Commission Regulation (EC) No 2168/2005 of  23 December 2005  amending Regulation (EC) No 1831/94 concerning irregularities and the recovery of sums wrongly paid in connection with the financing of the Cohesion Fund and the organisation of an information system in this field
Date: 2005-12-23
Institutions: European Commission
Subjects: Cohesion Fund, administrative procedure, disclosure of information, fraud against the EU, judicial proceedings

28.12.2005

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Official Journal of the European Union

L 345/15

COMMISSION REGULATION (EC) No 2168/2005

of 23 December 2005

amending Regulation (EC) No 1831/94 concerning irregularities and the recovery of sums wrongly
paid in connection with the financing of the Cohesion Fund and the organisation of an information
system in this field

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 1164/94 of 16
May 1994 establishing the Cohesion Fund (1), and in particular
Article 12(4) thereof,

Whereas:

Commission Regulation (EC) No 1831/94 (2) applies to
all eligible measures provided for in Article 3 of Regu-
lation (EC) No 1164/94.

(6)

(7)

(8)

(9)

Regulation (EC) No 1831/94 should be updated in order
to enhance the effectiveness of the system for reporting
irregularities.

(10)

It is necessary to specify that the definition of ‘irregu-
larity’ used for the purposes of Regulation (EC) No
1831/94 is taken from Article 1(2) of Council Regulation
(EC, Euratom) No 2988/95 of 18 December 1995 on the
protection of
financial
interests (3).

the European Communities’

(11)

It is necessary to define the term ‘suspected fraud’, taking
fraud contained in the
account of
Convention of 26 July 1995 on the protection of the
European Communities’ financial interests (4).

the definition of

It is necessary to align the definition of ‘first adminis-
trative or judicial finding of fact’ to the one included in
Commission Regulation (EC) No 1681/94 of 11 July
1994 concerning irregularities and the recovery of
sums wrongly paid in connection with the financing of
the structural policies and the organisation of an infor-
mation system in this field (5).

(1) OJ L 130, 25.5.1994, p. 1. Regulation as last amended by the 2003

Act of Accession.

(2) OJ L 191, 27.7.2004, p. 9.
(3) OJ L 312, 23.12.1995, p. 1.
(4) OJ C 316, 27.11.1995, p. 49.
(5) OJ L 178, 12.7.1994, p. 43. Regulation as amended by Regulation

(EC) No 2035/2005 (OJ L 328, 15.12.2005, p. 8).

(1)

(2)

(3)

(4)

(5)

It is also necessary to define the terms ‘bankruptcy’ and
‘economic operator’.

In order to enhance the added value of the reporting
suspected
the obligation to report cases of
system,
fraud for the purposes of risk analysis should be more
closely determined, and for this purpose the quality of
the information supplied should be ensured.

It should be clearly stated that Regulation (EC) No
1831/94 will remain applicable to cases of irregularities
of less than EUR 10 000 already reported.

It
is necessary to specify the information needed for
dealing with the cases for which an amount cannot be
recovered or is not expected to be recovered.

In order to reduce the burden imposed by reporting on
the Member States and to improve efficiency,
is
necessary to increase the minimum threshold above
which irregularities have to be reported by Member
States and to determine those cases
in which no
reporting obligation arises.

it

for

Regulation (EC) No 1831/94 should apply without
prejudice to Article 7 of Commission Regulation (EC)
No 1386/2002 of 29 July 2002 laying down detailed
the implementation of Council Regulation
rules
the management and
regards
(EC) No 1164/94 as
control
from the
assistance
for
Cohesion Fund and the procedure for making financial
corrections (6).

systems

granted

(12) Account must be taken of the obligations arising out of
Regulation (EC) No 45/2001 of the European Parliament
and of
the Council of 18 December 2000 on the
protection of individuals with regard to the processing
of personal data by the Community institutions and
bodies and on the free movement of such data (7) and
Directive 95/46/EC of the European Parliament and of
the Council of 24 October 1995 on the protection of
individuals with regard to the processing of personal data
and on the free movement of such data (8).

(6) OJ L 201, 31.7.2002, p. 5.
(7) OJ L 8, 12.1.2001, p. 1.
(8) OJ L 281, 23.11.1995, p. 31. Directive as amended by Regulation

(EC) No 1882/2003 (OJ L 284, 31.10.2003, p. 1).

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(13)

Conversion rates should be established for Member States
outside the euro zone.

3. Article 3(1) is replaced by the following:

(14)

Regulation (EC) No 1831/94 should be
accordingly,

amended

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 1831/94 is amended as follows:

1. the following Article 1a is inserted:

‘Article 1a

‘1.
During the two months following the end of each
to the
quarter, beneficiary Member States
Commission any irregularities which have been the subject
of a primary administrative and/or judicial finding. To this
end Member States shall in all cases give details of:

report

shall

(a)

the identification of the project or measure in question
and the project or CCI (common identification code)
number;

(b)

the provision which has been infringed;

For the purposes of this Regulation the following definitions
shall apply:

(c)

the date and source of the first information leading to
suspicion that an irregularity had been committed;

1. “irregularity” means any infringement of a provision of
Community law resulting from an act or omission by an
economic operator which has, or would have, the effect
of prejudicing the general budget of the Communities by
charging an unjustified item of expenditure to the
Community budget;

2. “economic operator” means any natural or legal person or
other entity taking part in the administration of assistance
from the Funds, with the exception of Member States
exercising their prerogatives as a public authority;

3. “primary administrative or judicial finding” means a first
written assessment by a competent authority, either
administrative or judicial, concluding on the basis of
specific facts that an irregularity has been committed,
without prejudice to the possibility that this conclusion
may subsequently have to be revised or withdrawn as a
result of developments in the course of the administrative
or judicial procedure;

4. “suspected fraud” means an irregularity giving rise to the
initiation of administrative and/or judicial proceedings at
national level in order to establish the presence of inten-
tional behaviour, in particular fraud, such as is referred to
the Convention on the
(a), of
in Article 1(1), point
protection of
financial
interests;

the European Communities'

5. “bankruptcy” means insolvency proceedings within the
meaning of Article 2, point (a), of Council Regulation
(EC) No 1346/2000 (*).

