The background to the complaint

1. The complainant is a Polish cultural association. In April 2001 and in the framework of the European Commission's Culture 2000 programme, it applied for financing for its project entitled 'X' (Project 1). The project aimed at removing certain misconceptions which have been rooted in European society for centuries.

2. On 19 December 2001, the complainant and the Commission signed a grant agreement for the said project (the 'Agreement'). According to this Agreement, the Commission was to finance a maximum amount of EUR 87 272.10, that is, 40.69 % of the estimated total cost of EUR 214 460.10. In turn, the complainant (together with its partners) was to fund 59.31 % of the remaining estimated total cost. The Agreement provided that, if at the end of the project the real eligible costs were lower than expected, the Commission's contribution would be limited to the amount calculated by applying the above percentage of the Commission's contribution to the real eligible costs. In order to be eligible, project costs had to be incurred in the period between 1 May 2001 and 1 May 2002. Annex II to the Agreement specified the conditions which had to be fulfilled for costs to be considered 'eligible'[1] and provided that financial audits by the Commission and the Court of Auditors, or any persons authorised by them, could be carried out for a period of up to five years following the end of the Agreement. The Agreement further stipulated that the complainant would have to submit a final report on the project, including its final financial accounts as detailed in the form in Annex IV.

3. The first part of the grant was paid soon after the Agreement was signed. The second part had to be paid within 60 days of receipt of the above-mentioned final report. The responsible project manager on the Commission's side was initially Ms M.

4. On 19 December 2001, the complainant sent a letter to the Commission in which it requested that the eligibility period for costs be changed in order to commence on 1 December 2001 and run until 1 December 2002.

5. On 12 February 2002, the complainant requested changes regarding the content of the project.

6. On 5 April 2002, the Commission rejected the changes proposed by the complainant as regards the content of the project. It took the view that the nature and the number of the changes requested would significantly modify important parts of the project and would thus affect the basis on which the project had been chosen.

7. On 11 April 2002, the complainant sent a letter to Ms M, pointing out that it had not received a reply to its previous letters dated 19 December 2001 and 12 February 2002, and to its e-mail of 16 March 2002. The complainant also stressed the need for a rapid reply with regard to the proposed modifications.

8. On 18 April 2002 and on 15 May 2002, the complainant sent further letters to the Commission concerning the proposed modifications.

9. On 29 May 2002, the Commission replied that the content of the complainant's letters was unclear, and that it appeared that the complainant intended to proceed with the changes it had initially proposed. The Commission pointed out that if the project could not be carried out in its original form, it would reconsider the Agreement. It added that this could lead to the annulment of the Agreement and the recovery of the contribution already paid.

10. On 19 June 2002, the complainant assured the Commission that it was prepared to make any effort necessary to implement the project as it had been originally approved. However, it requested the Commission to confirm that the eligibility period for costs would run from 1 December 2001 to 1 December 2002.

11. In its reply of 30 July 2002, the Commission pointed out that "[t]he displacement of project activities to December 2002 is acceptable".

12. On 19 December 2002, the Commission and the complainant signed an amendment to the Agreement according to which, the eligibility period for costs ran from 1 December 2001 to 1 December 2002.

13. On 23 January 2003, the complainant sent a letter to the Commission in which it referred to a telephone conversation with Ms M and indicated that it would send the final report on the project on 3 February 2003. In that letter, the complainant also requested the Commission's approval for one specific change concerning the budget, and stated that it envisaged some other minor changes which would be specified in the final report.

14. On 6 February 2003, the complainant sent the Commission by express registered mail delivery (DHL) two parcels weighing 8.5 kg altogether. The content of both parcels was declared as 'education materials'.

15. On 21 March 2003, the Commission informed the complainant that it agreed with the change concerning the budget requested on 23 January 2003.

16. On 30 May 2003, Ms D informed the complainant that she had taken over the file from Ms M who had left the Commission. Ms D pointed out that "[a]lthough [Ms M] has made already a draft evaluation of the content of your report, she did not leave any evaluation of the income and expenses. I have well received the copies of the books and CD-roms of your project, but unfortunately she did not leave me the final report itself nor the annex IV with the income/expenses. I have made my inquiries all over the unit here and they seem to be lost."

17. On 5 June 2003, after a telephone conversation with the complainant's project coordinator, Ms D addressed to him an e-mail the contents of which were almost identical to her previous e-mail of 30 May 2003.

18. By letter of 5 June 2003, the complainant's project manager informed the Commission that the complainant had already sent it a copy of the report by mail, and that this copy was expected to reach the Commission on 9 June 2003. According to the complainant's project manager, the final report of the project consisted of several files saved on his computer which, if sent by e-mail or fax, could confuse the Commission's financial experts. The complainant's project manager also criticised Ms M who, during a telephone conversation in March 2003, had informed him that the financial report was being examined by independent financial experts who would get in touch with him if they had any further questions. However, no such contacts had ever been made.

19. On 11 June 2003, Ms D confirmed that she had received the final report sent by the complainant.

20. On 16 June 2003, following a telephone conversation with the complainant's project coordinator, Ms D wrote to the latter enclosing "a copy of the annex IV which [the project coordinator/the complainant] (still) [had] to fill out."

21. On 19 June 2003, the complainant's project coordinator sent an e-mail containing three attachments to the Commission, explaining that this was the second part of the corrected final report and that the remaining two parts would be sent in the morning of the next day.

22. On 20 June 2003, the Commission received a copy of the complainant's financial report.

23. On 23 July 2003, the Commission paid the complainant the second instalment of the grant.

24. On 7 May 2004, the Commission informed the complainant that it had decided to carry out an ad hoc audit at its premises. The Commission drew the complainant's attention to the fact that the original documents relating to the project had to be made available to the auditors and that no supporting documents would be accepted after the audit.

25. Between 14 and 16 June 2004, an external audit company carried out a first audit concerning Project 1 at the complainant's premises. The auditors took the view that the complainant had not fulfilled its contractual obligation to finance 59.31% of the eligible expenses. They considered that the complainant had not provided sufficient proof of its own contribution, and that it had provided no documents to support the reported contributions of its partners. According to the auditors, the complainant's failure to provide sufficient proof of its own financial contribution could be attributed to a number of factors[2]. Therefore, they considered that the Commission's grant should be recovered in its entirety. However, the auditors added that, irrespective of the issue related to the own-contribution, the complainant would have to reimburse EUR 41 196.92 due to expenditure that was qualified as ineligible.

26. In October 2004, the complainant submitted to the Commission an application for a grant concerning another project entitled 'Y' (Project 2).

27. In March 2005, the complainant submitted further documents which allegedly had not been taken into account in the report on the first audit of Project 1 project. The Commission thereupon decided to proceed to a further audit.

28. In May 2005, the Commission informed the complainant that Project 2 had been put on its reserve list.

29. On 12 July 2005, the Commission informed the complainant that it was not in a position to fund Project 2, which ranked eighth on the relevant reserve list which comprised thirteen projects. The Commission explained that, as a result of budgetary constraints, it was able to fund only ten projects. It further stated that the above-mentioned audit into the prior Culture 2000 project had given rise to certain concerns that were known to the complainant. The Commission pointed out that, in accordance with the Financial Regulation, it had decided not to fund the complainant's Project 2.

30. The second audit concerning the Project 1 took place from 26 to 28 February 2007 and was carried out by another external auditing company. It resulted in a recommendation to recover an amount of EUR 27 080.51.

31. On 25 January 2008, the Commission informed the complainant that it envisaged issuing a debit note for the amount of EUR 27 080.51.

32. Between 1 February and 18 March 2008, an intense exchange of correspondence took place between the complainant and the Commission. In its letters and e-mails, the complainant considered that the two audits had pursued contradictory approaches in terms of determining the eligible project costs. Expenses rejected in the second audit had been accepted in the first audit. The complainant argued that it had received assurances from the Commission's representative present at the first audit that the relevant documents were "correct". The same documents had however been interpreted differently in the second audit. Given that six years had passed since the implementation of the project, it was difficult to obtain all the necessary documents. The complainant further submitted that, in 2001, the Culture 2000 programme was for the first time accessible to Polish associations. It criticized the allegedly poor assistance provided by Ms M who, according to the complainant, had not replied to any of its letters and had lost the final report, and the fact that the amendment concerning the eligibility period for costs had only been concluded after the Agreement had expired.

33. In its reply of 5 March 2008, the Commission's Directorate-General for Education and Culture pointed out that the two audits were not contradictory. The first audit resulted in a recovery order of EUR 41 196.92. However, due to the additional information provided by the complainant, the Commission had agreed to carry out a second audit which had also taken into account that additional information. This explained the differences between the two audit results. From 2003 to 2007, the complainant had had ample time and opportunity to submit any further relevant documents. The Commission stressed that it had to ensure that public money was spent in line with the objective for which it was granted and the applicable financial rules. Audits were intended to verify that this was indeed the case. The responsibility to keep all relevant financial records lay with the complainant. Its relationship with co-organisers was also its responsibility, and the Commission could not intervene in that relationship. The Commission thus intended to recover the amount established by the second audit.

