Commission Regulation (EC) No 1848/2006 of 14 December 2006 concerning irregularities and the recovery of sums wrongly paid in connection with the financing of the common agricultural policy and the organisation of an information system in this field and repealing Council Regulation (EEC) No 595/91
Date: 2006-12-14
Institutions: European Commission
Subjects: EAGGF, EU control, common agricultural policy, exchange of information, fraud, information system

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COMMISSION REGULATION (EC) No 1848/2006

of 14 December 2006

concerning irregularities and the recovery of sums wrongly paid in connection with the financing
of the common agricultural policy and the organisation of an information system in this field and
repealing Council Regulation (EEC) No 595/91

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Article 34(1) points
No 1290/2005.

(b) and (c) of Regulation (EC)

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 1290/2005 of 21
June 2005 on the financing of
the common agricultural
policy (1), and in particular to Article 42 thereof,

After consulting the European Data Protection Supervisor,

Whereas:

(1)

(2)

(3)

Article 2 of Regulation (EC) No 1290/2005 sets up two
funds to attain the objectives of the common agriculture
policy: a European Agricultural Guarantee Fund here-
inafter referred to as the ‘EAGF’ and a European Agri-
cultural Fund for Rural Development, hereinafter referred
to as the ‘EAFRD’.

Article 9 of Regulation (EC) No 1290/2005 lays down
principles governing the protection of
the financial
interests of
the Community and assurances regarding
the management of Community funds.

In the light of the experience gained by the Commission
and by the Member States, the system provided for in
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 organisation of an
information system in this field and repealing Regulation
(EEC) No 283/72 (2) should be adjusted in order to
harmonize its application in the Member States,
to
intensify the campaign against irregularities, to enhance
the effectiveness of the system of reporting irregularities,
to take into account that individual irregularity cases will
henceforth be cleared according to the provisions of
Articles 32 and 33 of Regulation (EC) No 1290/2005
and to cover both the EAGF and the EAFRD from 1
January 2007 onwards. To that end, provision should
also be made in order to include in that system irregula-
rities concerning assigned revenues as referred to in

(4)

(5)

(6)

(7)

(8)

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

the definition of

It is necessary to define the term ‘suspected fraud’, taking
account of
fraud contained in the
Convention on the protection of the European Commu-
nities’ financial interests drawn up on the basis of Article
K.3 of the Treaty on European Union (4).

is necessary to specify that
It
administrative or judicial finding’
35 of Regulation (EC) No 1290/2005.

the definition of

‘first
is taken from Article

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

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

fraudulent
(9) With a view to ascertaining the nature of
irregularities and
practices and the financial effects of
to monitoring the recovery of
sums wrongly paid,
provision should be made for irregularities to be commu-
nicated to the Commission at least every quarter; such
communication should be supplemented by information
on the progress of judicial or administrative procedures.

(10)

The overall results of the reporting exercise each year are
brought to the notice of the Committee referred to in
Article 2(1) of Commission Decision 94/140/EC of 23
February 1994 setting up an advisory committee for the
coordination of fraud prevention (5).

(1) OJ L 209, 11.8.2005, p. 1. Regulation as amended by Regulation

(EC) No 320/2006 (OJ L 58, 28.2.2006, p. 42).

(2) OJ L 67, 14.3.1991, p. 11.

(3) OJ L 312, 23.12.1995, p. 1.
(4) OJ C 316, 27.11.1995, p. 49.
(5) OJ L 61, 4.3.1994, p. 27. Decision as amended by Decision

2005/223/EC (OJ L 71, 17.3.2005, p. 67).

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(11)

are
efficiency,

In order to facilitate the reporting exercise which the
required to carry out and to
Member States
improve
the
it
minimum threshold, defined in terms of
the sum
affected by the irregularity, above which irregularities
have
and to
determine those cases in which no reporting obligation
arises.

reported by Member States,

is necessary to increase

to be

This Regulation shall not affect the obligations that arise directly
from the application of Articles 32, 33 and 36 of Regulation
(EC) No 1290/2005 and of Commission Regulation (EC)
No 885/2006 (8).

Article 2

Definitions

(12)

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

For the purposes of this Regulation:

1.

2.

3.

4.

(13) 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 (6) 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 (7).

