Annual Report and Statement of Assurance concerning the ECSC for the financial year ended 23 July 2002, together with the Commission's replies
Date: 2003-06-26
Institutions: European Court of Auditors
Subjects: ECSC, account, balance sheet, budgetary control, financial year, report

19.9.2003

EN

Official Journal of the European Union

C 224/1

I

(Information)

COURT OF AUDITORS

ANNUAL REPORT AND STATEMENT OF ASSURANCE CONCERNING THE ECSC

for the financial year ended 23 July 2002, together with the Commission’s replies

(presented in accordance with Article 45c(1) and (4) of the ECSC Treaty)

(2003/C 224/01)

CONTENTS

Paragraph

Page

I.

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expiry of the ECSC Treaty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Audits carried out

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IMPLEMENTATION OF THE ECSC’S LAST BUDGET . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CLOSING BALANCE SHEET OF THE ECSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SPECIFIC ASPECTS OF MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Redeployment aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Administrative reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Revenue from financing research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Situation regarding loans and advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loans to officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

STATEMENT OF ASSURANCE CONCERNING THE ECSC . . . . . . . . . . . . . . . . . . . . . . .

FINAL OBSERVATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

II.

III.

IV.

V.

VI.

1-5

1-4

5

6-10

11-15

16-33

16-19

20

21-22

23-24

25-26

27-33

34-38

39-40

Tables 1 to 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Commission’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

1

2

2

3

3

3

4

4

4

4

4

5

5

7

9

I.

INTRODUCTION

Expiry of the ECSC Treaty

conditions which would ensure the rational distribution of coal
and steel production while safeguarding continuity of employ-
ment and taking care not to provoke fundamental and persistent
disturbances. ECSC financial aid served to:

1.
In accordance with Article 97 of the Treaty establishing
the ECSC, the European Coal and Steel Community (ECSC) ceased
to exist on 23 July 2002. Its objective had been to bring about

— facilitate the carrying-out of investment programmes by
granting loans to undertakings or by guaranteeing other
loans contracted by them (Article 54 of the Treaty),

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— promote technical and economic research (Article 55 of the

Treaty),

— facilitate enterprises’ financing of redeployment and social
protection programmes for workers (Article 56(1) and (2) of
the Treaty) where such programmes had been made neces-
sary either by technical progress (Article 56(1) of the Treaty)
or by fundamental changes in market conditions (Article 56(2)
of the Treaty).

The funds required to achieve the Community’s objectives came
from levies imposed on the production of coal and steel and from
the loans contracted (Article 49 of the Treaty). Funds obtained by
borrowing could only be used to grant loans (Article 51 of the
Treaty).

2.

On 24 July 2002, the ECSC left behind:

According to forecasts, the liquidation of the ECSC should
4.
be concluded, at the latest, in 2027. This date is the latest expiry
date for the contracts and commitments still outstanding. In this
respect it is necessary to distinguish between, on the one hand,
outstanding commitments under the operating budget and, on
the other, reimbursement operations concerning loans and bor-
rowings (3):

— of the 400,9 million euro of commitments still outstanding
on 23 July 2002,
the commitments for redeployment
(132,6 million euro) will end, in their entirety, in 2006, the
commitments for social measures (70,6 million euro) in 2007,
the commitments for interest subsidies (16,8 million euro) in
2004 and, lastly, the commitments for research (180,8 mil-
lion euro) in 2008,

— the ECSC’s borrowings and the loans from borrowed funds
will be fully amortised by 2019 at the latest. The loans from
own funds will be fully amortised by 2025 at the latest and
loans from the former Pension Fund by 2027 (4).

— 400,9 million euro in outstanding commitments under the

ECSC operating budget,

The audits carried out

— borrowings of 742,5 million euro,

— loans totalling 768,8 million euro and

— 33,5 million euro in loans granted from the ECSC’s former

Pension Fund.