34. On 14 May 2008, the Commission addressed a debit note to the complainant for the amount of EUR 27 080.51.

The subject matter of the inquiry

35. The Ombudsman opened an inquiry into the following allegations and claims:

Allegations

1) The Commission failed adequately to handle Project 1. In particular, the Commission (i) unnecessarily delayed signing an amendment relating to the implementation period of the project, which was only signed after the Agreement had expired; (ii) based on two inconsistent audits, wrongly considered certain project costs as ineligible; (iii) wrongly refused to accept official documents issued by a diocese as proof of the project partners' contribution; (iv) wrongly refused to evaluate additional documents submitted after the audit had been completed; (v) carelessly lost the original final project report; and (vi) failed to provide sufficient assistance to the complainant through its project coordinator, Ms M, who inter alia failed to answer the complainant's letters.

2) The debit note issued by the Commission contained no information on the possibility of an appeal, which was not in conformity with principles of good administrative behaviour.

3) The Commission illegally and unfairly refused to allow the complainant to coordinate Project 2, which had been approved by the selecting committee and with regard to which implementation had already started. According to the complainant, this practice was due to the fact that it had been secretly blacklisted.

Claims:

1) The Commission should (i) acknowledge its failure to see to it that the amendment was signed during the period of validity of the Agreement; and (ii) acknowledge its failure to refer, in the amendment, to the provision on the duration of the original Agreement.

2) The Commission should revoke the debit order for the amount of EUR 27 080.51.

3) The Commission should also accept testimonial confirmation instead of accounting documents in the present case.

4) The Commission should (i) explain the reasons for, and the basis of, the disqualification of Project 2 and (ii) compensate the complainant and its project partners for their work in preparing the respective project proposals.

36. In its complaint, the complainant also argued that, due to the invalidity of the Agreement, there was no legal basis for the two audits performed. In his letter opening the inquiry, the Ombudsman noted that if the complainant's point of view proved to be well-founded, it would lead to the conclusion that the Commission had no legal basis for the financial support it granted. This appeared to contradict the complainant's intentions, given that it did not question the validity of the payments it had received. Thus, in that respect, the Ombudsman took the view that there were insufficient grounds to include that allegation in the inquiry.

37. In its complaint, the complainant also claimed that the Commission should acknowledge the invalidity of the amendment to the Agreement relating to the duration of the Agreement which referred to an agreement no longer in force at the time when the amendment was signed. That claim was not taken up for inquiry for essentially the same reason mentioned in the preceding point.

38. Furthermore, the complainant claimed that the Commission should reconsider its approach towards its cooperation with the Catholic Church in the framework of EU projects, in general. The Ombudsman decided that that claim was inadmissible pursuant to Article 2(4) of the Ombudsman's Statute because the complainant did not appear to have made any prior administrative approaches concerning this issue. This claim was thus not included in the inquiry.

The inquiry

39. The present complaint was lodged on 7 May 2008. On 26 June 2008, the Ombudsman opened an inquiry.

40. On 5 December 2008, the Commission provided its opinion on the complaint.

41. On 30 January 2009, the complainant sent its observations on the Commission's opinion.

42. On 26 May 2009, the Ombudsman asked the Commission to reply to a number of questions. Among other things, the Ombudsman asked the Commission to comment on the second aspect of the first claim.

43. On 19 August 2009, the Commission provided its reply. However, it emerged that the Commission had omitted to address one of the Ombudsman's questions. Therefore, on 5 October 2009, the Ombudsman asked it to provide the relevant information, which the Commission did on 18 December 2009.

44. On 11 January 2010, the Ombudsman forwarded the Commission's supplementary comments to the complainant and invited it to provide its comments thereon.

45. On 25 January 2010, the complainant submitted its observations.

46. On 9 September and 5 October 2010, the Ombudsman's services carried out an inspection of the Commission's file.

47. A copy of the inspection report was forwarded to the complainant. On 30 November 2010, the complainant provided its observations on this report.

48. On 29 July 2011, the Ombudsman's services asked the Commission for supplementary information.

49. On 7 December 2011, the Commission provided additional clarifications.

50. On 13 December 2011, the Ombudsman invited the complainant to provide its observations thereon. No observations were received from the complainant.

The Ombudsman's analysis and conclusions

Preliminary remarks

51. In its observations, the complainant put forward arguments related to the invalidity of the Agreement and of its amendment. Given that these arguments concern issues which were not taken up for inquiry (see points 36 and 37 above), they will not be dealt with in the framework of the present decision.

52. The present complaint concerns a dispute arising out of a contract concluded between the Commission and the complainant. It appears useful to clarify that maladministration may also be found within the context of the fulfillment of obligations arising from contracts concluded by the institutions, bodies, offices or agencies of the EU. The Ombudsman has consistently taken the view that the scope of his review in such cases must necessarily be limited. In particular, the Ombudsman will 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 having jurisdiction to decide issues of fact and law. Therefore, in cases concerning contractual disputes, the Ombudsman limits his inquiry to examining whether the EU institution or body concerned has provided him with a coherent and reasonable account of the legal basis for its actions and why it believes that its contractual position is justified. If such an account is provided, 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 settled by a competent court.

53. In its complaint, the complainant argued that the Commission's two audits had been triggered by allegations formulated against the complainant by Ms B, a former collaborator on the project. According to the complainant, Ms B had attempted to pressure its coordinator into a romantic relationship and when these advances proved unsuccessful, she turned to the Commission in order to prompt it to proceed to an audit of the complainant's project. The Ombudsman notes that the Commission has argued that it carried out the audits in the present case in order to ensure both that the EU's public funds were properly spent, and that the project was carried out in accordance with the Agreement. The complainant has not alleged that this decision constituted an abuse of power. The Ombudsman therefore considers that there are no grounds to investigate this aspect of the complaint. In any event, the Ombudsman can only investigate possible maladministration on the part of EU institutions, not of citizens like Ms B.

54. In its observations, the complainant submitted that its own contribution under the Culture 2000 programme amounted to 50% of the entire budget and that it was unreasonable for the Commission to expect a Polish association with an annual income of EUR 10 000 to provide EUR 84 000 in cash. In the complainant's view, Polish associations were not in the same position as associations from other European countries. The Ombudsman considers, however, that by concluding the Agreement in question the complainant voluntarily agreed to the own-contribution levels fixed therein. In these circumstances, the fact that it considered later on that it would be unreasonable for an association with an annual turnover of EUR 10 000 to make an own financial contribution of EUR 84 000 has nothing to do with alleged instances of maladministration on the part of the Commission, but concerns the complainant's own ability to fulfil its contractual obligations. Thus, this argument does not form part of the Ombudsman's inquiry either[3].

A. Alleged improper handling of the project coordinated by the complainant and related claims

55. The complainant identified various aspects of the Commission's alleged improper handling of Project 1. In addition, it made a number of claims which relate to that allegation. For the sake of clarity and conciseness, the arguments of the parties are reproduced and examined in relation to the said allegation and the claims in the following order:

a) The alleged failure to refer, in the amendment, to the correct provision on the duration of the original Agreement (aspect (ii) of the first claim);

b) The alleged delay in the signing of the amendment to the Agreement (aspect (i) of the first allegation) and the related claim (aspect (i) of the first claim);

c) The allegedly inconsistent audits (aspect (ii) of the first allegation), the refusal to accept the documents issued by a diocese (aspect (iii) of the first allegation), and the claim that the Commission should accept testimonial documents (the third claim);

d) The refusal to examine additional documents after the audit (aspect (iv) of the first allegation);

e) The alleged loss of the original final project report (aspect (v) of the first allegation);

f) The alleged failure to assist the complainant by, among other things, failing to reply to its letters (aspect (vi) of the first allegation); and

g) The claim that the Commission should revoke the debit order (the second claim)./em>

Arguments presented to the Ombudsman

a) The alleged failure to refer, in the amendment, to the correct provision on the duration of the original Agreement (aspect (ii) of the first claim)

56. According to the complainant, the amending provision concerning the eligibility of costs amended Article 3 instead of Article 2. In its view, it followed that both costs eligibility periods applied and that, as a result, the eligibility period ran from 1 May 2001 to 1 December 2002.

57. In its opinion on the complaint, the Commission acknowledged that the amendment to the Agreement contained a typing error, since it should indeed have referred to Article 2 of the Agreement. However, the amendment made it clear that it only concerned the period during which costs had to be incurred in order to be eligible. Moreover, it was explicitly stated that all other provisions of the Agreement remained unaffected and applicable to the amended costs eligibility period. The amendment in question had been requested and accepted by the complainant before it was signed by the Commission. Thus, the reference in the amendment to the wrong article of the Agreement could not call into question the amendment's clarity, purpose or validity.

58. In its observations, the complainant took the view that the error in the reference to the Article to be amended meant that the initial eligibility period for costs had not been amended. Therefore, the correct eligibility period for costs was the original one, that is, from 1 May 2001 to 1 May 2002. Otherwise, the period of cost eligibility would have to be extended from 1 May 2001 to 1 December 2002.

b) The alleged delay in the signing of the amendment to the Agreement (aspect (i) of the first allegation) and the related claim (aspect (i) of the first claim)

59. In its complaint, the complainant pointed out that the Agreement stipulated that costs were eligible only if they were incurred during the implementation period of the project. This implementation period should have been adjusted and agreed upon by both parties before the project began. However, the complainant's requests for a change in the eligibility period for costs were ignored until 19 December 2002. The Commission had thus unnecessarily delayed the signing of the amendment to the Agreement.

