WRITTEN QUESTION E-4046/97 by Ernesto Caccavale (UPE) to the Commission (14 January 1998)

Subject: Breach of the rules on European public contracts

In the context of the procedure for the award of public contracts under the Lomé Convention, the Italian company ITAMSIDER, which had been awarded a contract in Mauritania, duly supplied certain materials to that country. However, Mauritania, despite having received the material according to due form, has refused to ask the Commission to make the corresponding payment, adducing unsubstantiated and unproven allegations of technical unsuitability.

This refusal was in reality motivated by the fact that ITAMSIDER refused, as a matter of principle, to pay the bribe which was asked of it as a condition for supplying the Commission with the documents required for the funds concerned to be released.

The local representative of the Commission held an expert hearing - of a summary nature and not allowing for representation of both sides - which was subsequently declared to have been irregular by the Court of First Instance in Luxembourg (judgment of 25 June 1997, first section, T-7/96).

The Court of First Instance did not, however, take into consideration the recording of a telephone conversation which established beyond all doubt that the representatives of the Mauritanian company had asked for a bribe.

It should be clear from the above that the Italian company was obliged to react to behaviour of an unethical nature. There appears, however, to be no possibility of taking out legal proceedings in Mauritania, since such attitudes would seem to be a matter of 'usual practice' in that country.

The circumstance that such behaviour can go unpunished can only be considered detrimental to the correct functioning of the Community institutions.

In view of the above, can the Commission state:

1. what means of redress are available in such cases, given that the procedures instituted by DG XX to bolster action against fraud and to protect the Community's financial interests seem to be completely ineffective in the face of behaviour such as that described;

2. what its position is on this matter as a whole, and what measures it intends to take to offer more secure guarantees to Community enterprises?

Answer given by Mr Pinheiro on behalf of the Commission (23 February 1998)

The Commission would inform the Honourable Member that the general specifications for works, supplies and service contracts financed by the European Development Fund (EDF) include provisions on corruption and fraud in the performance of those contracts.

The Commission has always been prepared to examine complaints which firms wish to bring to its attention in connection with the execution of contracts financed by the EDF, about compliance with those provisions and - more generally - any case of corruption in connection with contracts financed by the Community.

The Commission would point out to the Honourable Member that, in the specific case to which he refers in his Written Question, no fact has been brought to the attention of the Commission, either by the firm or by the government of the State concerned, from which it can be concluded that the line taken by the firm is justified. And that was, furthermore, the position taken by the Commission in proceedings before the Court of First Instance.