(14)

The measures provided for in this Regulation are in
accordance with the opinion of the Committee of the
Agricultural Funds,

HAS ADOPTED THIS REGULATION:

CHAPTER I

GENERAL PROVISIONS

Article 1

Scope

This Regulation shall apply to expenditure under the European
Agricultural Guarantee Fund (EAGF) and the European Agri-
cultural Fund for Rural Development (EAFRD), in accordance,
respectively, with Articles 3(1) and 4 of Regulation (EC)
No 1290/2005.

It shall also apply in cases where the payment of assigned
revenue within the meaning of Article 34(1) points (b) and
(c) of Regulation (EC) No 1290/2005 has not been made in
accordance with those provisions.

‘irregularity’ has the meaning assigned to it by Article 1(2) of
Regulation (EC, Euratom) No 2988/95, that is any infringe-
ment 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 either by reducing or losing revenue accruing
from own resources collected directly on behalf of
the
Communities, or by charging an unjustified item of expen-
diture to the Community budget;

‘economic operator’ has the meaning assigned to it by Article
1a point (2) of Commission Regulation (EC) No 1681/94 (9),
that is any natural or legal person or other entity benefiting
from a financing from the EAGF or the EAFRD, with the
exception of Member States exercising their prerogatives as a
public authority, or receiving such assistance, or having to
pay an assigned revenue within the meaning of Article 34(1)
points (b) and (c) of Regulation (EC) No 1290/2005;

the

that
authority,

‘primary administrative or judicial finding’ has the meaning
assigned to it by Article 35 of Regulation (EC) No
a
1290/2005,
competent
judicial,
concluding on the basis of actual facts that an irregularity
has been committed, without prejudice to the possibility that
this conclusion may subsequently have to be adjusted or
withdrawn as a result of developments in the course of
the administrative or judicial procedure;

first written assessment of
administrative or

either

‘suspected fraud’ has the meaning assigned to it by Article 1a
point (4) of Regulation (EC) No 1681/94, that is an irregu-
larity which has been subject of a primary administrative or
judicial finding giving rise to the initiation of proceedings at
national level in order to establish the presence of intentional
behaviour, in particular fraud as is referred to in Article 1(1)
point
the Convention of 26 July 1995 on the
protection of the European Communities’ financial interests
drawn up on the basis of Article K.3 of the Treaty on
European Union;

(a) of

(6) OJ L 8, 12.1.2001, p. 1.
(7) 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).

(8) OJ L 171, 23.6.2006, p. 90.
(9) OJ L 178, 12.7.1994, p. 43.

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5.

‘bankruptcy’ means
insolvency proceedings within the
meaning of Article 2 point (a) of Council Regulation (EC)
No 1346/2000 (10).

(k)

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

(l)

CHAPTER II

REPORTING OBLIGATIONS

Article 3

Quarterly report

entities which have

the identities of the natural and/or legal persons involved
or of other
in the
commission of the irregularity, except where this infor-
mation is irrelevant for the purposes of combating irregu-
larities, given the nature of the irregularity in question;

taken part

1.
At the latest within two months following the end of each
quarter, Member States shall report to the Commission all the
irregularities which have been the subject of a primary admin-
istrative or judicial finding. For each irregularity, Member States
shall give details of:

(m) the total amount of expenditure on the operation at issue,
and, where appropriate, the distribution of its co-financing
between Community, national, private and other contri-
butions;

(a)

the common market organizations affected, the sectors and
products concerned;

(b)

the nature of the irregular expenditure;

(n)

the amount affected by the irregularity and, where appro-
priate,
its distribution between Community, national,
private and other contributions; where no payment has
been made to the persons and/or other entities identified
under point
the amounts which would have been
wrongly paid had the irregularity not been identified;

(l),

(c)

the Community provision which has been infringed;

(o)

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

(d)

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

(p) Only in the case of irregularities relating to the EAFRD, the
ARINCO or CCI (Common Identification Code) number of
the programme affected.

(e)

the practices employed in committing the irregularity;

(f) where appropriate, whether the practice amounts to a

suspected fraud;

(g)

the manner in which the irregularity was discovered;

(h) where appropriate, the Member States and third countries

involved;

(i)

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

By way of derogation from paragraph 1, the following

2.
cases need not be reported:

— cases where the irregularity consists solely of the failure to
partially or totally execute an operation co-financed by the
EAFRD or subsidised under the EAGF owing to the bank-
ruptcy of
recipient;
however, irregularities preceding a bankruptcy and cases of
suspected fraud must be reported,

the final beneficiary or

the final

— cases brought

to the

attention of

administrative
authority by the final beneficiary or the final recipient
voluntarily and before detection by the relevant authority,
whether before or after the payment of the public contri-
bution,

the

(j)

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;

(10) OJ L 160, 30.6.2000, p. 1.