60. In its opinion, the Commission acknowledged that the amendment to the Agreement was concluded late. It explained that the participation of Polish associations was dependent on the financial contribution of the Polish government to the 'Culture 2000' programme. It was only on 17 December 2001 that Poland made that contribution. The Commission further pointed out that, in February 2002, the complainant requested certain changes to the project. These modifications had initially been rejected because they entailed significant changes to a project which had already been approved by a panel of independent experts. Following additional clarifications provided by the complainant in its letter of 19 June 2002, the Commission accepted some of the changes proposed. In its reply of 30 July 2002, the Commission also stated that a "displacement of project activities to December 2002 [was] acceptable". According to the Agreement, any amendment needed to be set out in writing. In order to comply with that obligation, the parties to the Agreement signed an amendment on 19 December 2002. The Commission pointed out that this amendment had been adopted for the benefit of the project and in order to allow a maximum of eligible costs to be taken into account.

61. In its observations on the Commission's opinion, the complainant stressed that the Commission's approval of the change to the eligibility period for costs, that is, the statement that "[t]he displacement of project activities to December 2002 is acceptable", was obscure and vague. Without a clear understanding of the implementation period, it was impossible for a project manager to coordinate an international project.

62. The Ombudsman asked the Commission to explain why the amendment to the Agreement was signed nearly five months after the Commission's acceptance expressed in its letter of 30 July 2002. In its response, the Commission submitted that the complainant had not been disadvantaged by the said delay, since both parties had already agreed in July 2002 to that modification, through "a valid exchange of letters". These letters had the same legal effect as a formal amendment.

63. In its observations, the complainant noted that the Commission's letter of 30 July 2002 addressed the issue of the eligibility period for costs in a single sentence and reiterated that it was not possible to run a project on an international scale without a clear idea of its implementation period.

c) The allegedly inconsistent audits (aspect (ii) of the first allegation), the refusal to accept the documents issued by a diocese (aspect (iii) of the first allegation), and the claim that the Commission should accept testimonial documents (the third claim)

64. In its complaint, the complainant noted that the auditors carrying out the second audit (the 'second auditors') had scrupulously examined even those expenses that had already been accepted as eligible by the auditors who had carried out the first audit (the 'first auditors'). In this context, the complainant pointed out that some of a diocese's contributions which had been accepted in the first audit were considered ineligible in the second audit. These contributions related to research and the participation of a bishop in a film, payments made to seven individual staff members, equipment rental, and conference refreshments. The total costs that had thus been declared ineligible after the second audit amounted to EUR 10 413.

65. The complainant disagreed with the Commission's view that the reason for the differing assessments between the two audits was that the second auditors took into account the additional information that it had provided after the first audit. According to the complainant, the first auditors had accepted certain expenses on the basis of documents that had been available to them, whereas the second auditors had rejected them, even though they had more documentation at their disposal.

66. The complainant also submitted that the Commission acted wrongly when refusing to accept official documents issued by a Diocese and two further partner organisations that certified a number of items of expenditure.

67. In its opinion, the Commission explained that, in order to be eligible, costs had to comply with the principles set out in Article 9 of Annex II to the Agreement[4]. In particular, eligible costs (i) had to have been actually incurred, (ii) had to have been incurred during the lifetime of the operation, (iii) had to be recorded in the beneficiary's accounts or tax documents, and (iv) had to be identifiable and controllable. Contributions in kind did not constitute eligible costs. However, according to the second auditors' report, many of the costs declared by the complainant did not comply with these rules. With regard to certain staff costs, no supporting documents issued by third parties were presented. In addition, no contracts, timesheets or payroll documents were available. The Commission underlined that a simple declaration did not constitute sufficient proof, unless it was supported by other documents and unless the relevant amount was paid out of the beneficiary's accounts, which was not the case here. Thus, the second auditors came to the conclusion that the complainant had not ensured an adequate financial management of the project and had not complied with the relevant provisions of the Agreement. As regards the complainant's argument that it should have accepted documents issued by third parties that certified certain expenditure, the Commission reiterated that for costs to be declared eligible, a mere declaration was not sufficient, unless the costs were recorded and paid out of the beneficiary's accounts.

68. Having examined the Commission's submissions, the Ombudsman asked it to provide more specific comments on the alleged inconsistency between the findings of the two audits.

69. In its reply, the Commission argued that there was no contradiction between the two audits. The first auditors had recommended that the Commission recover the entire grant paid by it (EUR 87 272.10) because they considered that the complainant failed to prove that it had complied with the requirement that 59.31% of the eligible expenses be financed by itself and its partners. The Commission did not accept this recommendation and, instead, took the view that its decision should be based on the expenditure that had been deemed ineligible by the first auditors. On that basis, the Commission asked the complainant to reimburse the amount of EUR 41 196.92.

70. After the completion of the first audit, the complainant provided supplementary information that had not been made available to the first auditors. Despite the additional costs that this entailed, the Commission again showed its flexibility and goodwill by giving the complainant a second opportunity to present all the supporting documents of the project on the occasion of another audit. The second auditors took into account all the supporting documents submitted to them, including the additional information presented by the complainant after the closure of the first audit. Any discrepancy between the conclusions of the two audits was due to the fact that these audits were carried out independently of each other and were based on the documents supplied by the complainant at the respective point in time.

71. In this regard, the Ombudsman pointed out that complainant's argument did not merely question the legality of the Commission's approach but also considered it to have been unfair.

72. The Ombudsman also noted that, in its opinion, the Commission pointed out that it had proceeded to a 'supplementary' audit because the complainant had submitted 'supplementary' documents. The Ombudsman considered it logical to assume that the additional documents provided by the complainant after the first audit had been completed concerned expenditure items that had been declared ineligible by the first auditors, and not items that had been considered eligible. The fact that the second auditors nevertheless rejected the said items could thus hardly have been the result of this additional evidence, as the Commission suggested, but appeared to be due to the fact that the second auditors examined again each and every item of the project costs. The Ombudsman further noted that the final decision on the recovery was not taken by the auditors, but by the Commission.

73. In the Ombudsman's view, the Commission had not sufficiently explained why it decided to base itself on the conclusions reached by the second auditors, even with respect to those items that had already been accepted by the first auditors. Thus, the Ombudsman asked the Commission (i) to take note of the fact that the second aspect of the first allegation also encompassed the issue of fairness and (ii) to explain whether it considered to have acted fairly in the present case.

74. In its further reply, the Commission reiterated that, although the first audit resulted in the recommendation to recover the entire grant paid by the Commission, it decided not to follow that recommendation, which would have been very harsh on the complainant. The first audit resulted in a recovery order of EUR 41 196.92.

75. The Commission emphasised that the complainant sent supplementary documents in March 2005, after the closure of the first audit. Notwithstanding the fact that it had already been given adequate time to react and submit supplementary documents during the audit, the Commission exceptionally gave the complainant a second possibility to present "all the supporting documents of the project" in a second audit. The second audit was, however, a complete audit, not a supplementary one. The auditors examined the final financial report in its entirety as well as all relevant supporting documentation submitted to them by the complainant. They were independent and carried out their assignment in line with International Standards on Auditing as set by the International Federation of Accountants. After this second audit, the complainant was given the possibility to submit additional documents to the auditors, and the audit findings were discussed with the complainant. It transpired from the audit report that the complainant made no comments on the observations of the report. The second audit resulted in a proposed recovery of EUR 27 080.51.

76. Since the Agreement had been signed between the complainant and the Commission, it was up to the Commission to issue the recovery order. As foreseen by the Agreement, persons authorised by the Commission could carry out technical and financial controls. The Commission needed to ensure that public money was spent in line with the objectives of the Culture 2000 Programme, as well as in accordance with the EU's financial regulations. External audits constitute a means of ensuring that public money is correctly spent. The purpose of the audit in question was to check that all expenses that were claimed were also supported by the appropriate documents. The Commission reiterated that the second auditors found that the complainant's expenses did not meet the relevant conditions set out in Article 9 of Annex II to the Agreement, and that the complainant did not: (i) provide for adequate financial management of the project, (ii) operate satisfactorily, (iii) comply with the legal/contractual basis of the project, and (iv) provide for the prevention and detection of errors, irregularities and fraud.

77. Thus, the Commission considered that it had acted fairly towards the complainant. It had shown goodwill and flexibility, as demonstrated in particular by its decision to give the complainant a second chance to submit all project costs to the second auditing company. The costs submitted which did not comply with the relevant contractual rules were considered ineligible. However, it was the complainant's responsibility to submit all supporting documents of the project to the auditors.

d) The refusal to examine additional documents after the audit (aspect (iv) of the first allegation)

78. The complainant submitted that, on 26 February 2007, it asked the second auditors whether it would be reasonable for it to contact its project partners, with a view to collecting further evidence to support its expenses so that they could be declared eligible. The second auditors agreed to grant the complainant an extension of the time limit for producing such documents. The complainant's project coordinator thus personally travelled in order to meet the various contributors, that is, the bishops and priests concerned, to explain the situation to them and to obtain accurate documents. As a result, six project partners provided 185 further supporting documents. These documents were subsequently forwarded to the second auditors. However, the relevant letters were returned unopened. The complainant pointed out that the second auditors had requested that the Commission reopen the case. However, the latter refused to do so.