3.
A protocol annexed to the Treaty of Nice deals with the
financial consequences of the expiry of the ECSC Treaty. It makes
provision for all ECSC assets and liabilities at 23 July 2002 to be
transferred to the European Community on 24 July 2002 and for
the assets of the ECSC in liquidation to be used to finance research
activities in the sectors related to the coal and steel industries.
Since the Treaty of Nice was not ratified before the ECSC Treaty
expired, the Member States, as the legal heirs of the ECSC, entrusted
the European Commission with the task of managing the assets
of the ECSC in liquidation, under a temporary management man-
date based on the same principles as provided for in the Protocol
to the Treaty of Nice (1). As the Treaty of Nice came into force on
1 February 2003, the Protocol concerning the ECSC in liquid-
ation has been applicable retroactively since 24 July 2002. A
Council Decision taken on 1 February 2003 established the meas-
ures necessary for the implementation of the Protocol (2).

(1) Decision by the Representatives of the Governments of the Member
States meeting within the Council of 27 February 2002 (2002/234/
ECSC) (OJ L 79, 22.3.2002, p. 42).

(2) Decision 2003/76/EC.

5.
The Court examined the financial statements of the ECSC
in liquidation for the financial year closed on 23 July 2002 and
the Commission report relating to them. The Court based this
examination, in part, on the work of the private audit company
which audited these financial statements. On conclusion of its
work, the Court submitted a report on the reliability of the finan-
cial statements of the ECSC in liquidation and on the legality and
regularity of the underlying transactions. As a complement to this
report, the Court has drawn up the following observations on the
management of the ECSC during the financial year.

II.

IMPLEMENTATION OF THE ECSC’S LAST BUDGET

The ECSC’s budget consists of two parts: one for the

6.
administrative budget and a second for the operating budget.

7.
The ECSC Treaty contains lengthy provisions on the admin-
istrative budget (Articles 78 to 78d). Since the Treaty which
merged the Communities in 1968, the administrative budget has

(3)

In view of the expiry of the Treaty, the ECSC ceased granting loans
from borrowed funds as from 1997.

(4) All these maturity dates are given by way of information to underline

the extent of the stipulated deadlines.

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been reduced to the ECSC contribution to the administrative
expenditure of the merged Community institutions and takes the
form of a commitment entered in the operating budget under the
heading of administrative expenditure. The Council Decision of
21 November 1977 reduced this contribution to a flat rate of
5 million euro per year. Pro rata temporis, administrative expendi-
ture for 2002 was 2,8 million euro (1).

The headings of the ECSC’s operating budget are divided
8.
into resources (revenue) and utilisation of resources, or require-
ments (expenditure).

The initial estimates for the operating budget for 2002
9.
amounted to 167,8 million euro. Commitments for the financial
year came to a final total of 130,8 million euro. Redeployment aid
absorbed 35,2 million euro of the 64 million entered in the bud-
get and social measures (coal) took 21 million euro, compared to
the 29 million entered in the budget. Table 1 shows the operations
to be financed from the resources for the financial year (estimates
and outturn). The commitments for the operating budget changed
during this period as shown in Table 2.

10.
The estimates of resources in the operating budget of the
ECSC for 2002, including the lump sum for administrative expen-
diture, amounted to 167,8 million euro. The Commission decided
to reduce the rate of the ECSC levy to 0 % as of 1998. The provi-
sions entered in the ECSC balance sheet at 31 December 2001
were deemed sufficient to maintain its financial activities until the
expiry of the Treaty.

On conclusion of the implementation of the ECSC operating bud-
get, the sum total of appropriations used was 130,8 million euro.
Table 3 shows the resources for the financial year (estimates and
outturn).

III.

CLOSING BALANCE SHEET OF THE ECSC

11.
Table 4 shows the principal data in the ECSC balance
sheet at 23 July 2002; it shows that the balance sheet total declined
by 839 million euro compared with the situation at 31 December
2001.

