Amended proposal for a COUNCIL REGULATION (EC) on measures to be taken in dealing with certain beneficiairies of operations financed by the Guarantee Section of the EAGGF
Date: 1995-05-24
Institutions: European Commission
Subjects: EAGGF Guarantee Section, award of contract, confidentiality, discount sale, exchange of information, export refund

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  24.05.1995 

COM(95)  194  final 

94/0015  (CNS) 

Amended  proposal  for  a 

COUNCIL  REGULATION  (EC) 

on  measures  to  be  taken  in  dealing  with  certain  beneficiaries  of  operations 

financed  by  the  Guarantee  Section  of  the  EAGGF 

(presented  by  the  Commission  pursuant  to  Article  189  a (2) 
of  the  EC-Treaty) 

EXPLANATORY  MEMORANDUM 

At  its part-session  in February  1995 Parliament  delivered  its  opinion  on  the  Commission 

proposal  (contained  in  document  COM(94)  122  final)  for  a  Council  Regulation  on 

measures  to  be  taken  in  dealing  with  certain  beneficiaries  of  operations  financed  by  the 

Guarantee  Section  of  the  EAGGF. 

This  amended  proposal  takes  account  of  Parliament's  proposed  amendments,  where  the 

Commission  has  expressed  a  favourable  opinion  on  them,  and  of  the  results  of  the 

discussions  that  have  been  held  in  the  Council. 

4 

Amended  proposal  for 

Council  Regulation  (EC)  No 

of 

on  measures  to  be  taken  in  dealing  with  certain  beneficiaries  of  operations 

financed  by  the  Guarantee  Section  of  the  EAGGF 

(Presented  by  the  Commission  in  accordance  with  Article  189a(2)  of  the  EC  Treaty) 

THE  COUNCIL  OF  THE  EUROPEAN  UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 

Article  43  thereof, 

Having  regard  to  the  opinion  of  the  European  Parliament, 

Having  regard  to  the  opinion  of  the  Economic  and  Social  Committee, 

Having  regard  to  the  proposal  from  the  Commission, 

Whereas,  at  its  meetings  in  June  1993  in  Copenhagen  and  December  1994  in  Essen,  the 

European  Council  stressed  the  importance  of  pursuing  the  campaign  against  fraud  and 

irregularities  affecting  the  Community  budget;  whereas  there  should  be  a  reinforcement 

of  those  measures  designed  to  ensure  that  the  Community  funds  intended  for  the 

implementation.of  the  CAP  are  not  granted  to  persons  or  companies  which  do  not  offer 

all  the  guarantees  of  reliability  as  to  the  proper  execution  of  the  operations  concerned; 

Whereas  Article  8  of  Council  Regulation  (EEC)  No  729/70  of.21  April  1970  on  the 

financing  of  the  common  agricultural  policy1,  as  last  amended  by  Regulation  (EEC)  No 

2048/882,  lays  down,  in  particular,  that Member  States are  under  an obligation  to take  the 

measures  necessary  to  ensure  that  transactions  financed  by  the  Fund  are  actually  carried 

out  and  are  properly  executed,  and  to  prevent  and  deal  with  irregularities; 

Whereas  Council  Regulation  (EEC)  No  595/91  of 4 March  1991 concerning  irregularities 

and  the  recovery  of  sums  wrongly  paid  in  connection  with  the  financing  of  the  common 

agricultural  policy  and  the  organization  of  an  information  system  in  this  field,  and 

repealing  Regulation  (EEC)  No  283/723, lays  down, among  other things, that  with  a view 

to  systematically  ascertaining  the  nature  of  fraudulent  practices  and  to  recovering  sums 

wrongly  paid  cases  of  irregularity  and  the  judicial  or  administrative  procedures  against 

persons  who  have  committed  irregularities  are  to  be  communicated  at  regular  intervals 

to  the  Commission  by  the  Member  States; 

Whereas  these  provisions  need  to  be supplemented  by  a Community  system  allowing  the 

national  authorities  to  identify,  in  connection  with  tendering  procedures,  the  grant  of 

export  refunds  or  sales  at  reduced  prices  of  intervention  products,  operators  who  have 

deliberately  or  as  a  result  of  serious  negligence  committed  an  irregularity  prejudicial  to 

Community  funds  or  who  are  suspected  on  solid  grounds  of  having  done  so;  whereas, on 

that  basis,  there  must  be  determined,  in  the  light  of  the  seriousness  of  the  offence  and 

depending  on  whether  it  has  been  established  or  suspected,  a  series  of  varied  measures 

ranging  from  reinforced  controls  to the  exclusion  of.the  operators  concerned  from  taking 

part  in  operations  to  be  determined  when  their  fraudulent  actions  are  established; 

1  O J N oL  94,  28.4.1970,  p.  13. 
2  OJNo  L  185,  15.7.1988,  p.  1. 
3  OJNo  L  67,  14.3.1991, p.  11. 

Whereas,  in  order  to  provide  operators  with  a  maximum  of  guarantees,  it  would  be 

advisable  to  adopt  the  essential  features  of  the  corresponding  provisions  of  Regulation 