79. In its opinion, the Commission explained that the complainant had submitted additional documents to support purportedly eligible costs after the first audit had been closed, that is to say, in March 2005. The Commission noted that it decided to show its goodwill by taking these documents into account. To this end, it authorised a second audit at the end of 2006.

80. In its observations, the complainant argued that an intense exchange of correspondence took place between itself and the manager of the second auditing company. According to the complainant, the manager was not aware that the final report on the second audit had been sent to the Commission without waiting for the complainant's additional documents or comments. The complainant stated that the manager assured it that he would ask the Commission for an extension of the time limit in order to make it possible to include and examine the documents supplied after the audit. The Commission, however, ignored this request. The complainant submitted an undated printout of an e-mail in which the manager of the second auditing company agreed to an extension of the time limit so as to allow the complainant to submit additional documents. It further referred to an e-mail of 6 February 2008, sent to the manager, in which it acknowledged that the initial deadline for providing these documents was 4 September 2007 but stated that this deadline was cancelled after it explained that its project coordinator needed to travel in order to meet its project partners and obtain the relevant documents.

81. Having examined the above submissions, the Ombudsman asked the Commission to comment on the complainant's criticism that it had failed to take into account the additional documents submitted after the second audit. The Ombudsman also asked the Commission to address the contents of the complainant's e-mail of 6 February 2008.

82. In its reply, the Commission rejected the complainant's assertion that it had wrongly refused to accept additional documents after the audit had been completed. The complainant had been given the possibility to submit supplementary documents even after the second audit. The initial deadline for doing so had been extended from 4 September 2007 to 10 October 2007. However, by the end of November 2007, that is, a month and a half after the expiry of the extended deadline, the complainant still had not provided any supplementary documents to the auditors. The latter thus decided to send their draft audit report to the Commission. The Commission validated the report in December 2007 and closed the audit.

83. On 25 January 2008, the Commission informed the complainant that it intended to issue a recovery order for the amount of EUR 27 080.51. This prompted the complainant to react with an e-mail to the auditors, dated 6 February 2008, in which it stated that it had sent further supporting documents in December 2007. The Commission noted that it never received these documents and that the only documents received consisted of evidence of travel expenses incurred after the expiry of the project, which, in any event, were ineligible.

84. In its observations on the Commission's reply, the complainant put forward that the Commission's claim for certain amounts to be repaid mostly concerned contributions by its project partners. The main partners in the project were a diocese and a public television broadcaster, but there was also a number of other partner institutions. These institutions were extremely cautious about making public internal financial documents in relation to Project 1. It proved particularly difficult to obtain the necessary documents from some of the partners, such as a diocese.

e) The alleged loss of the original final project report (aspect (v) of the first allegation)

85. In its complaint, the complainant alleged that Ms M. lost the original final report it had submitted.

86. In its opinion, the Commission pointed out that, although the complainant argued that the final report was sent in February 2003, the Commission's services were unable to find any trace of its registration at that time in its system. The complainant's file had been taken over by another project manager in the Commission who assumed that the financial report had been lost, since no record of it was found. The Commission further pointed out that, despite its requests, the complainant was never able to supply a copy of the financial report it claimed to have sent in February 2003.

87. In its observations, the complainant pointed out that it had announced the submission of its report in a letter of 23 January 2003. It further pointed to the e-mail of 5 June 2003 in which Ms D, the new project manager, wrote, with reference to the previous project manager, that "[a]lthough she has made already a draft evaluation of the content of your report, she did not leave any evaluation of the income and expenses [...] I have made my inquiries all over the unit here in order to find these documents and they seem to be lost". The complainant argued that it followed from Ms D's e-mail that she had consulted her Head of Unit and that it could thus be assumed that he agreed that the report had been lost. Moreover, the complainant was puzzled by the fact that, on the assumption that the report had not been received, as the Commission claimed, nobody noticed the failure to submit it until four months after the relevant deadline had expired. The complainant stressed that it had a clear interest in submitting that report to the Commission, since otherwise no payment could be made. It further referred to its letter of 5 June 2003 and enclosed a copy of the DHL receipt, dated 6 February 2003. It put forward that a copy of the final report was available on the computer of the project's accountant, who was in hospital at the time.

88. Having examined these submissions, the Ombudsman asked the Commission to address the above-mentioned arguments put forward by the complainant.

89. In its reply, the Commission rejected the complainant's assertion that it had lost the report. It underlined that the final report consisted of two parts. The first part contained a report on the implementation of the project and the second comprised a report on the financial aspects of the project (expenditure and income). The complainant's assertion that it sent the complete final report, that is, both parts, in February 2003, was not confirmed by the information at the Commission's disposal. In a letter sent in March 2003, the Commission had accepted transfers between the budget lines of the project, which in fact meant that the final financial report had not been submitted in February 2003. The documents sent by the complainant in February 2003 consisted exclusively of the first part of the report. This was the reason why, in her e-mail of 30 May 2003, Ms D stated that a "draft evaluation of [the] report" had been carried out, but "[no] evaluation of the income and expenses" had been conducted. The Commission had thus referred to the first part of the report and not to an evaluation of the final financial report, as this was only provided in June 2003.

90. In view of the Commission's reply, the Ombudsman considered it necessary to proceed to an inspection of the Commission's file. It emerged that the Commission's file contained the operational report, which was signed by the complainant and dated 1 February 2003. This document did not bear any stamp or note recording when it was received and registered. The Commission officials present at the inspection were unable to provide any information on the precise date when the Commission received and registered that document.

91. The Commission officials present at the inspection expressed the view that the institution could not have received the financial report before 20 June 2003, since the changes to the budget requested by the complainant would not have been possible if the financial report had actually been received and approved.

92. At the inspection, it emerged that, until then, Ms D did not appear to have been asked to clarify the meaning of her e-mails of 30 May and 5 June 2003. The Commission officials present at the inspection therefore promised to obtain such clarifications from Ms D. Shortly afterwards, the Commission provided the Ombudsman with a note drawn up by Ms D in which she stated that Ms M had left behind a file concerning this case which contained the operational report and copies of books and CDs provided by the complainant. However, the file did not include the financial report. Ms D explained that, since no message had been left concerning this report and since it did not occur to her at the time that it was possible that the financial report had not yet been submitted, she concluded that it could have been lost and asked the complainant for a copy. Ms D added that, as far as she could remember, it had taken the complainant a long time to provide a copy of that report.

93. In its observations on the Commission's reply to the Ombudsman's request for further information and on the inspection report, the complainant reiterated that beneficiaries such as itself receive only part of the Commission grant at the beginning of a project. It is only when beneficiaries have submitted the financial report and the Commission has approved it that the remaining part of the grant is paid out. The complainant and its partners thus knew that they could only receive the final payment if they submitted the financial report on time. The complainant reiterated that it had sent the financial report to the Commission in February 2003 and alleged that Ms M had been known for her complete lack of organisation.

94. The complainant also enclosed a statement by its secretary that the financial report was sent together with the final report "on the date indicated on the registered mail to the Culture 2000 programme" and that she had witnessed the actual sending of all documents at the main post office in a Polish city.

95. The Ombudsman asked the Commission (i) when and how the correspondence sent by the complainant by DHL in February 2003 was registered, (ii) if it was not registered, why no such registration was carried out, and (iii) why there was no receipt stamp on the operational report.

96. Furthermore, the Ombudsman noted that the complainant's project coordinator sent a letter on 5 June 2003 in which he stated that the Commission's previous project manager had told him in a telephone conversation in March 2003 that the financial report was already being examined by the Commission's financial experts and that the latter would contact the complainant if they had questions.

97. Finally, the Ombudsman made reference to the above-mentioned statement made by the complainant's secretary regarding the posting of both the financial and operational report on the date indicated in the DHL receipt.

98. In its reply to the Ombudsman's further inquiries, the Commission explained that the complainant's incoming correspondence was registered in the internal Commission filing system with a reference number on 6 February 2003, bearing the subject: 2001-1454 Final report. It was assigned to the Commission project manager at the time, Ms M. There was no information in the registration system on the number of files received, nor on their type. Given the length of time that had passed since then, it was no longer possible to provide an answer to the Ombudsman's question as to why there was no receipt stamp on the report, or to clarify the content of a telephone conversation held in March 2003 between Ms M and the complainant's project manager. However, other facts strongly suggested that the final financial report was never received. The complainant was not able to deliver a duplicate of the final report to Ms D, and, in the meantime, on 21 March 2003, the Commission approved transfers between budget headings. These transfers had been requested by the complainant and would not have been possible if the financial report had been received and approved by the operational unit.

99. The Commission explained that the financial procedure applicable at the time was as follows: a financial report and payment order would be sent to the financial unit only after approval by the officials responsible for operational and financial initiation, and after financial and operational verification. None of those approvals were recorded for the allegedly lost report. Given that transfers between budget lines were accepted by the operational unit one and a half months after the date the complainant sent the allegedly lost report, it could be concluded that the various actors in the operational unit could not have approved it and sent it to the financial unit.