___________
(*) OJ L 160, 30.6.2000, p. 1. Regulation as amended by the

2003 Act of Accession.’;

2. Article 2 is deleted.

(d)

the practices employed in committing the irregularity;

(e) where appropriate, whether the practice gives rise to a

suspicion of fraud;

(f)

the manner in which the irregularity was discovered;

(g) where

appropriate,
countries involved;

the Member States

and third

(h)

the period during which, or the moment at which, the
irregularity was committed;

(i)

the national authorities or bodies which drew up the
official report on the irregularity and the authorities
responsible for administrative and/or judicial follow-up;

(j)

the date on which the primary administrative or judicial
finding on the irregularity was established;

(k)

the identity of the natural and/or legal persons involved
or of any other participating entities, except where this
information is irrelevant for the purposes of combating
irregularities, given the nature of
the irregularity in
question;

(l)

the total budget approved for the operation and the
distribution of
its co-financing between Community,
national, private and other contributions;

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(m) the amount affected by the irregularity and its distri-
bution between Community, national, private
and
other contributions; where no payment of the public
contribution has been made to the persons and/or
other entities identified under point (k), the amounts
which would have been wrongly paid had the irregu-
larity not been identified;

(n)

the suspension of payments, where applicable, and the
possibilities of recovery;

This information must be sufficiently detailed to allow
the Commission to decide as soon as possible, after
consulting
States
concerned, on the apportionment of: the financial conse-
quences referred to in the third indent of Article 12(1) of
Regulation (EC) No 1164/94.

authorities of

the Member

the

This information shall include at least the following:

(o)

the nature of the irregular expenditure.

(a)

the date of the last payment made to the bodies
responsible
implementation of projects
and/or the final recipient;

the

for

By way of derogation from the first subparagraph,
following cases need not be reported:

the

(b) a copy of the recovery order;

— cases where the irregularity consists solely of the failure
to partially or totally execute a measure co-financed by
the Community budget owing to the bankruptcy of the
bodies responsible for the implementation of the project
or the final recipient. However, irregularities preceding a
bankruptcy and cases of
suspected fraud must be
reported,

— cases brought

to the attention of

the administrative
authority by the bodies responsible for the implemen-
tation of the project and/or the final recipient voluntarily
or before detection by the relevant authority, whether
before or after the granting of the public contribution,

(c) where applicable, a copy of the document attesting
the bodies responsible for the

the insolvency of
implementation of projects or the final recipient;

(d) an outline description of the measures taken by the
to

Member State, with indication of
recover the relevant amount.’;

their dates,

5. the following Article 6a is inserted:

‘Article 6a

— cases where the administrative authority finds a mistake
the financed project and
the public

regarding the eligibility of
corrects the mistake prior to payment of
contribution.’;

The information required under Articles 3, 4 and 5(1) shall
be sent, whenever it
is possible to do so, by electronic
means, using the module provided by the Commission for
the purpose via a secure connection.’;

4. Article 5 is amended as follows:

6. the following Article 8a is inserted:

(a)

the second subparagraph of Article 5(1) is replaced by
the following:

‘Article 8a

‘Beneficiary Member
the
States
Commission administrative or judicial decisions, or the
main points thereof, concerning the termination of such
procedures and shall state in particular whether or not
the findings are such that fraud is suspected.’;

report

shall

to

The Commission may use any information of a general or
operational nature communicated by Member States under
this Regulation to perform risk analyses, using information
technology support, and may, on the basis of the infor-
mation obtained, produce
and develop early-
warning systems serving to identify risks more effectively.’;

reports

(b) paragraph 2 is replaced by the following:

7. Article 10(3) is replaced by the following:

‘2. Where a beneficiary Member State considers that
an amount cannot be recovered or is not expected to be
recovered, it shall inform the Commission, in a special
report, of the amount not recovered and the reasons
why the amount should,
in its view, be borne by the
Community or by the beneficiary Member State.

‘3.
The Commission and the Member States shall ensure,
when processing personal data pursuant to this Regulation,
the Community and national provisions on the
that
protection of personal data,
in particular those laid down
by Directive 95/46/EC and, where applicable, by Regulation
(EC) No 45/2001, are complied with.’;

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8. Article 12 is replaced by the following:

‘Article 12

1. Where the irregularities relate to amounts of less than
EUR 10 000 chargeable to the Community budget, Member
States
send the Commission the information
provided for in Articles 3 and 5 unless the latter expressly
requests it.

shall not

2. Member States which have not adopted the euro as
their currency by the date when the irregularity is established
shall convert expenditure incurred in national currency into
euro. The amount shall be converted into euro by using the
Commission’s monthly accounting rate for the month in
which the expenditure was or would have been entered
into the accounts of the paying authority responsible for

the operational programme in question. The Commission
publishes this rate electronically once a month.’;

Article 2

Article 5 of Regulation (EC) 1831/94, as it applied prior to the
entry into force of this Regulation, shall continue to be applied
for those cases involving an amount of less than EUR 10 000
which are notified before 28 February 2006.

Article 3

This Regulation shall enter force on the third day following its
publication in the Official Journal of the European Union.

It shall apply from 1 January 2006.

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

Done at Brussels, 23 December 2005.

For the Commission

Siim KALLAS
Vice-President