— cases where the administrative authority finds a mistake
regarding the eligibility of
the financed expenditure and
corrects the mistake prior to payment of the public contri-
bution.

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3. Where some of the information referred to in paragraph 1
of this Article, and in particular that concerning the practices
adopted in committing the irregularity and the manner in which
this was discovered, is not available, Member States shall as far
as possible supply the missing information when forwarding
subsequent communications of irregularities to the Commission.

recovery of any sums wrongly paid in a specific case or group
of cases.

Article 6

De minimis rule

If national provisions provide for the confidentiality of
the information shall be

4.
investigations, communication of
subject to the authorisation of the competent court.

1. Where the irregularities relate to sums of less than EUR
10 000 in Community funding, Member States
shall not
forward the information provided for in Articles 3 and 5 to
the Commission unless the latter expressly requests it.

Article 4

Special cases

Each Member State shall forthwith report to the Commission
and, where necessary, to the other Member States concerned,
any irregularities discovered or supposed to have occurred,
where it is feared that:

(a)

they may very quickly have repercussions outside its
territory; or

(b) they show that a new malpractice has been employed.

This communication gives in particular detailed information of
the malpractice and of
third
countries concerned.

the other Member States or

Article 5

Follow-up report

shall

inform the Commission as

In addition to the information referred to in Article 3(1),
1.
soon as
Member States
possible, but at the latest within two months following the
end of each quarter, with reference to any previous report
made under Article 3, on details concerning the initiation or
abandonment of any procedures for imposing administrative or
criminal sanctions related to the notified irregularities as well as
of the main results of such procedures. This information shall
also indicate the character of
the sanctions applied and/or
whether the sanctions in question relate to the application of
Community and/or national legislation, including a reference to
the Community and/or national rules in which the sanctions are
laid down.

Upon explicit request of the Commission, the Member
2.
States shall, within two months following receipt of
that
request, provide the Commission with all relevant information
regarding the progress made — notably on initiation, aban-
donment and termination — in the procedures related to the

2.

For applying the threshold set out in paragraph 1:

— Member States which do not form part of the euro zone
shall apply the same exchange rate as that which they
used to make payments to beneficiaries or receive revenue
(EC)
in
No 2808/98 (11) and the sectoral agricultural
legislation,

accordance with

Commission

Regulation

— in cases other than those referred to in sub-paragraph 1, in
particular for operations for which an operative event has
not been laid down by the sectoral agricultural legislation,
the applicable exchange rate shall be the last-but-one
exchange rate established by the European Central Bank
before the month in respect of which the expenditure
or assigned revenue has been declared to the Commission
in
(EC)
No 883/2006 (12).

accordance with

Commission

Regulation

Article 7

Form of the communication

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

CHAPTER III

CO-OPERATION

Article 8

Co-operation with the Member States

1.
The Commission shall maintain appropriate contacts with
the Member States concerned for the purpose of supplementing
the information supplied on the irregularities referred to in
Article 3, on the procedures referred to in Article 5, and,
in
particular, on the possibility of recovery.

(11) OJ L 349, 24.12.1998, p. 36.
(12) OJ L 171, 23.6.2006, p. 1.

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2. Without prejudice to such contacts, when the nature of
the irregularity is such as to suggest that identical or similar
practices could occur in more than one Member State, the
matter shall be put before the Committee referred to in
Article 2(1) of Decision 94/140/EC (hereinafter referred to as
the Cocolaf) or its working parties as referred to in Article 3(3)
thereof.

3.
Furthermore, the Commission shall organise meetings of
an informative nature at Community level for the appropriate
representatives of the Member States in order to examine with
them the information obtained under Articles 3, 4 and 5 and
in particular with regard to the
paragraph 1 of this Article,
lessons to be learned therefrom in connection with irregula-
proceedings. The
rities,
preventive measures
Commission shall keep the Cocolaf
this work
and shall consult it regarding any proposals which it intends
to submit for the prevention of irregularities.

legal
informed of

and

At

the

request of a Member State or, under

4.
the
arrangements laid down in paragraph 3, of the Commission,
the Member States shall consult each other, where appropriate,
within the Cocolaf or any other competent body,
for the
purpose of closing any loopholes which become apparent in
the course of application of current provisions of the common
the Community’s
agricultural policy and which prejudice
financial interests.