100. As regards the statement by the complainant's secretary Ms P, who at the time was responsible for the implementation of the project and had declared that she had witnessed the actual sending of all documents from the main post office in a Polish city, the Commission respectfully pointed out that the documents submitted on 6 February 2003 were sent by means of a private shipment company (DHL), not by post. In addition, the Commission pointed to an apparent discrepancy in Ms P's position, since, according to the financial report itself, Ms P only worked on the project for 10 days. According to the audit report of the first auditors, the "beneficiary does not have own personnel. Contracts were entered into with people providing services only during the eligibility of the project". Considering that the eligibility of the project ended on 1 December 2002, and the allegedly lost report was sent on 6 February 2003, it appeared that Ms P was no longer employed by the complainant at the time the final report was sent.

101. The complainant did not provide any further observations.

f) The alleged failure to assist the complainant by, among other things, failing to reply to its letters (aspect (vi) of the first allegation)

102. The complainant put forward that the assistance afforded by Ms M had been poor and that she had not replied to any of its letters after the project had started. In that regard, it enclosed copies of two letters, dated 11 April 2002 and 3 December 2002, respectively. In the December letter, the complainant stressed that it had not received a reply from Ms M to its numerous communications.

103. In its opinion, the Commission took the view that it had provided the complainant with answers to its questions and with assistance during the implementation of the project, as it did for all other projects. Furthermore, the Commission noted that it had met the complainant on 11 December 2002, in order to clarify the additional changes requested by the latter. The Commission stressed that it had always acted in close cooperation with the complainant and in the interest of the correct implementation of the project.

104. In its observations, the complainant did not make any specific comments on this issue.

105. Having examined the Commission's opinion, the Ombudsman concluded that he needed further information. He therefore asked the Commission for a more specific answer, taking into account the complainant's letter of 11 April 2002 in which the complainant had indicated that its previous letters of 19 December 2001, 12 February 2002 and 16 March 2002 had not been answered, and that the Commission's case-handler could not be reached by telephone.

106. In its reply, the Commission denied that Ms M had failed to assist the complainant. Ms M had been helpful before and during the implementation of the project. There were regular bilateral contacts between her and the complainant. The Commission pointed out that more than sufficient attention had been given to the handling of the complainant's file, which was managed in a spirit of fairness and equal treatment. The complainant had asked for changes to the Agreement on 19 December 2001, 12 February 2002 and 16 March 2002. In its letter of 5 April 2002, the Commission informed the complainant that the changes sought could not be approved. That letter must have crossed the complainant's letter of 11 April 2002. After the complainant clarified its numerous requests, in particular by letter dated 19 June 2002, the Commission provided its definitive position in its letter of 30 July 2002, which dealt with the issue of amending the implementation period mentioned in the complainant's letter of 5 April 2002.

107. The complainant did not make any further observations on this aspect of the complaint.

g) The claim that the Commission should revoke the debit order (the second claim)

108. The complainant claimed that the Commission should revoke its debit note by which it ordered the complainant to repay the amount of EUR 27 080.51.

109. In its opinion, the Commission rejected this claim. It explained that the amount of the debit order was based on the second audit of the project, and reiterated the reasons that had led it to conclude that costs amounting to the above-mentioned sum were not eligible.

The Ombudsman's assessment

a) The alleged failure to refer, in the amendment, to the correct provision on the duration of the original Agreement (aspect (ii) of the first claim)

110. The Commission and the complainant agree that the amending provision to the Agreement referred to the wrong article of the Agreement. Instead of referring to Article 2 of the Agreement, which dealt with the duration of the contract and the period of eligibility for costs, it mentioned Article 3, which concerned the financing of the project. The Ombudsman notes that the Commission has thus satisfied the complainant's claim that it should acknowledge its failure to refer, in the amendment, to the correct provision of the original Agreement.

111. The complainant argued that this mistake meant that (i) either the original costs eligibility period from 1 May 2001 to 1 May 2002 should apply, or (ii) the eligibility period for costs should cover both the period originally envisaged and the period referred to in the amendment, that is, from 1 May 2001 to 1 December 2002. The Ombudsman notes that it was the complainant itself which proposed that the new eligibility period should run from 1 December 2001 to 1 December 2002. It is furthermore clear that the Commission accepted this proposal. In these circumstances, the Ombudsman takes the view that the Commission's argument that the incorrect reference in the amending provision was due to a typing error and that this error does not call into question the clarity, purpose or validity of the amendment is reasonable.

112. Therefore, no maladministration has been established in relation to the second aspect of the first claim.

b) The alleged delay in the signing of the amendment to the Agreement (aspect (i) of the first allegation) and the related claim (aspect (i) of the first claim)

113. By the time the Agreement between the complainant and the Commission was signed on 19 December 2001, a significant part of the eligibility period for costs, which was originally foreseen to run from 1 May 2001 to 1 May 2002, had already lapsed.

114. The Ombudsman notes that the complainant requested a change to the eligibility period for costs on the very day on which the Agreement was signed. The Commission attributed that delay in signing the Agreement to the time it took the Polish government to make its financial contribution towards the 'Culture 2000' programme. Changing the eligibility period for costs would thus have been the logical consequence of that delay. It is therefore difficult to see why it took the Commission more than seven months to address this issue. It is true that, in February 2002, the complainant asked for further changes to the project. However, if the reason for holding in abeyance the complainant's request to change the eligibility period for costs was its request for further changes to the project, the fact remains that the Commission never informed the complainant about it. Moreover, the Commission could not have been unaware of how important the change in the eligibility period for costs was for the work on the project, especially since the said eligibility period, as originally foreseen, was to expire on 1 May 2002. In any event, there is nothing to show that the Commission provided the complainant with any kind of response to its repeated requests for an extension of the said eligibility period before 30 July 2002. The Commission has not claimed that there were any objective reasons preventing it from accepting the amendment proposed by the complainant.

115. Furthermore, it appears useful to point out once again that, even in its letter of 30 July 2002, the Commission merely confirmed that the "displacement of project activities to December 2002" was "acceptable". It did not say that the change was, in fact, "accepted". In any event, the Ombudsman notes that the Commission acknowledges that changing the eligibility period for costs required a formal amendment.

116. Given that, in its opinion, the Commission did not put forward any explanation as to why nearly five more months passed before that amendment was finally adopted, the Ombudsman specifically asked the Commission for an explanation. In its reply, the Commission merely indicated that the delay in question had not disadvantaged the complainant, since it had already "formally" agreed to the change in its letter of 30 July 2002. These explanations are not convincing. It is difficult to understand why, if the Commission believed that the Agreement had been validly amended through the said letter, it considered it necessary to proceed to a formal amendment in December 2002. In any event, the Commission failed to provide a reasonable explanation for the time it took to accept the relevant amendment, regardless of whether one considers 30 July 2002 or 19 December 2002 as the date when the amendment was accepted.

117. The Ombudsman considers that it constitutes good administrative practice for the EU institutions to implement uncontroversial amendments to contracts within a reasonable time frame, unless there are objective reasons justifying why this is not possible. The Commission did not provide any convincing explanations as to why it was not possible for it to do so in the case at hand. This constitutes an instance of maladministration. The Ombudsman will therefore make a corresponding critical remark below.

118. As regards the related aspect (i) of the first claim, namely, that the Commission should acknowledge its failure to see to it that the amendment was signed during the period of validity of the Agreement, the Commission has admitted that the amendment to the Agreement was signed after the validity period of the Agreement had expired. However, as explained above, responsibility for the delay in signing this amendment must be imputed to the Commission. The Commission's failure to admit that it was responsible for this delay constitutes a further instance of maladministration which will be the subject of another critical remark made below.

c) The allegedly inconsistent audits (aspect (ii) of the first allegation), the refusal to accept the documents issued by a diocese (aspect (iii) of the first allegation), and the claim that the Commission should accept testimonial documents (the third claim)

119. The complainant essentially alleged that the Commission acted wrongly because it (i) considered certain costs ineligible even though the first auditors had accepted them, (ii) took the view that the complainant failed to provide the information that would have been necessary to consider certain costs eligible, and (iii) refused to accept certain documents issued by the complainant's project partners as sufficient evidence.

120. As regards the first of the above issues, it should be recalled that the Commission did not follow the recommendations made by the first auditors, but decided to proceed to a second audit. The complainant focused its criticism on the fact that the second auditors rejected certain costs that the first auditors had considered eligible. The Commission does not appear to dispute this. The Ombudsman agrees that, indeed, it would appear unusual for costs which were accepted in the first audit, on the basis of the information available at that time, to be considered ineligible in the second audit, on the basis of the very same information and the additional information provided by the beneficiary. However, what is decisive is whether the conclusions reached by the second auditors were well-founded.

121. In particular, the Ombudsman considers that any discrepancy or inconsistency between the findings of the two audits would only be relevant in this case if the complainant could legitimately expect that the first auditors' findings could not subsequently be called into question by a second audit. According to the case-law of the Union courts, a person can only have a legitimate expectation that an EU institution will behave in a certain way if (a) precise, unconditional and consistent assurances originating from authorised and reliable sources have been given to the person concerned, (b) those assurances were such as to give rise to a legitimate expectation, and (c) the assurances given comply with the applicable rules[5]. In the present case, the complainant merely alleges that it received assurances from the Commission's representative present during the first audit that the documents it had provided were "correct". It would therefore appear that the Commission gave no clear assurance to the complainant that certain costs considered eligible by the first auditors would also be accepted by the second auditors. In these circumstances, the Ombudsman considers that there was nothing to prevent the second auditors from reviewing afresh all evidence and documents in the complainant's possession.