12.
On the assets side, the decrease can be explained mainly
by the reduction in loans and advances to credit institutions (down
by 341,6 million euro) and the decline in loans and advances to
customers (down by 405,2 million euro). The latter include busi-
ness loans, which fell by 363 million euro to 682,1 million euro
at 23 July 2002 (compared to 1 045,1 million euro at 31 Decem-
ber 2001). The loans to businesses in difficulty totalled 216,2 mil-

lion euro at 23 July 2002 (297 million euro at the close of the
previous financial year). The decrease in doubtful debts can mainly
be explained by the recovery of loans from defaulting debtors and
by the ceding of debt instruments. Liquid assets fell by 149,6 mil-
lion euro to 1 676,6 million euro at the close of the financial year.

13.
With regard to liabilities, the ECSC’s liabilities vis-à-vis
third parties decreased by half to 801,7 million euro at 23 July
2002 (1 518,9 million euro at 31 December 2001). On the clo-
sure date outstanding commitments under the ECSC operating
budget totalled 400,9 million euro (2). As regards loans and bor-
rowings, in view of the expiry of the Treaty the Commission
decided to adjust its policy concerning coverage of the risk of
default: it committed itself to creating a guarantee fund to achieve
a level of reserves to cover 100 % of the total outstanding loans
which are not covered by a government guarantee. At 23 July
2002 the coverage was 100 % and was the equivalent of 529 mil-
lion euro. A withdrawal of 51 million euro from the guarantee
fund provision was entered in the accounts in the course of the
accounting year. In the past, the ECSC had also created a provi-
sion for major exposures, the objective of which was to make
advance provision against a concentration of risks in respect of
beneficiaries of loans not covered by a first-rank government
guarantee and which, individually, exceed 25 % of own funds.
This provision, which amounted to 6 million euro at the end of
the financial year closed on 23 July 2002, was withdrawn in its
entirety, because the guarantee fund already covers 100 % of the
amount of loans outstanding.

14.
Income for the financial year closed on 23 July 2002
amounted to 417,1 million euro and charges to 258,5 million
euro. The surplus for the period was approximately 158,7 million
euro. The exceptionally large surplus was mainly due to the with-
drawals from the provision for financing the ECSC operating bud-
get and the provision for budgetary contingencies, which, before
the closure, amounted to 149,8 million euro.

15.
On the date of expiry of the Treaty that established the
ECSC the ECSC’s own funds amounted to 1 188,9 million euro at
23 July 2002, as shown in Table 5. The ECSC’s own funds are
mainly invested in bonds and other fixed-income securities issued
by first-ranking public entities (1 129,4 million euro).

IV.

SPECIFIC ASPECTS OF MANAGEMENT

Redeployment aid

16.
The Court carried out audits in the field of redeployment
aid. The conditions governing eligibility and the granting and pay-
ment of the aid are regulated by bilateral conventions between the

(1) Commission Report: Financial statements of the ECSC at 23 July

2002, p. 19.

(2)

In this connection, see the Court’s observation in paragraph 20.

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Commission and the Member States (1). The audits were carried
out in the Commission departments responsible and in two
Member States (Italy and the United Kingdom) which absorbed
37 % of the aid during the 2002 financial year. The Court’s audits
revealed some weaknesses in the application of the bilateral con-
ventions.

Management of the operations of the ECSC in liquidation
22.
(see paragraphs 2, 3 and 4 on this subject) is the Commission’s
responsibility. At the time of the audit, no department had yet
been designated to provide the administrative organisation for
technical and financial management of the research projects con-
cerning the ECSC in liquidation.

17.
A clause in the bilateral conventions states, ‘The follow-
ing shall not qualify for aid: (a) workers entitled to a normal retire-
ment pension having reached normal pensionable age; (b) work-
ers who have been declared to be totally and permanently
incapacitated for work, who are consequently entitled to the rel-
evant allowances’. The Court observed errors in the application of
these rules in the United Kingdom, as regards normal pension-
able age, and weaknesses in Italy as regards checks on incapacity.