(EEC)  No  595/91,  in  particular  with  regard  to  the  observance  of  confidentiality  and 

professional  secrecy  and the national  rules relating to criminal  proceedings; whereas, with 

regard  to  data  protection,  the  relevant  provisions  of  Council  Regulation  (EC)  No 

/94 

of 

1994  on  mutual  assistance  in  customs  and  agricultural  matters1  may  be  applied; 

Whereas  this  system  must  be  a supplement  to  the  specific  provisions  already  existing  or 

to  be  adopted  in  the  future  under  the  common  agricultural  policy  with  a  view  to 

preventing  irregularities,  in  particular  those  provisions  relating  to  controls  and  sanctions 

established  by  the Commission  by  virtue  of its powers  confirmed  by the  Court of  Justice; 

Whereas,  furthermore,  as  part  of  an  across-the-board  campaign  against  fraud,  on  7  July 

1994  the  Commission  presented  a  proposal  for  a  Council  Regulation  (EC,  Euratom)  on 

protection  of  the  Community's  financial  interests2;  whereas,  on  the  adoption  of  that 

Regulation  by  the  Council,  the  common  set  of  legal  rules  enacted  by  it  for  all  areas  of 

Community  policy  will  apply  to  the  measures  introduced  by  this  Regulation;  whereas, 

until  that  Regulation  is  adopted,  provision  should  be  made  for  the  detailed  rules  for  the 

application  of this Regulation  to include similar  rules temporarily,  in particular  as  regards 

the  definition  of  the  irregularities  involved, 

HAS  ADOPTED  THIS  REGULATION: 

Article  1 

1. 

A Community  system  is hereby  established,  designed  to identify  and  make  known 

as  rapidly  as  possible  to  the  competent  authorities  of  the  Member  States  and  the 

Commission  operators  presenting,  on  the  grounds  of  experience  acquired  with 

them  as  to  the  proper  execution  of  their  previous  obligations,  a  risk  of  non-

1  OJ  No  L 
2  O J No  C  216,  6.8.1994,  p.  11 

reliability  in  connection  with  tendering  procedures,  export  refunds  and  sales  at 

reduced  prices of  intervention  products,  financed  by  the  Guarantee  Section  of  the 

EAGGF. 

2. 

For the purposes of this Regulation,  "operators presenting  a risk of  non-reliability" 

means  operators,  whether  natural  or  legal  persons,  who: 

(a) 

according  to  a  final  decision  by  an  administrative  or  judicial  authority, 

have  deliberately  or  through  serious negligence  committed  an  irregularity 

in  respect  of  relevant  Community  provisions  and  who  have  unjustly 

benefited  from  a  financial  advantage  or  who  have  attempted  to  benefit 

therefrom,  and 

(b) 

have  been  the  subject,  in  this  respect,  on  the  basis  of  established  facts,  of 

a preliminary  administrative or judicial  report by the competent  authorities 

of  the  Member  State. 

3. 

Pending  the  entry  into  force  of  horizontal  provisions  defining  irregularities,  the 

conduct  referred  to  in  paragraph  2(a)  shall  be  defined  in  accordance  with  the 

procedure  laid  down  in  Article  5. 

Article  2 

1. 

The  identification  procedures  and  the  rules  relating  to  notification  shall  be 

implemented  on  the  initiative  of  the  Member  State  in  which  the  risk  of  the 

operator's  non-reliability  is  identified. 

2. 

Where  a  Member  State  fails  to  fulfil 

its  obligation  under  paragraph  1  the 

Commission  shall  implement  the  identification  and  notification  system. 

Article  3 

I. 

Mesaber  States  shall  take  the  following  measures  to  deal  with  the  operators 

referred  to  in  Article  l(2)(a): 

(a) 

reinforced  checking  of  all  operations  performed  by  the  operator 

and/or 

(b) 

suspension  of  payment  of  amounts  in  respect  of  operations  in  hand  to  be 

determined,  until  it  has  been  determined  administratively  whether  an 

irregularity  has  been  committed  and,  where  appropriate,  of  the  release  of 

the  security  relating  thereto 

and/or 

(c) 

their  exclusion  for  a  period  and  from  operations  to  be  determined. 

The  measures  under  (b)  and  (c)  shall  be  determined  by  the  competent  authorities 

of the Member  State  in accordance  with  criteria  laid  down  in  accordance  with  the 

procedure  provided  for  in  Article  5  with  due  regard  to  the  risk  of  further 

irregularities  that  may  be committed  by  the  operator.  They  shall  be  adopted  after 

any  formalities  relating  thereto  laid  down  in  the  laws  of  the  Member  States  have 

been  completed. 

2. 

In the case of operators  as referred  to in  Article  I(2Xb), only  the measures set  out 

in  the  preceding  paragraph  under  (a)  and  (b)  shall  apply. 