122. The complainant appears to have also considered unfair the fact that the second audit qualified as ineligible certain costs that the first audit had deemed eligible.

123. In this respect, the Ombudsman finds it useful to make a number of observations. First, the question of fairness in the present case would necessarily need to be assessed taking into account the behaviour of both contractual parties, that is, the complainant and the Commission. Second, and as already noted above, the complainant asserted that certain expenditures amounting to EUR 10 413 that were considered eligible in the first audit had been rejected in the second audit. The Commission did not dispute that assertion. Third, both the first and the second audit were carried out at the complainant's premises by qualified auditors, pursuant to international auditing standards and based on the documents made available by the complainant at the material time. Fourth, it is not for the Ombudsman to review how the auditors evaluated individual items of expenditure and to carry out a fresh audit of specific documents and/or other items, nor, for that matter, could this role be assigned to the Commission. What the Commission had to decide was whether and to what extent it should follow the recommendations of the qualified auditors. Thus, it is for the Ombudsman to examine whether the Commission's position in this respect was reasonable and fair.

124. The first auditors considered that the Commission was entitled to recover from the complainant the entire amount of the grant (EUR 87 272.10) on account of the latter's failure to comply with the provisions of the Agreement relating to the complainant's inability to prove its own contribution. The Commission however showed its goodwill by choosing to follow another of the first auditors' findings which was more beneficial to the complainant, namely, that on the basis of the eligible costs verified, the much lower amount of EUR 41 196.92 could be established as the sum to be reimbursed. Moreover, when, subsequent to the findings of the first audit, the complainant submitted further expenditure-related documents, the Commission decided to give it the opportunity to present all its documents within the context of a second audit. Given that the complainant was in any event obliged to keep appropriate documentary records concerning the project even prior to the first audit, this decision can indeed be considered to constitute a further demonstration of the Commission's goodwill. It may be useful to point out in this regard that, based on the Ombudsman's experience, the Commission's willingness to allow a second audit to take place is quite exceptional.

125. Next, the Ombudsman points out that, according to Article 12 of Annex II to the Agreement, the complainant had to keep "all documents relating to the technical and financial management of the project", and that the Commission was entitled to commission an audit for a period of up to five years after the end of the project[6]. More importantly, a closer look at the relevant requirements of Article 9 of Annex II on the eligibility of costs reveals that their application would have necessarily entailed a margin of discretion as to whether specific costs were eligible under the project. Thus, irrespective of whether the two audits were based on the same or on different documents, given the margin of discretion involved, one could expect that the auditors who carried out the second audit could have had diverging views from those of the first auditors with regard to the eligibility of certain items of expenditure. In that regard, the Ombudsman also notes that, in spite of the auditors' margin of discretion and the inherent risks associated with a new audit, the second audit, despite its different findings, concluded that the complainant should have been asked to reimburse a significantly lower amount than the one recommended in the first audit.

126. It may be useful to add that there was nothing in the complainant's submissions to show that the relevant findings of the first audit were manifestly correct and that the findings of the second audit were manifestly erroneous.

127. In light of the foregoing, the Ombudsman considers that the allegedly inconsistent findings of the two audits cannot justify a finding that the complainant was treated unfairly.

128. Next, the Ombudsman will examine the other related argument put forward by the complainant, namely, that the Commission wrongly considered that the complainant failed to provide the necessary information in order for certain costs to be considered eligible. The Ombudsman notes that, as the Commission pointed out, a number of conditions had to be met in order for costs to be considered eligible. The complainant did not dispute the statements made by the Commission in this context. As regards the costs that are disputed in the present case, the Ombudsman notes that, according to the Commission, the second auditors found that the complainant provided no supporting documents issued by third parties, and that the complainant did not submit any contracts, timesheets or payroll documents either in so far as certain staff costs were concerned.

129. As regards the refusal to accept certain documents issued by the complainant's project partners as sufficient evidence, the complainant referred to documents concerning contributions by (a) a diocese and (b)(c) two other partner institutions. As regards item (a), the complainant presented a one-page "report on the project co-organiser's input" concerning a diocese containing a table indicating that a contribution of EUR 2 000 was made by a bishop. The document bears what appears to be the official stamp of a diocese and is signed and dated 14 January 2004. No other date features in that report. As regards item (b), the complainant submitted another "report on the project co-organiser's input" in relation to the relevant partner institution. This document also bears the official stamp of the project partner and is signed and dated 17 November 2003. It does not specify the date on which the contribution was made. With regard to item (c), the complainant presented two documents. The first is entitled "Agreement/confirmation of partner's contribution" and is dated 1 February 2002. The second is a "report on the project co-organiser's input". It bears the partner's official stamp, and is signed and dated 20 November 2001.

130. The Commission took the view that a mere declaration did not constitute sufficient proof, unless it was supported by proof of expenditure recorded and paid from the beneficiary's accounts. According to the Commission, no such proof was ever submitted by the complainant.

131. The Ombudsman considers that the Commission's approach is in conformity with the conditions of eligibility set out in the Agreement.

132. In view of the above, the Ombudsman considers that the Commission has provided a coherent and reasonable account of how it handled the costs declared by the complainant. No maladministration can therefore be found in this respect.

d) The refusal to examine additional documents after the audit (aspect (iv) of the first allegation)

133. The complainant essentially argued that the Commission wrongly refused to take into account additional documents which the complainant obtained after the second audit had been completed. The evidence gathered by the Ombudsman shows that the second auditors invited the complainant to comment on their draft audit report by 4 September 2007. On 5 September 2007, the complainant asked for an extension of that deadline to 10 October 2007. The auditors granted the complainant the extension requested. The evidence available to the Ombudsman does not suggest that the complainant requested or obtained a further extension.

134. The auditors appear to have submitted their report to the Commission on 28 November 2007, that is, a month and a half after the expiry of the extended deadline set for the complainant to submit its observations. It appears useful to recall that, according to the Agreement, the complainant could have been audited within a period of five years after the end of the project. In the event of such an audit, it had to make available all documents relating to the technical and financial management of the project. The Ombudsman notes that, in the present case, the complainant had the possibility to submit further evidence until 10 October 2007, that is, almost five years after the end of the project. The complainant could not have been unaware of the importance of this deadline, since it had itself asked for an extension of the initial deadline.

135. Given that the complainant was supposed to be in possession of the relevant documents from the beginning of the project's implementation (and not to collect them almost five years after the project had been completed) and considering that the extended deadline had passed without any reply from the complainant, the Ombudsman finds that the complainant had more than enough time to obtain the relevant documents from its partners. Therefore, the Ombudsman considers that the Commission was entitled to take the view that no additional documents sent after the relevant deadline needed to be considered by the second auditors or by itself, and that it could proceed to finalise the audit report. Besides, the documents which the complainant submitted belatedly to the Commission appear to have concerned ineligible travel expenses that were incurred after the completion of the project.

136. In view of the above, no maladministration can be established in that regard.

e) The alleged loss of the original final project report (aspect (v) of the first allegation)

137. The complainant alleged that the Commission lost the final report it had sent to it. At the outset, it appears useful to recall that the final report consisted of the operational report, containing the description of the activities carried out, and the financial report, outlining the project's income and expenses. In the course of the inquiry, it emerged that the complainant's criticism only concerned the financial report which, according to the complainant, the Commission received in February 2003 and then lost. It appears useful to add that the inspection carried out by the Ombudsman's services showed that the complainant's operational report, which is dated 1 February 2003, forms part of the Commission's file.

138. The complainant presented a copy of a DHL receipt which shows that it had sent two packages to the Commission on 6 February 2003. However, this receipt does not prove that those packages contained the final financial report.

139. It is true that, in her e-mails of 30 May and 5 June 2003, Ms D expressed the view that the financial report appeared to have been lost. However, the very wording of these e-mails makes it clear that Ms D did not refer to something that she knew to be a fact, but rather to an assumption she had made. Thus, the relevant statement does not prove that the Commission indeed received the financial report in February 2003 and then lost it. The complainant suggested that the probative value of Ms D's statement was further reinforced by the fact that, according to the complainant, Ms D consulted her head of unit before sending the relevant e-mails. Even if the complainant's assumptions were correct, this would however not alter the fact that Ms D's statement was merely based on an unproven assumption.

140. The complainant argued that, if the financial report had indeed not been submitted in February 2003, it would be difficult to understand why the Commission only noticed this nearly four months later. The Ombudsman finds it puzzling that the Commission appears to have noticed the absence of the financial report in late May 2003, all the more so since, according to Ms D's e-mail of 30 May 2003, Ms M had already made a "draft evaluation" of the content of the operational report. However, Ms D also stated that Ms M had left no evaluation of the income and expenses. Possibly, this could have happened because the financial report had not been provided with the operational report. Nevertheless, the fact that this was not noticed earlier could also have been due to the circumstance that the relevant file was not, before Ms D took charge of it, handled as diligently as it ought to have been.