Article 9

Summary report

and be 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
the
institutions. Member
Commission shall take all necessary precautions to ensure that
that information remains confidential.

States

and

The information referred to in paragraph 1 may not, in
2.
particular, be disclosed 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 so agreed.

In addition, that information may not be used for any purposes
other than those provided for in this Regulation unless the
authorities that have provided it have given their express
consent 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.

The Commission and the Member States shall ensure,
3.
when processing personal data pursuant
to this Regulation,
that the Community and national provisions on the 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.

The Commission shall every year inform the Cocolaf, of the
order of magnitude of the sums involved in the irregularities
which have been discovered and of the various categories of
irregularity, broken down by type and with a statement of the
number of irregularities in each category.

Paragraphs 1 and 2 shall not affect the rights of access of the
data subject as provide for in Directive 95/46/EC and Regu-
lation (EC) No 45/2001 under the conditions provided for in
that directive and regulation.

CHAPTER IV

USE AND TREATMENT OF THE INFORMATION

Article 10

Use of the information

Without prejudice to Article 11, the Commission may use any
information of a general or operational nature communicated
by Member States
in accordance with this Regulation to
perform risk analyses, using information technology support,
and may, on the basis of the information obtained, produce
reports and develop systems serving to identify risks more
effectively.

Article 11

Treatment of the information

1.
Information communicated or acquired in any form under
this Regulation shall be covered by professional confidentiality

or

instituted
by
in respect of

Paragraphs 1 to 3 shall not impede the use, in any legal
4.
actions
the
subsequently
proceedings
the
Community or by the Member States
recovery of the sums subject to the irregularity, the performance
of checks following alleged irregularities or the imposition of
administrative measures, administrative penalties or criminal
sanctions for irregularities, of information obtained pursuant
to this Regulation. The competent authority of the Member
State which supplied this information shall be informed of
such use.

5. Where a Member State notifies the Commission that a
natural or legal person whose name has been communicated
to the Commission under this Regulation proves on further
inquiry not to be involved in any irregularity, the Commission
shall forthwith inform all those to whom it disclosed that name
under this Regulation of that fact. Such person shall thereupon
cease to be treated, on account of the earlier notification, as a
person involved in the irregularity in question.

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CHAPTER V

FINAL PROVISIONS

Article 12

Repeal

Regulation (EEC) No 595/91 is repealed with effect from

1.
1 January 2007.

References

2.
to Regulation (EEC) No 595/91 shall be
construed as references to this Regulation and be read in
accordance with the correlation table set out in the Annex.

or irregularities communicated before 1 January 2007 under
Regulation (EEC) No 595/91 that are still under follow-up by
their authorities.

For those cases with a financial

2.
impact less than EUR
10 000, Member States may submit one single final commu-
nication.

Article 14

Entry into force

Article 13

Transitional provision

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

1. Member States shall provide the Commission with the
information referred to in Article 5 of the present Regulation

It shall apply from 1 January 2007.

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

Done at Brussels, 14 December 2006.

For the Commission

Siim KALLAS
Vice-President

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ANNEX

Correlation Table

Regulation (EEC) No 595/91

This Regulation

Article 1

Article 2 (deleted)

Article 3(1)

Article 3(2)

Article 3(3)

Article 4

Article 5(1)

Article 5(2) (deleted by Regulation (EC) No 1290/2005)

Article 6 (deleted)

Article 7(1) (deleted by Regulation (EC) No 1290/2005)

Article 7(2) (deleted)

Article 8

Article 9

Article 10

Article 11

Article 12

Article 13

Article 14(1)

Article 14(2)

Article 15

Article 1

Article 2 (new)

Article 3(1)

Article 3(2) (new)

Article 3(3)

Article 3(4)

Article 4

Article 5(1)

Article 8

Article 9

Article 11

No longer of relevance

Article 6

Article 1

Article 12(1)

Article 12(1)

Article 14

Article 7 (new)

Article 10 (new)

Article 13 (new)