In Italy the Court noted that data provided by the enter-
18.
prises themselves were used to calculate the aid, without the data
being subjected to adequate independent verification. In this
respect it must be emphasised that it is often the enterprises which
pay the aid to the beneficiary workers that are responsible for
applying for its reimbursement under ECSC aid.

According to the bilateral conventions (Article 5), rede-
19.
ployment aid may only be granted to workers engaged in the pro-
duction of the products specified in the ECSC Treaty. This limita-
tion requires adequate procedures to be put in place in the
enterprises concerned so that the workers engaged in the produc-
tion of goods and products that fall within the scope of the Treaty
can be accurately identified. In the cases audited the Court found
practical problems with the procedures in question.

Outstanding commitments

20.
The Commission cancelled individual commitments
amounting to 15,4 million euro. These commitments concerned
redeployment aid (5,8 million euro), research (4,2 million euro)
and interest subsidies (5,4 million euro).

Revenue from financing research

23.
It has been estimated that the total amount of aid devoted
by the ECSC to research in the steel sector alone over the last 15
years is approximately 800 million euro at current prices. It has
been possible for the benefits and outcome of the research work
financed in this way to be exploited in a practical way by the
industry concerned, resulting in commercial applications.

24.
The ECSC has not established a system for keeping an
inventory of any patents that may have been filed by these organi-
sations. Recognition of the ECSC’s rights as regards these patents
is explicitly provided for in Annexes III and IV to the contracts
signed between the Commission and the aid beneficiaries.

Situation regarding loans and advances

In view of the ECSC’s liquidation, the Court reviewed the

25.
situation regarding ECSC loans and advances.

26.
As a result of the restructuring of certain loans, the ECSC
has a portfolio of miscellaneous financial instruments. The valu-
ation of some of them is problematic (3). The Commission valued
these instruments on the basis of quotations provided by a single
specialist broker. In the liquidation context, it would have been
preferable for the quotations provided by this broker to be com-
pared with those of other intermediaries.

Loans to officials

Administrative reorganisation

The Court examined the loan files available at the Com-

27.
mission.

One of the requirements of the Commission reform
21.
launched in 2000, which concerns the application of the prin-
ciple that management and control functions should be sepa-
rate (2), has not yet been implemented by the departments respon-
sible for redeployment aid and research aid.

28.
After the merger of the European Community institu-
tions in 1968, the Council decided to use the amounts available
from the former Pension Fund for ECSC officials in the following
way:

(1) Agreements collected by the Commission under reference V/1274/91

of 1 July 1991.

(2) See COM(2000) 200 final/2 of 5 April 2000.

(3) At 23 July 2002 the acquisition cost of these bonds and instruments
was 131 million euro and the related value adjustments totalled 47 mil-
lion euro.

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— up to a maximum of 40 % for loans in the context of a hous-

V.

STATEMENT OF ASSURANCE CONCERNING THE ECSC

ing policy for European Community officials (1),

— up to a maximum of 60 % to guarantee commitments for
redeployment (Article 56 of the ECSC Treaty) and to grant
loans at reduced rates to further the pursuit of the social and
economic objectives of the ECSC Treaty within the frame-
work of the financial transactions provided for in that
Treaty (2).

34.
Pursuant to Article 45c of the Treaty establishing the
European Coal and Steel Community (ECSC), the Court has exam-
ined the ECSC’s accounts so as to provide the European Parlia-
ment and the Council with a statement of assurance concerning
the reliability of the accounts and the legality and regularity of the
underlying transactions.

29.
Following adjustment of the borrowing and lending policy,
the grant of loans to finance workers’ housing stopped after the
12th programme for the financing of housing for workers in the
iron and steel industries, which covered the period 1995 to 1997.

35.
The accounts concerned are the financial statements of
the ECSC at 23 July 2002, which were drawn up under the
responsibility of the Commission and published in the Official
Journal of the European Union (4).

30.
European officials received loans up to the liquidation of
the ECSC (the last loans were approved at the end of June 2002) (3).
Some of these loans will mature in 2027 and will have the effect
of postponing the final closure of the ECSC’s liquidation by a
number of years.