141. The complainant pointed out that it had every interest in submitting the report as soon as possible since doing so was a pre-condition for receiving the remainder of the grant. It would have been against its own interest not to comply with this condition. The Ombudsman agrees that it is logical to assume that the complainant had a clear interest in submitting the financial report in question as soon as possible. However, this does not exclude the possibility that the complainant might have inadvertently failed to do so. The Ombudsman notes that, in its letter dated 5 June 2003, the complainant stated that the final report was still stored on its computer and that it would send it by post so as to avoid confusion on the part of the Commission's experts. However, on 16 June 2003, the Commission drew the complainant's attention to the fact that it still needed to submit the final financial report[7] and the Commission only received it on 20 June 2003.

142. The Commission argued that, since it was only on 20 March 2003 that it accepted certain transfers between the budget lines of the project, the final financial report could not have been submitted in February 2003. The Ombudsman considers that it would indeed appear logical to assume that a beneficiary would await the Commission's reply to a request to proceed to certain financial changes before submitting the financial report to it. However, it cannot be excluded that the financial report was nevertheless submitted in February 2003, on the assumption that the Commission would approve the relevant changes and with a view to enabling the complainant to obtain the remainder of the grant as rapidly as possible.

143. In response to the Ombudsman's further inquiries, the Commission explained that, even though the complainant's correspondence was received and registered on 6 February 2003, it had no knowledge of the number or type of files that were received as part of that correspondence. Given the time that had elapsed, the Commission could not explain why there was no receipt stamp on the operational report either. Thus, it cannot be established from this information whether the Commission received the financial report in February 2003.

144. In its letter to the Commission dated 5 June 2003, the complainant mentioned that Ms M had informed its project manager during a telephone conversation in March 2003 that the financial report was being examined by independent financial experts who would get in touch with him if they had questions. The Commission explained that it was not in a position to confirm the content of that telephone conversation. However, it emerges from the Commission's clarifications that the allegedly lost financial report had not been submitted to the Commission's services in charge of the financial aspects of the project (as required by the administrative procedure applicable at the time and outlined in point 99 above), since there was no trace of the said report in their records. Thus, although it is not possible to establish what was said in the relevant telephone conversation, it transpires that the allegedly lost report had not reached the financial unit. The Ombudsman notes that this could imply that that the financial report might have been lost while still in the possession of the operational unit.

145. The complainant produced a statement by its secretary confirming that she had witnessed the sending of the financial report and the operational report to the Commission at the main post office in a Polish city. In response, the Commission put forward two arguments, namely, that (i) pursuant to the first audit report, Ms P should no longer have been employed by the complainant at the time when the final report was sent, and (ii) the complainant used a private shipment company (DHL) to send its final report to the Commission. As regards the first argument, the Ombudsman notes that the complainant is an association. Although the audit report noted that the association did not have its own personnel, the same report also recorded that Ms P was listed as the secretary of the association in the court register. Thus, it cannot be excluded that Ms P was employed and present when the financial report was sent. The Commission's first argument is hence not convincing. As regards the Commission's second argument, the Ombudsman notes that, indeed, the complainant had not used the postal service, but a private international express courier company (DHL), to send its final report to the Commission. Thus, Ms P's declaration that she witnessed the sending of the report at the main post office in a Polish city appears doubtful. The Ombudsman regrets to note that the complainant did not provide any clarifications that could shed more light on this point. In these circumstances, the Ombudsman considers that Ms P's declaration does not have the required probative value to decisively influence his conclusion.

146. Taking all the aforementioned factors into account, the Ombudsman finds that it is not possible to establish with certainty that, as the complainant alleged, the Commission received the financial report in February 2003 and subsequently lost it. Therefore, the Ombudsman must conclude that no maladministration can be established in this respect.

147. Nevertheless, the Ombudsman considers that it has emerged from this inquiry that a number of aspects of the Commission's handling of such kind of projects could be further improved. To this end, he will make two further remarks concerning the two points set out below.

148. The Ombudsman considers that the Commission's registration procedures for incoming documents in place at the time when the facts of this case occurred could clearly be improved (if this has not been done in the meantime). In this context, it should be noted that the complainant's operational report in the Commission's file did not contain any stamp indicating the date of receipt. For comparison, documents received by the Ombudsman are registered, stamped with the date of receipt, added to a physical file and scanned for electronic storage. The Commission would be well advised to ensure that, in so far as it has not yet taken such steps, any item or document it receives is handled in a way that allows one to establish in an easy and reliable manner when it was actually received and registered.

149. Moreover, where a project manager in charge of a given file within the Commission is about to leave his or her post or terminate his or her employment with the Commission, it would constitute good administrative practice to ensure that hand-over notes are prepared, taking stock of all the previous stages of the procedure (including any relevant correspondence exchanged) and of any pending actions that need to be taken. This could significantly reduce the scope for administrative errors that may arise from a change in project managers. It should also contribute to ensuring the necessary continuity in managing projects vis-à-vis the outside world.

f) The alleged failure to assist the complainant by, among other things, failing to reply to its letters (aspect (vi) of the first allegation)

150. The complainant alleged that the Commission and, in particular, Ms M failed to provide the complainant with sufficient assistance by not replying to its letters. In that regard, the Ombudsman notes that the complainant did not suggest that Ms D, who took over from Ms M, also failed to provide it with adequate assistance.

151. The complainant made reference to a letter dated 11 April 2002, sent to the Commission by its coordinator who stated that Ms M had not replied to the previous correspondence of 19 December 2001, 12 February 2002 and 16 March 2002, and that the coordinator had been unable to reach her by telephone. The Commission stated that Ms M had been in regular contact with the complainant and that the Commission had informed the complainant by letter dated 5 April 2002 that the changes requested were too extensive. In the Commission's view, that letter must have crossed the complainant's letter of 11 April 2002.

152. In the Ombudsman's view, if there was regular contact with the complainant, this clearly appears to have been largely due to the complainant's own efforts. Even if the complainant, in its letter of 12 February 2002, asked for changes that appeared to modify the project significantly, it is not clear why it took the Commission almost two months to address that letter. What is more, on 19 December 2001, the complainant asked for a change to the eligibility period for costs and reiterated its request on 11 April 2002. However, the subsequent letter from the Commission dated 5 April 2002 did not even address that pending issue. It actually took the Commission more than seven months finally to express its view on the complainant's request that the eligibility period for costs be extended to December 2002. Against this background, the Ombudsman finds that the Commission did not put forward any convincing explanation to show that it actually had, through its project coordinator, Ms M, provided the complainant with sufficient assistance. Accordingly, the Ombudsman finds an instance of maladministration with regard to the Commission's alleged failure to assist the complainant sufficiently. Given that this aspect to a certain extent overlaps with the issue of the delay in the signing of the amendment to the Agreement (aspect (i) of the first allegation and aspect (i) of the first claim), it will be considered in the critical remark corresponding to that issue.

g) The claim that the Commission should revoke the debit order (the second claim)

153. As noted above, not all of the aspects of the Commission's implementation and handling of the Agreement with the complainant were satisfactory. However, the above-mentioned instances of maladministration committed by the Commission are not such as to call into question the underlying reason for issuing the debit note addressed to the complainant, which was that the complainant failed to provide, over a period of more than four years, the required evidence to show that it had operated in accordance with the Agreement concluded with the Commission. The Ombudsman thus considers that the Commission's refusal to revoke the debit order was justified.

B. Allegation of having failed to provide information on the possibility of lodging an appeal (second allegation)

Arguments presented to the Ombudsman

154. The complainant alleged that the Commission's debit note did not provide any information on the possibility of an appeal. It therefore considered that the debit note should be revoked.

155. The Commission argued in its opinion that, by signing the Agreement, the complainant was fully aware of the possibility to turn to the General Court in order to challenge a decision adopted by the Commission. This was provided for in Article 8 of Annex II to the Agreement.

The Ombudsman's assessment

156. It is true that the debit note did not specify how it could be appealed. However, the Agreement signed by the complainant contained a specific provision regarding the settlement of disputes. Thus, it is reasonable to assume that the complainant was aware of the dispute settlement clause in the contract it had signed. Moreover, the debit note itself also referred to the Agreement signed by the complainant. In the Ombudsman's view, the Commission's position therefore appears reasonable and no maladministration can thus been found regarding this allegation.

C. The alleged blacklisting of the complainant and the related claim (third allegation and fourth claim)

Arguments presented to the Ombudsman

157. The complainant argued in its complaint that the preparation of Project 2 in 2005 involved nine partners and a substantial effort in terms of time and money. The complainant's coordinator travelled in order to visit all the institutions involved in Iceland, Greece, Spain, and Germany, made reservations for music concerts, signed agreements and incurred other related expenses. The project was eventually selected for a grant and, in July 2005, the project partners started working on its implementation. However, the Commission disqualified the project due to the complainant's ostensible misconduct in the context of its previously selected Project 1. According to the complainant, there was no evidence then, or at the time of the complaint, of any wrongdoing on its part in the implementation of the above-mentioned project. In the complainant's view, the Commission based its decision to exclude its second project on false evidence presented by Ms B. It argued that such behaviour amounts to illegal blacklisting.

158. In its opinion, the Commission explained that no 'blacklists' existed within the Culture 2000 programme. It added that the complainant's Project 2, received 68.20 points out of 100. Although it was not selected for financial support, it was placed on a reserve list. The Commission decided not to award a grant on the basis of the first audit report concerning  Project 1 and in compliance with the principle of sound financial management enshrined in the Financial Regulation[8]. It informed the complainant accordingly on 12 July 2005. Responsibility for starting the project before knowing the outcome of the Commission's selection procedure lay with the complainant alone. Likewise, the fact that the project was not selected for a grant did not give the complainant any right to compensation since the only binding document would have been the signed grant agreement.

