WRITTEN QUESTION E-3100/00

by Paulo Casaca (PSE) to the Commission

(4 October 2000)

Subject: Application of Council Regulations Nos 1260/99 and 1263/99

Potential beneficiaries of structural aid under the Financial Instrument for Fisheries Guidance (FIFG), pursuant to Regulations 1260/99(1) and 1263/99(2) have drawn my attention to the fact that the Portuguese authority responsible for implementing these regulations in Portugal, namely the Ifadap, has required applicants to provide a real or bank guarantee for an amount which is greater than the subsidy itself.

Moreover, the contract which they are expected to sign with the payment authority explicitly stipulates that any delay in payment of such subsidies cofunded by the FIFG should in no way exempt the beneficiary from fully meeting his contractual obligations.

This set of conditions make its extremely difficult for economic operators who are dependent on the subsidy cofinanced by the Community for the success of their initiatives to apply for such funding, and is actually turning the investment subsidy into a bonus payment for successful investments.

The payment authority maintains that its approach is entirely a result of the Commission's zero error policy whereby the financial responsibility for any shortcomings in the development or results of the cofunded project is borne by the payment authority.

The Commission:

1. Will it confirm that it considers any Community cofunding granted to a project which is not carried out according to the established conditions and time limits or which is not as cost effective as predicted to be an error, and does it consider that the Community funds paid to the project must be repaid to the Community budget by the Member State where this error has occurred?

2. If so, will it state the legal basis for its interpretation?

3. Does it not consider that this interpretation of Community legislation is bound to limit the impact and extent of structural measures and to heighten social disparities?

(1) OJ L 161, 26.6.1999, p. 1.

(2) OJ L 161, 26.6.1999, p. 54.

Answer given by Mr Fischler on behalf of the Commission

(20 October 2000)

The Honourable Member's questions concern the position of potential recipients of Community financial aid granted under Regulations (EC) No 1260/1999 laying down general provisions on the Structural Funds and (EC) No 1263/99 on the Financial Instrument for Fisheries Guidance.

Under the first of these the authority designated by a Member State to manage Community assistance is responsible for the efficiency and correctness of management and implementation (Article 34).

This provision, applicable to structural action in the fisheries sector, involves the Member State in assumption of responsibility for financial control of aid so as to ensure efficient and correct use of Community funds (Article 38(1)(a)) in line with the principles of sound financial management (Article 38(1)(c)). It also involves the Member State in ensuring that aid is managed in line with all applicable Community rules.

The application of these principles is reiterated, where the FIFG is concerned, in Regulation (EC) No 2792/99 laying down detailed rules and arrangements regarding Community structural assistance in the fisheries sector(1). Article 18 requires each Member State's authority to ensure that the special conditions governing assistance listed in Annex III are complied with and to satisfy itself of the technical capacity of recipients and financial viability of enterprises before granting aid.

Accordingly in cases where it emerges that implementation of a project part-financed by the Community is not in line with the Community rules, it falls in the first instance to the Member State to take suitable action to ensure that the Community's funds are used efficiently and correctly and that the abovementioned rules are complied with. If any major change is found that has an effect on the nature of the assistance or the conditions in which it is given the Member State must make the necessary financial corrections by cancelling all or part of the Community contribution (Article 39(1) of Regulation (EC) No 1260/99).

The funds thus released may be reassigned by the Member State to the FIFG subject to compliance with the rules provided for in Article 53(2) of that Regulation.

To sum up, a Member State making use of the Community's structural financial instruments must respect and ensure respect for the rules indicated above that ensure efficient and correct use of the funds made available.

The information given by the Honourable Member does not allow any conclusion to be drawn as to whether the actual circumstances are likely to entail irregularity with regard to the abovementioned Regulations that will require cancellation or reduction of the Community aid.

(1) OJ L 337, 30.12.1999.