the second period (February 1999 - July 1999), and the staff costs for this period, as already explained, had not been accepted by the Commission. It was normal practice that undergraduate students are assisted and guided in their work by postgraduate students. The costs of the latter could be charged to the project.

3.22 The Ombudsman notes that Article 19.1.1 of the General Conditions provides that "personnel costs shall be limited to (...) postgraduate or technical staff engaged in research (...)". He further notes that the parties agree, as regards the present project, that costs could only be claimed concerning the work of postgraduate students, but not concerning the work of undergraduate students.

3.23 In its complaint, the complainant argued that reports submitted by the University of Huelva to the Commission had in substance been identical to papers that had been handed in by students at this university. The Commission does not appear to deny that this was indeed the case. It should be noted that the expressions used to denote the type of work that was produced by these students vary to some extent. For instance, in its reply to the request for further information, the Commission refers to "thesis work done by the undergraduate students". What seems, clear, however, is that the reference is to papers drawn up by undergraduate students. Since it must be assumed that papers handed in by students at a university were written by these students themselves, the question arises as to what work had actually been carried out by the postgraduate students in respect of whom costs had been claimed from the Commission. The Ombudsman notes that this question was already raised in Mr V.'s note of 5 March 2001. It appears that this note was sent to the person who subsequently carried out the financial audit.

3.24 As regards the financial audit, it emerges from the report prepared by the auditor that time sheets were available for the three postgraduate students who, according to the University of Huelva, had worked on the project. On the basis of these time sheets, the relevant staff costs were considered eligible.

3.25 The report on the scientific audit notes that the research work was carried out by three PhD candidates and a number of undergraduate students and that their "dissertations" had been incorporated in the reports of the University of Huelva. The auditors point out that the role of the students was questioned by the Commission's scientific officer and by the complainant. They stress, however, that costs were only claimed concerning the work performed by the PhD candidates.

3.26 In his note of 31 July 2003, Mr V. provides further, detailed comments on this issue. However, given that the Commission has informed the Ombudsman that it considers this document to be confidential, the Ombudsman takes the view that it would not be proper to quote from it.

3.27 Having examined all the information available to him, the Ombudsman considers that the following conclusions can be drawn: (1) The University of Huelva claimed costs for the work of three PhD candidates. (2) Time-sheets concerning the work of these PhD candidates were presented to the Commission as regards the first period for which the University of Huelva claimed costs. (3) The Commission's scientific auditors took the view that the work that had been performed was useful for the project. (4) Most of the staff costs were therefore considered to be eligible. (5) No staff costs were accepted as regards the second period, since no time-sheets had been submitted for this period.

3.28 The Ombudsman further considers that where a financial and a scientific audit have been carried out by competent staff, he may normally rely on the findings of these experts when dealing with complaints about maladministration concerning a specific project, provided that the auditors have considered all the relevant material and examined all relevant issues. However, it seems clear that in the present case, neither the financial nor the scientific audit examined the question as to what the work carried out by the PhD students was. It appears that both audits considered it sufficient that time-sheets attesting the work of these PhD students had been submitted. The Ombudsman agrees that time-sheets constitute relevant evidence in order to establish that work has been carried out by certain persons. He considers, however, that it is good administrative practice, and certainly in conformity with the duty to handle public funds properly, to proceed to further checks where reasonable doubts are raised as regards the reliability of such time-sheets. If reports submitted by the University of Huelva to the Commission were indeed in substance identical to papers that had been handed in by undergraduate students at this university, there was clearly reason to doubt whether the relevant work had indeed been carried out by the PhD students for whom costs had been claimed. Further checks would thus have been necessary to clarify this issue. It appears useful to note in this context that the complainant has pointed out that, already in July 2002, he had provided the Commission with a complete synopsis (i) of the texts of the papers prepared by the undergraduate students and (ii) of the relevant reports.

3.29 In its reply to the Ombudsman's request for further information, the Commission submitted that it was normal practice that undergraduate students are assisted and guided in their work by postgraduate students. This is certainly correct. However, it would seem that the relevant costs were claimed for work on the project, and not for work done in assisting and guiding undergraduate students. In any event, regard should be had to the fact that, according to a table provided by the complainant, the amount of costs considered eligible, after certain deductions, amounted to more than EUR 38 000. The Ombudsman finds it very difficult to understand how such a considerable amount could be considered appropriate if the work had been limited to assisting and guiding undergraduate students.

Conclusion

3.30 In view of the above, the Ombudsman considers that the Commission has failed to provide a coherent and reasonable explanation as regards its approach to the issue of staff costs. On the basis of the evidence available to the Ombudsman, it appears that the Commission has not dealt with this issue properly. This constitutes an instance of maladministration, and a draft recommendation will thus be made by the Ombudsman.

3.31 The complainant argues that the sums that, in his view, ought to be reclaimed from the University of Huelva should then be passed on to the parties who carried out the project. The Commission takes the view that even if further funds had to be recovered from the University of Huelva, this would not have a further financial impact on the project because the money recovered would have to be returned to the general budget of the Commission and could not be redistributed to the contractors of the project. The Ombudsman is not entirely convinced by this argument. It should be noted that a redistribution of funds was carried out when Amendment no 1 was agreed on, resulting in funds previously paid to the University of Huelva being reallocated to the other parties. Furthermore, Articles 1.1 and 1.2 of the contract provide that the contractors were to carry out the project "jointly and severally towards the Commission" and that they should "use reasonable endeavours to achieve the results intended for the Project and to fulfil the obligations of a defaulting Contractor". If the examination that is suggested by the Ombudsman in his draft recommendation below were to lead to the result that further funds ought to be recovered from the University of Huelva, the Commission could therefore consider whether these funds or parts thereof could be made available to the other parties. Any such reallocation would obviously presuppose that these parties had to face extra expenditure in order to ensure the success of the project. It is equally obvious that any such reallocation must not affect the maximum sum of the Community's financial contribution for this project.

3.32 The examination suggested by the Ombudsman only concerns the issue of staff costs. The Ombudsman considers, however, that the Commission could usefully decide to enlarge the scope of any new examination and in particular also to consider the comments on other issues that were made by Mr V. in his note of 31 July 2003.

3.33 In order to avoid misunderstandings, the Ombudsman considers it important to underline that the maladministration he has identified in the present case consists in the failure to examine the issue of staff costs thoroughly and properly enough. It goes without saying that this does not prejudge the outcome of such an examination to be carried out by the Commission.

4 Conclusion

In view of the above, the Ombudsman makes the following draft recommendation to the Commission, in accordance with Article 3 (6) of the Statute of the Ombudsman:

The draft recommendation

The Commission should carry out a further examination of the staff costs declared by the University of Huelva in the context of project FAIR 5-CT97-3751 and take any follow-up measure that might be necessary in light of the results of this examination.

The Commission and the complainant will be informed of this draft recommendation. In accordance with Article 3 (6) of the Statute of the Ombudsman, the Commission shall send a detailed opinion by 30 June 2008. The detailed opinion could consist of the acceptance of the Ombudsman's decision and a description of the measures taken to implement the draft recommendation.

Strasbourg, 1 April 2008

 

P. Nikiforos DIAMANDOUROS

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(1) Decision 94/262 of 9 March 1994 of the European Parliament on the Regulations and General Conditions Governing the Performance of the Ombudsman’s Duties, OJ 1994 L 113, p. 15.

(2) Amendment no 2 concerned a further extension of the duration of the project by 3 months.

(3) OJ 2001 L 145, p. 43.

(4) See the Ombudsman's annual report 1997, p. 22.