The amount entered in the ECSC’s financial statements at
31.
23 July 2002 (33,5 million euro) is the total for loans outstand-
ing at 30 June 2002, not 23 July 2002.

Reconciliation of the data provided by the Commission’s
32.
Directorates-General
for Personnel and Administration (DG
ADMIN), the Budget (DG BUDG), and Economic and Financial
Affairs (DG ECFIN) revealed differences which, even if they are
not significant, indicate certain weakness in the control systems
which are supposed to guarantee the accuracy of these data.

36.
In its report on the financial statements of the ECSC at
23 July 2002 (4), which includes the statement of assurance con-
cerning the reliability of the accounts and is published with the
financial statements concerned, the Court concluded that the lat-
ter give a true and fair view of the assets and financial situation of
the European Coal and Steel Community at 23 July 2002 and of
the results of its operations for the financial year then ended.

37.
The Court performed its audit in accordance with its audit
policies and standards. These have been adapted from generally
accepted international auditing standards to reflect the specific
characteristics of the Community context. The Court carried out
such tests of the accounting records and other audit procedures
as it deemed necessary in the circumstances. Through this audit,
the Court obtained a reasonable basis for the opinion expressed
below.

In the opinion of the Court, taken as a whole the legality
38.
and regularity of the transactions underlying the ECSC accounts
for the financial year closed on 23 July 2002 are sufficiently
assured.

33.
According to Article 11(1) of the implementing rules
concerning the grant of building loans to European officials, the
Commission (DG ADMIN) must draw up an annual report on the
situation of and changes in these loans. One report, covering the
years 1996 to 2002, has been adopted by the Commission, but
only on 26 March 2003.

VI.

FINAL OBSERVATIONS

(1)

In reality, loans intended for the purchase of homes or the financing
of housing construction by European officials.
In fact, to finance loans for steelworkers’ housing.

(2)
(3) The Court notes, in this respect, that in the Commission report on the
financial statements of the ECSC at 23 July 2002 (SEC(2002) 1415 of
7 January 2003), the Commission asserted (in its comments concern-
ing the management of ECSC loans and guarantees), ‘In view of the
expiry of the ECSC Treaty on 23 July 2002, the Commission did not
engage in any lending operations in 2002’. This assertion does not
take account of the loans granted to officials.

39.
Since it began its financial activity, the ECSC has dis-
bursed 24 500 million euro by way of loans, including 23 800 mil-
lion euro from borrowed funds and 643 million euro from own
funds. During the same period, it provided guarantees in respect
of 77,9 million euro. ECSC financial aid has exceeded 24 500 mil-
lion euro (5). In addition, it is currently estimated that, major
changes excepted, on conclusion of its liquidation, the ECSC will
leave funds in excess of 1 200 million euro to the European Com-
munity.

(4) Financial statements of the ECSC at 23 July 2002 (OJ C 127, 29.5.2003).
(5) Data provided by the Commission: Financial statements of the ECSC

at 23 July 2002, SEC(2002) 1415 final, p. 8.

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In its final annual report on the ECSC, the Court would
40.
like to pay homage to those men and women who conceived and
implemented this first European Community. In its general annual
report, the Court will continue to keep a watchful eye both on the

transactions involved in the liquidation of the ECSC and on the
setting-up and management of the new Coal and Steel Research
Fund.

This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 26 June 2003.

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President

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Operations to be financed from the resources for the financial year

Table 1

1. Administrative expenditure
2. Aid for redeployment (Article 56)
3. Aid for research (Article 55)

3.1. Steel research
3.2. Coal research

4. Social measures — coal (Article 56)

Source: Financial statements of the ECSC at 23 July 2002.

