WRITTEN QUESTION P-3483/02 by Eryl McNally (PSE) to the Commission. The requirement of bank guarantees from small organisations taking part in SAVE/Altener projects.
Date: 2002-11-29
Institutions: European Parliament, Provisional data
Subjects: EU programme, aid system, credit guarantee, prevention of pollution, renewable energy, small and medium-sized enterprises, support policy

3.7.2003

EN

Official Journal of the European Union

C 155 E/159

The Honourable Member is requested to note that this type of problem can be sent to the Solvit network
(http://europa.eu.int/comm/internal_market/solvit/). This is a network set up by the Commission consisting
of members of the national administrations who aim to find informal solutions to specific problems
encountered by businesses or the public concerning the application of Community rules. All information
on how to proceed and what can be expected of the network can be found on the above website.

(2003/C 155 E/177)

WRITTEN QUESTION P-3483/02

by Eryl McNally (PSE) to the Commission

(29 November 2002)

Subject: The requirement of bank guarantees from small organisations taking part in SAVE/Altener projects

I have received complaints from small organisations wishing to take part in Save/Altener projects.

Even though their project proposals have been accepted by the Commission and their contracts approved,
these small organisations are not given an advance payment (40 % of granted EU support), which larger
organisations can benefit from. If small organisations wish to receive an advance payment from the
Commission, they are required to provide a bank guarantee, which puts a heavy administrative and
financial burden on them. It seems unreasonable to ask for bank guarantees from them precisely because
they are small, since banks charge highly for such services and tend to require the blocking of funds.
Moreover, the banks have similar financial tests for loans as the EU applies for advance payments and have
no reason, per se, to support the contracted work. Without the advance payment, such small organisations
are obliged to provide the funds beforehand and thus cover a very large part of contract expenditure and
staff cost themselves in order to carry out the work for the EU.

Is this the new policy of the Commission to support SMEs? Or is it that the Commission rejects these
proposals by imposing inacceptable financial requirements in order to simplify EU bureaucracy? Is the
Commission aware of the fact that providing such a guarantee obliges small organisations to block funds
in the bank and to face a heavy additional financial burden? Is the Commission merely aiming to sustain
itself and those who have sufficient financial soundness not to require such support?

Answer given by Mrs de Palacio on behalf of the Commission

(7 January 2003)

In reply to the Honorable Member, the Commission is of course very much aware of the problems and
burdens facing small and medium-sized enterprises (SMEs) such as those raised in the written question.
However, sound financial management of Commission programmes requires the application of strict rules
and effective measures to safeguard public funds. In doing so, Commission staff are under an obligation to
act in accordance with the demands of the budgetary authority, and thus also of the Parliament. In
addition, the Court of Auditors has regularly called for more rigorous protection for Community funds
including by the use of bank guarantees.

The requirement for financial viability and in case of unsatisfactory results the request for bank guarantees
is one of the rules, which is now implemented consistently, without discrimination between contractors,
regardless whether they are big companies or SMEs, and on the basis of objective criteria which are
applied to the balance sheets of all proposers.

The Commission is aware that banks assess the financial status of organisations using similar criteria when
asked to provide a bank guarantee. The provision of a bank guarantee is subject to charges and can limit
the financial availability of a company up to the amount of the advance payment for the project in

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3.7.2003

question. Hence, although the costs of the bank guarantee may be considered by the Commission as
eligible costs for the contract, it may in some cases not be attractive to some SMEs to obtain one. In
consequence, such organisations are in these cases unable to benefit from the improved cash flow which is
offered via the advance payment to other contractors.

The Commission has encountered in the past the problem that projects had failed already at an early stage,
sometimes because of problems within the consortium that had been contracted to carry out the project.

In some of these cases there have been problems to recover the part of the advance payment that has not
been substantiated under the terms of the contract or (cid:1) as for example in the case of bankruptcy of one of
contractors (cid:1) the Commission has even been faced with the impossibility to recover these parts of the
advance payments.

It is therefore necessary to take appropriate precautions in order to prevent the loss of these public funds.
In case of unsatisfactory financial viability of a contractor a bank guarantee is the only safe measure that
can prevent such a loss.

(2003/C 155 E/178)

WRITTEN QUESTION E-3494/02

by Cristiana Muscardini (UEN) to the Council

(9 December 2002)

Subject: Massacre in Nigeria

The tragic events in Nigeria (which resulted in the deaths of over 200 Christians, the torching of buildings
and the destruction of churches and shops) are a particularly urgent reminder of the seriousness of an
international situation in which extreme violence breaks out whenever an attempt is made to impose
sharia as the law of the state. Although each country is entitled to uphold its own traditions, Europe
cannot ignore brutal, inhumane violations of human rights, the dignity of the individual and the freedom
of belief and expression which lead to mass murder and the destruction of property, such as has just
occurred in Nigeria and which could occur in the future in any other country in which Islamic
fundamentalist organisations operate.

Does the Council not think that political sanctions should be imposed whenever similar massacres

1.
are carried out in the name of religion?

2. What action does the Council intend to take in order to prevent similar tragedies from occurring in
the future?

Reply

(4 March 2003)

Freedom of thought, conscience and religion is enshrined in core International Human Rights Instruments
including UN human rights conventions. The EU condemns persecution of people because of their faith or
belief, in all circumstances. The EU takes every opportunity to urge States to pursue laws and practices,
which foster tolerance and mutual respect, and to protect religious minorities against discrimination,
intimidation and attacks. Specific cases of religious persecution are raised regularly with the governments
concerned, both in bilateral contacts as well as in multilateral forum, such as at the annual meetings of the
UN Commission on Human Rights and of the Third Committee of the UN General Assembly.

In the case of Nigeria, while obviously being concerned about recent outbursts of violence, the EU
nonetheless welcomes the Federal Government’s efforts to ascertain that Nigerian law is in compliance
with international human rights covenants. The EU is also encouraged by the peaceful and legal action
taken by both Muslim and Christian human rights groups in Nigeria on these issues. The EU has conveyed
to the Nigerian authorities its willingness to continue the dialogue that is taking place in the framework of
its partnership with Nigeria, with a view to strengthening the existing processes in Nigeria towards a
consolidation of democracy and the respect for human rights.