WRITTEN QUESTION E-1077/97 by Konstadinos Klironomos (PSE) to the Commission (21 March 1997)

Subject: Technology and Research Institute in Crete

The Technology and Research Institute (ITE) is Greece's largest research and technological institute and has a proven track record in Greece, the European Union and internationally. It is co-funded by the European Union in respect of a significant number of projects and has received contracts from the EU which it has always carried out consistently.

Within the framework of this joint funding, the EU Court of Auditors carried out an audit between 13 and 15 November 1996 in respect of which the ITE has not so far received an audit report. However, since 12 December 1996 the Commission's DG XIII has, in an unprecedented move, been sending documents to collaborators of the Institute (project coordinators) giving instructions for the deduction and non-payment of funds for the ITE, in violation of the contractual obligations. The Commission has so far failed to reply to letters from the ITE - which was notified of this state of affairs on 17 January 1997 - and collaborators of the Institute inquiring about the underlying reasons for this unprecendented action.

Since this practice by the Commission which has now been extended to some services of DG XIII discredits the ITE, harms its interests, and incites collaborators of the Institute to avoid working with it, even though it is very likely that these acts which are extremely prejudicial to the ITE are the products of confusion or malicious actions on the part of the Institute's competitors:

Will the Commission set out the basic reasons for these actions by DG XIII which are prejudicial to the reputation of the ITE and amount to slander, and say why the missives from the ITE and its collaborators regarding the reasons for the instructions to deduct funding have not been answered?

Answer given by Mrs Cresson on behalf of the Commission (3 June 1997)

Article 2 of the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities ((Last amended by Regulation (EC, Euratom, ECSC) No 2335/95 of 18 September 1995 (OJ L 240, 7.10.1995). )) stipulates that 'the budget appropriations must be used in accordance with the principles of sound financial management, and in particular those of economy and cost-effectiveness'.

The principle of sound financial management includes empowering the Commission and the Council of Auditors to monitor the use made of Community funds. All Commission research contracts therefore contain a clause allowing it to verify the costs invoiced by contractors on the basis of documents and on the spot. Article 87 of the Financial Regulation stipulates that the control of sound financial management by the Court of Auditors extends to the use made by outside bodies of Community funds granted as aid.

An inspection carried out by the Court of Auditors at the Technology and Research Institute in Crete (ITE)/Foundation for Research and Technology - Hellas (FORTH) uncovered problems with the level of the costs charged by this body on contracts concluded with the Commission, which led the latter to take temporary preventative measures pending more detailed information. Far from being an unprecedented action, this was a normal precautionary measure, and ITE/FORTH has not been the subject of any discriminatory treatment by the Commission.

Community research contracts, which are multi-partner contracts, provide for payments to beneficiaries to be made via one of the partners (the coordinator). In certain cases, therefore, the Commission has had to inform the coordinators of contracts involving ITE/FORTH of the provisional measures taken with regard to this body. When doing so, the Commission has exercised the necessary discretion and did nothing to damage the reputation of ITE/FORTH in any way. In particular, the Commission has at no time suggested or requested the partners to cease cooperating with ITE/FORTH.

The Commission places a high value on the excellent collaboration which has always characterized its relations with ITE/FORTH, and on the quality of the scientific work carried out by this body. It is confident that the problems uncovered during the inspection by the Court of Auditors can be dealt with by the parties concerned, and in accordance with the contractual provisions. The Commission assures the Honourable Member that it will do everything in its power to find appropriate solutions to these problems as soon as possible, and in the best interests of both parties.