Estimate

2,80
64,00
72,00
52,00
20,00
29,00

167,80

Table 2

Commitments under the ECSC operating budget

(million euro)

Outturn

2,80
35,20
71,80
51,80
20,00
21,00

130,80

(euro)

Redeployment
Research
Interest
Article 56
Social measures (coal)
(Rechar)

subsidies

Amount at 31.12.2001

New legal commitments

Payments

Cancellations

Total at 23.7.2002

128 960 809
174 023 995
25 008 679

35 199 572
71 779 540
—

25 720 457
60 813 446
2 737 620

5 832 213
4 160 694
5 426 905

132 607 711
180 829 395
16 844 154

52 932 945

21 009 507

3 305 000

2 000

70 635 452

Total

380 926 428

127 988 619

92 576 523

15 421 812

400 916 712

Source: Financial statements of the ECSC at 23 July 2002.

Table 3

Resources for the financial year

1. Current resources

1.1. Yield from levy at a rate of 0 %
1.2. Net balance on financial operations
1.3. Fines and surcharges for late payment
1.4. Miscellaneous

2. Cancellation of commitments not likely to be implemented
3. Withdrawal from provision for financing ECSC operating budget

Source: Financial statements of the ECSC at 23 July 2002.

Estimates

0
31
p.m.
1
17
118,8

167,8

(million euro)

Outturn

0
31,1
4,6
0,7
15,4
79,0

130,8

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Changes in the ECSC summary balance sheet, before allocation of the surplus, between 31 December 2001 and
23 July 2002

Table 4

23.7.2002
(million euro)

%

31.12.2001
(million euro)

%

Assets
Balances with central banks
Loans and advances
Loans and advances to customers
Bonds and other fixed-income securities
Other assets
Prepayments and accrued income

Total assets

Liabilities
Liabilities vis-à-vis third parties
ECSC operating budget
Provisions for liabilities and charges
Budget for financing coal and steel research
Reserves and surplus

Total liabilities

0,03
155,59
682,42
1 556,90
6,02
47,57
2 448,53

801,68
400,92
586,01
240,00
419,92
2 448,53

Source: Financial statements of the ECSC at 23 July 2002.

0,00
6,35
27,87
63,59
0,25
1,94
100,00

32,74
16,37
23,93
9,80
17,15
100,00

0,06
497,20
1 087,60
1 613,10
7,09
82,53
3 287,58

1 518,91
530,72
736,70
240,00
261,25
3 287,58

0,00
15,12
33,08
49,07
0,22
2,51
100,00

46,20
16,14
22,41
7,30
7,95
100,00

Changes in ECSC own funds for the financial year ending 23 July 2002

Table 5

Item

31.12.2001
(after alloca-
tion)

Allocation

Withdrawal

Allocation at
23.7.2002

23.7.2002

(million euro)

Guarantee Fund
Special Reserve
Former Pension Fund
Assets of the Coal and Steel Research Fund
Surplus brought forward

Subtotal

Provision for major exposures
Provision available for financing the ECSC
operating budget
Provision for financing coal and steel research

580,0
118,0
40,0
100,0
3,3

841,3

6,0
149,8

240,0

Total

1 237,1

Source: Financial statements of the ECSC at 23 July 2002.

0,0
0,0
0,0
9,7
0,0

9,7

0,0
0,0

0,0

9,7

51,0
5,7
4,0
0,0
0,0

60,7

6,0
149,8

0,0

0,0
0,0
0,0
158,3
0,3

158,6

0,0
0,0

0,0

529,0
112,3
36,0
268,0
3,6

948,9

0,0
0,0

240,0

216,5

158,6

1 188,9

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THE COMMISSION’S REPLIES

SPECIFIC ASPECTS OF MANAGEMENT

For the normal pensionable age, the British authorities
17.
have always checked ages. It was by error that some cases were
mistakenly included in their claim to the Commission. Discovery
of this error led to a discussion on the eligibility of women over
60. It was necessary to consult the Commission’s Legal Service on
the interpretation of Article 5(2)(a) of the bilateral convention.
The Legal Service concluded that this Article only disqualifies
those women continuing to work over 60 while drawing a pen-
sion at the same time (and not those working over 60 while defer-
ring their pension). The British authorities were informed of this
and have checked how many women fall into each category.