159. In its observations on the Commission's opinion, the complainant stressed that, when the Commission disqualified Project 2, there were no definitive findings in relation to the first audit. Therefore, there could have been no grounds to disqualify it.

160. In response to the Ombudsman's further inquiries, the Commission explained that it had decided not to award a grant for Project 2 because, according to Article 115 of the Financial Regulation, a grant application needed to be assessed on the basis of the selection criteria. These included the applicant's financial capacity to complete the proposed project. Article 176(2) of Regulation 2342/2002[9] further specified that the applicant must have stable and sufficient sources of financing to maintain the activity throughout the set period and to participate in its funding. This pre-condition was specifically included in the 2005 call for proposals of the Culture 2000 programme which provided that applicants and co-organisers "must provide guarantees of their financial viability".

161. The Commission observed that the complainant's official accounts for the years 2000 and 2002, obtained during the first audit, showed that it did not have the adequate financial capacity to organise a project of a European dimension. Its annual results were negative, its net loss was increasing and there was almost no capital. Apart from the grants received from the Commission, the complainant did not have any other significant income by means of which to run a project. These elements reflected the extremely weak financial capacity of the complainant and were singled out by the first auditors. It was the failure to meet one of the main criteria for a grant award, as set in the Financial Regulation and in the call for proposals, that led the Commission to refuse the award of a grant. The Commission stressed that the rejection of the complainant's proposal stemmed from its weak financial capacity, and not from any of the exclusion criteria mentioned in Article 114(2) of the Financial Regulation.

162. The Ombudsman's representatives inspected the Commission's file relating to Project 2. It emerged that, due to the fact that additional budgetary means had become available, it would have been possible to fund the complainant's project. The Commission's competent service prepared a list of the projects from the reserve list that could receive this funding together with the letters informing the applicants concerned. A letter dated 7 July 2005, addressed to the complainant, was prepared but not sent because an analysis of the complainant's financial capacity that had in the meantime been carried out clearly showed a significant amount of negative capital. Therefore, the Commission took the decision not to fund the complainant's project and to inform it accordingly by letter dated 12 July 2005. The Commission reiterated that the procedure had been proper and transparent and that there had been no 'blacklisting' of the complainant or any other applicant.

163. The complainant did not comment on the part of the inspection report concerning this allegation.

The Ombudsman's assessment

164. The complainant alleged that the Commission illegally and unfairly refused to allow the complainant to coordinate Project 2, which had already been approved and whose implementation had already started. In its view, this was because it had been secretly 'blacklisted'.

165. The inquiry carried out by the Ombudsman showed that the Commission did not disqualify the complainant for misconduct attributed to it in carrying out Project 1. In fact, as the inquiry revealed, the Commission had initially (and independently of that project) intended to fund Project 2, once additional funds had become available. The change in its position only occurred after it learnt of the complainant's financial situation.

166. The inspection of the Commission's file did not reveal any elements that would suggest that the Commission's decision had been taken on the basis of an alleged 'blacklist'. The Commission explained that its decision was based on specific legal provisions in the Financial Regulation and Regulation 2342/2002, which aimed to ensure that the grant beneficiaries had sufficient financial capacity to complete their projects. During the inspection of the Commission's file, the Commission provided the Ombudsman with a document dated 5 July 2005, containing an analysis of the complainant's financial situation. That document showed that the complainant did not meet any of the relevant financial indicators. The complainant did not dispute the findings about its financial situation.

167. In light of the above, the complainant's assertions that the Commission acted illegally and unfairly or that it blacklisted the complainant cannot be upheld. No maladministration has thus been established with regard to the third allegation.

168. Nevertheless, the Ombudsman has consistently advocated the view that it constitutes good administrative practice for an administration to act transparently and to explain the reasons for its actions in clear and unequivocal terms. The Ombudsman notes that the wording used in the Commission's letter of 12 July 2005, namely, that "certain concerns" were raised about the complainant of which the latter "was also aware" was unnecessarily vague and obscure. If in the context of the present inquiry the Commission was able to explain in convincing terms the reasons for its decision not to fund the complainant's second project, it should have done so in the first instance, in its letter to the complainant of 12 July 2005. It would be desirable if, in the future, the Commission could ensure that applicants who find themselves in a situation similar to that of the complainant are informed in clear and unequivocal terms of the reasons why their project will not be funded. Therefore, the Ombudsman will make a corresponding further remark below.

169. The complainant claimed that the Commission should have (i) explained why it had disqualified Project 2, and (ii) compensated the complainant and its project partners for their work in preparing the project proposal. In light of the foregoing, it is clear that the Commission has provided sufficient clarifications concerning aspect (i) of the fourth claim. As regards aspect (ii) of the claim, the complainant did not put forward any evidence or information to show on which basis the Commission should have compensated it and its partners for the costs incurred for the preparation of their project. In that regard, the Ombudsman notes that the Commission informed the complainant that its project had been placed on a reserve list in May 2005. However, on 12 July 2005, the Commission informed the complainant that, although additional financial resources had become available, which meant that projects placed on the reserve list could be funded, it was not going to support Project 2. Thus, the Commission's position that the complainant bears sole responsibility for implementing a project before a grant agreement has been signed appears legitimate and reasonable. It is obvious that the fact that a project has been placed on a reserve list does not provide an applicant with any firm guarantee that it will receive funding in the future. Therefore, aspect (ii) of the fourth claim cannot be upheld either.

170. In light of the foregoing, no maladministration has been found in relation to the fourth allegation and the fourth claim.

D. Conclusions

On the basis of his inquiry into this complaint, the Ombudsman closes it with the following conclusions:

The Ombudsman considers that it constitutes good administrative practice for the EU institutions to implement uncontroversial amendments to contracts within a reasonable time frame and to provide beneficiaries with sufficient assistance in this respect, unless there are objective reasons justifying why this is not possible. The Commission did not provide any convincing explanations as to why it was not possible for it to do so in the case at hand. This constitutes an instance of maladministration.

The Commission also failed to admit that responsibility for the aforementioned delay in signing the amendment to the Agreement lay with it. This constitutes a further instance of maladministration.

No maladministration has been found as regards all the other aspects of the complainant's allegations and claims.

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

Further remarks

The Commission would be well advised to ensure that, insofar it has not yet taken such steps, documents and/or items received by its services are handled in a way that allows one to establish in an easy and reliable manner when they were actually received and registered.

When a project manager in charge of a given file is about to leave his or her post or terminate his or her employment with the Commission, it would constitute good administrative practice to ensure that hand-over notes are prepared taking stock of all previous stages of the procedure (including any relevant correspondence exchanged) and of any pending actions that need to be taken within the context of ongoing projects.

The wording of the Commission's letter dated 12 July 2005 was unnecessarily vague and obscure. It would therefore be useful if, in the future, the Commission could ensure that applicants who find themselves in a situation similar to that of the complainant in the case at hand are informed in clear and unequivocal terms of the reasons why their project will not be funded.

 

P. Nikiforos Diamandouros

Done in Strasbourg on 13 December 2012

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[1] Article 9.1 of Annex II provides as follows:/p>

"Eligible costs of the operation are taken to mean costs which satisfy the following criteria:

- they must be directly linked to the subject matter of the agreement and be provided for in the agreement;

- they must be necessary for carrying out the operation covered by the agreement;

- they must be reasonable and comply with the principles of sound financial management, and in particular of value for money and cost-effectiveness;

- they must have been incurred during the lifetime of the operation [...]

- they must have actually been incurred, be recorded in the beneficiary's accounts or tax documents and be identifiable and controllable."

[2] According to the audit report, the complainant's capital was PLN 400. Its net loss at the end of the year 2000 amounted to PLN 118 952.14, whereas the net loss at the end of the year 2002 amounted to PLN 331 738.05. The complainant did not have any significant income other than Commission grants. It did not have staff of its own, but entered into contracts with physical persons for the provision of services during the eligibility period.

[3] Moreover, it would appear that the Agreement foresaw a financial contribution of only about EUR 15 000 on the part of the complainant.

[4] Quoted in footnote 1 above.

[5] See for instance Case T-384/02 Fernando Valenzuela Marzo v Commission [2004] ECR-SC I-A-235 and II-1035, paragraph 104.

[6] Article 12 of Annex II reads as follows:

"12.1 The beneficiary undertakes to allow staff of the Commission and of the European Court of Auditors, and persons authorised by them, appropriate access to the sites or premises where the project is being carried out and to all documents relating to the technical and financial management of the project. ...

12.2 The beneficiary agrees to the Commission and the Court of Auditors of the European Communities, and any persons authorised by them, verifying the use to which the grant is put in accordance with the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities, as amended, throughout the duration of the agreement and for five years after the date on which it ends."

[7] Ms D wrote to the complainant to explain that she enclosed "a copy of the annex IV which you (still) have to fill out". It is useful to note in this context that, according to Article 5 of the Agreement, "the final financial account will be established solely on the Annex IV attached to this Agreement. Any other support will be rejected" (emphasis added by the Ombudsman).

[8] Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, OJ 2002 L 248, p. 1.

[9] Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities, OJ L 2002 L 357, p. 1.