COMMISSION STAFF WORKING DOCUMENT Early Detection and Exclusion System (EDES) - Panel referred to in Article 143 of the Financial Regulation Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 31st Annual Report on the protection of the European Union's financial interests - Fight against fraud - 2019
Date: 2020-09-03
Institutions: European Anti-Fraud Office, European Commission
Subjects: EU Member State, EU budget, EU strategy, activity report, corruption, crime, fight against crime, financial control, fraud, fraud against the EU

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.9.2020  SWD(2020) 157 final  COMMISSION STAFF WORKING DOCUMENT Early Detection and Exclusion System (EDES) - Panel referred to in Article 143 of the Financial Regulation Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 31st Annual Report on the protection of the European Union's financial interests - