Keywords

Summary



Keywords

1. Own resources of the European Union – Regulation on the protection of the financial interests of the Union – Administrative measures – Provisions on the withdrawal of a wrongly-obtained advantage – Scope – Measures for withdrawing an advantage wrongly obtained by means of an irregularity – Revocation of a decision having granted such an advantage – Included

(Council Regulation No 2988/95, Arts 1(1) and (2), and 4(1) to (3))

2. Own resources of the European Union – Regulation on the protection of the financial interests of the Union – Irregularity – Concept – Undermining of equality of opportunity and the principle of transparency – Collusive behaviour between the applicant for financial support and the official handling the file, enabling EU financial assistance to be obtained – Included

(Council Regulations No 2988/95, Arts 1(2) and 4(1), and No 1605/2002, Art. 109(1))

3. Own resources of the European Union – Regulation on the protection of the financial interests of the Union – Pursuit of irregularities – Limitation period

(Council Regulation No 2988/95, Art. 3(1), first para.)

4. Own resources of the European Union – Regulation on the protection of the financial interests of the Union – Continuous or repeated irregularity – Criteria for assessment

(Council Regulation No 2988/95, Art. 3(1), second para.)

Summary

1. The obligation to return an advantage improperly received by means of an irregular practice does not infringe the principle of legality. That obligation is not a penalty, but simply the consequence of a finding that the conditions required under EU legislation for obtaining the advantage were created artificially, thereby rendering the advantage received a payment that was not due and thus justifying the obligation to repay it. Thus, unlike administrative penalties which require a specific legal basis apart from the general rules laid down by Regulation No 2988/95 on the protection of the European Communities’ financial interests, the provisions laid down in Article 4(1) to (3), read in conjunction with Article 1(1) and (2) of that regulation, are to be regarded as a relevant and adequate legal basis for any measure designed to withdraw an advantage wrongly obtained by means of an irregularity and, accordingly, to revoke the decision granting that advantage.

In any event, even in the absence of specific provisions to that effect, it is apparent from the general principles of EU law that the administration is, as a rule, empowered to revoke, with retrospective effect, favourable administrative acts obtained unlawfully, Article 4(1) of Regulation No 2988/95 in particular being merely the implementation at secondary law level of those principles.

(see paras 117-118)

2. As is apparent from Article 109(1) of Regulation No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities, the Financial Regulation, the award of grants is subject, inter alia, to the principles of transparency and equal treatment, which presupposes that, having regard to the limited budget available to finance such grants, potential applicants for financial assistance will be treated equally as regards, firstly, the communication, in the call for proposals, of relevant information concerning the selection criteria for the projects to be submitted and, secondly, the comparative assessment of those projects culminating in their selection and the award of the grant.

With regard to budgetary matters, the obligation of transparency, which is the corollary of the principle of equal treatment, is essentially intended to preclude any risk of favouritism or arbitrariness on the part of the budgetary authority. It implies that all the conditions and detailed rules of the award procedure must be drawn up in a clear, precise and unequivocal manner, inter alia, in the call for proposals. Accordingly, all the information relevant for the purpose of a sound understanding of the call for proposals must be made available as soon as possible to all the operators who may be interested in a procedure for awarding grants in order, first, to enable all reasonably well-informed and normally diligent applicants to understand their precise scope and to interpret them in the same manner and, secondly, to enable the budgetary authority actually to verify whether the proposed projects meet the selection and award criteria previously announced. Therefore, any undermining of equality of opportunity and of the principle of transparency constitutes an irregularity invalidating the award procedure.

Therefore, the acquisition of financial assistance from the general budget of the Communities by means of collusive behaviour, which is manifestly in breach of the binding limitation period governing the grant of such assistance, between the applicant for financial support and the official responsible for preparing the call for proposals and for evaluating and selecting the project to be financed, constitutes an irregularity within the meaning of Article 4(1) of Regulation No 2988/95 on the protection of the European Communities’ financial interests and it is not necessary to assess whether that conduct also fulfils the criteria for active or passive corruption or an infringement of any other criminal provision.

(see paras 122, 124-126)

3. By adopting Regulation No 2988/95 on the protection of the European Communities’ financial interests and, in particular, the first subparagraph of Article 3(1) thereof, the Community legislature intended to establish a general limitation rule to apply in that area, by which it intended, first, to define a minimum period applied in all the Member States and, secondly, to waive the possibility of recovering sums wrongly received from the Community budget after the expiry of a four-year period after the irregularity affecting the payments at issue was committed. It follows that, as from the date on which Regulation No 2988/95 entered into force, any advantage wrongly received from the Community budget can, as a rule and apart from in the sectors for which the Community legislature has prescribed a shorter period, be recovered by the competent authorities of the Member States within a period of four years. As regards the treatment to be given to advantages wrongly received from the Community budget as a result of irregularities committed before Regulation No 2988/95 entered into force, by the adoption of Article 3(1) of that regulation and without prejudice to Article 3(3) thereof, the Community legislature defined a general rule on limitation by which it voluntarily reduced to four years the period during which the authorities of the Member States, acting in the name and on behalf of the Community budget, should recover or should have recovered such wrongly received advantages.

Consequently, pursuant to the first subparagraph of Article 3(1) of Regulation No 2988/95, the repayment of any sum wrongly received by an operator as a result of an irregularity predating the entry into force of Regulation No 2988/95 must, as a rule, be regarded as time-barred in the absence of any suspensory act adopted in the four years following the commission of the irregularity, a suspensory act which, pursuant to the third subparagraph of Article 3(1) of the regulation, is to be understood as an act of the competent authority, notified to the person in question, relating to investigation or legal proceedings concerning the irregularity.

Those principles apply mutatis mutandis where the measure in question, pursuant to Article 4(1) to (3), read in conjunction with Article 1(1) and (2), of Regulation No 2988/95, has been adopted by the Commission, since that regulation is a piece of general legislation directed at any national or Community authority subject to the obligations of sound financial management and monitoring of the use of Community budget resources for their intended purpose, as set out in recitals 3 and 13 in the preamble to that regulation.

(see paras 148-150)

4. An irregularity is continuous or repeated for the purposes of the second subparagraph of Article 3(1) of Regulation No 2988/95 on the protection of the European Communities’ financial interests where it is committed by an operator who derives economic advantages from a body of similar transactions which infringe the same provision of Community law.

(see para. 153)