3. 

Where,  under  a  tendering  procedure,  the  Commission  itself  awards  a  contract,  it 

shall,  as  appropriate,  take  or  propose  to  the  Member  State,  one  or  more  of  the 

measures  set  out  in  paragraph  1. 

Article  4 

1. 

The  measures  referred  to  in  Article  3  shall  comply  with  the  following  principles, 

in  accordance  with  the  provisions  of  the  law  of  the  Member  State: 

(a) 

the  prior  hearing  and  the  right  of  appeal  of  the  operator  concerned  in 

respect  of  the  measures  referred  to  in  Article  3(1 )(c)  and,  where 

appropriate,  (b); 

(b) 

proportionality  between  the  irregularity  committed  or  suspected  and  one 

or  other  of  the  measures  referred  to  in  Article  3(1),  subject  to  the 

provisions  to  be  established  in  accordance  with  the  procedure  laid  down 

in  Article  5; 

(c) 

non-discrimination  among  operators. 

2. 

Member States and the Commission  shall  take all  necessary  precautions  to  ensure 

that  the  information  which  they  exchange  pursuant  to  this  Regulation  remains 

confidential. 

Such  information  may  not, in  particular, be  sent to persons  other  than  those  in  the 

Member  States  or  within  the  Community  institutions  whose  duties  require  that 

they  have  access  to  it,  unless  the  Member  State  supplying  it  has  expressly  agreed. 

Information  communicated  or  acquired  in any form  under this Regulation  shall  be 

covered  by  professional  confidentiality  and  protected  in  the  same  way  as  similar 

information  is  protected  by  the  national  legislation  of  the  Member  State  that 

received  it  and  by  the  corresponding  provisions  applicable  to  the  Community 

institutions. 

In  addition,  that  information  may  not  be  used  for  purposes  other  than  those 

provided  for  in this  Regulation  unless the  authorities  providing  it have  expressly 

agreed  and  provided  that the provisions in force  in the Member  State  in which  the 

authority  that  has  received  it  is  located  do  not  prohibit  such  communication  or 

use. 

As  regards  data  protection,  the  relevant  provisions  laid  down  in  the  rules  on 

mutual  assistance  in  customs  and  agricultural  matters  shall  apply. 

The  provisions  of  this  Regulation  shall  not  affect  the  application  in  the  Member 

States  of  the  rules  governing  criminal  proceedings  and  mutual  assistance  in 

criminal  matters  between  Member  States.  They  shall  not  prevent  the  use,  in  the 

context  of judicial  proceedings  or  of  proceedings  brought  subsequently  for  non 

compliance  with  agricultural  regulations, of  information  obtained  pursuant  to  this 

Regulation;  in  the  latter  case  the  competent  authority  of  the Member  State  which 

provided  such  information  shall  be  notified  of  such  use. 

However,  Member  States  shall  take  the  administrative  measures  necessary  to 

ensure that the provisions of the preceding  subparagraph  are applied  in such  a way 

as  not  to  hinder  the  effective  application  of  this  Regulation  as  regards  the 

operators  referred  to  in  Article  l(2)(b). 

If  national  provisions  provide  for  the  confidentiality  of  judicial  investigations, 

communication  of  information  as provided  for  in  this  Regulation  shall  be  subject 

to authorization  by the competent judicial  authority; the competent  administrative 

authority  shall  secure  such  authorization  at the  earliest  opportunity. 

Article 5 

Detailed  rules  for  the  application  of  this  Regulation  shall  be  adopted  in  accordance  with 

the  procedure  laid  down  in  Article  13  of  Regulation  (EEC)  No  729/70.  They  shall 

concern,  among  other  things,: 

the  notifications  to  be  made  by  the  Member  States; 

the nature of the links  between  different  natural  or  legal  persons  which  may  result 

in  their  being  regarded  as  operators  within  the  meaning  of  this  Regulation; 

the  conditions  under  which  operators  may  avoid  the  suspension  of  payments  as 

referred  to  in  Article  3(1 )(b)  by  lodging  a  security. 

Article  6 

This  Regulation  shall  be  supplementary  to  the  specific  provisions  under  the  common 

agricultural  policy. 

Article  7 

The  Commission  shall  present  to  the  Council  and  Parliament  by 

(two  years  from  the 

date  of  entry  into  force  of  this  Regulation)  a  report  on  the  implementation  of  this 

Regulation  and,  in the  light  of  experience  gained,  shall  propose  amendments  that  may  be 

needed  to  the  arrangements  introduced  by  this  Regulation. 

Article  8 

This  Regulation  shall  enter  into  force  on  the  seventh  day  following  its publication  in  the 

Official  Journal  of  the  European  Communities. 

This  Regulation  shall  be  binding  in  its  entirety  and  directly  applicable  in  all  Member 

States. 

ISSN 0254-1475 

COM(95) 194 final 

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