For the Italian case, the Commission accepts the conclusions of
the Court. There are several weaknesses in Italy’s implementation
of the scheme, particularly because of the fragmentation of respon-
sibilities within the national administration. However, the Com-
mission would stress that there is an interministerial ECSC Affairs
Committee that is responsible for verifying the information sup-
plied by the companies before these details are transmitted to the
Commission. For invalidity for instance, the Commission under-
stands that this is one of the points checked by the ECSC Affairs
Committee.

The Commission will, however, continue to remind Member
States of the need to check these points during future control
visits.

18.
As noted in paragraph 17, the Commission accepts that
there are some weaknesses in Italy’s administration of the ECSC
aid scheme. The interministerial committee is responsible for veri-
fying the information supplied by companies and the Commis-
sion will remind the Italian authorities of the need for this work
to be done adequately.

The Commission accepts that the classification of work-

19.
ers as ECSC/non-ECSC can be problematic.

stressed and it had been agreed that, for the workers engaged in
both types of activities, those whose spent at least 50 % of their
time on ECSC work would be accepted as eligible for ECSC aid.
The British authorities confirmed that plants which produce both
ECSC and non-ECSC products are rare.

The Commission’s conclusion, following its audit visit, is that the
system as described and adopted, although not entirely perfect, is
probably the best that could be devised.

For Italy, the Commission understands that the classification of
workers as ECSC or non-ECSC is verified by the interministerial
committee. The Commission will, however, continue to remind
Member States of the need to check these points during future
control visits.

21 and 22.
that the following explanation be taken into account.

The Commission accepts this point but would ask

There are now only 2,5 officials (one A, half-time, and two B, full-
time) in DG EMPL who are responsible for ECSC aid payments.
Two officials take part in control visits. It is preferable that one of
the officials taking part in each visit has specialised knowledge of
the ECSC but, as there are only three such officials and given the
linguistic constraints, it is not always possible to ensure that this
official will have had no previous involvement with the payments
to be verified. Nevertheless, in future, control visits will be car-
ried out by one of the three ECSC officials and by one other Com-
mission official who is independent of the ECSC sector. This will
ensure better separation of the management and control func-
tions and the Commission would ask the Court to accept this
arrangement as a pragmatic solution to an awkward problem.

At the end of December 2002 the Commission changed the way
it organises research programme management. Since then the
management and control functions have been separate.

23.
The rules on ownership, exploitation and the award of
patents are laid down in Annex IV to the ECSC RTD model con-
tract. If contractors obtain a fee in return for industrial property
rights covered by patents or for passing on knowledge, the ECSC
is entitled to a share corresponding to the value of its contribu-
tion to the invention.

For the United Kingdom, the Commission considered this point
carefully during its July 2002 audit mission. The Commission had
discussed this matter with the British authorities when they were
drawing up the rules of the national scheme in 2001. The need
for a clear separation of the two sets of workers had been

24.
The Commission takes note of the Court’s observation
and will study the possibility of setting up an inventory of patents
filed by these organisations.

C 224/10

EN

Official Journal of the European Union

19.9.2003

Normally it is the Commission’s policy to value its port-
26.
folio on the basis of quotes from several sources. The instruments
under reference were an exceptional case and their valuation on
the basis of quotes from a single source was due precisely to the
lack of liquidity in the market. The Commission’s experience over
previous years, in relation to these particular illiquid instruments,
has been that when quotations were found to be available in the
market for the same closing date from different sources, the dif-
ferences were not significant.

There are three reasons for the differences mentioned by

32.
the Court.

The first, concerning the balance, is a difference in closing date.

The second reason, concerning movements during the financial
year, is that certain payments to beneficiaries were not taken into
account, as the value date was not known at the time of closure.

The third reason, concerning movements over a number of finan-
cial years, is a combination of a certain lack of control and a pro-
cedure for transmitting personal data (invalidity, resignation, CCP)
that could be improved. The Commission noted these points when
producing the report for 1996 to 2002; it is currently examining
and rectifying them on a case-by-case basis.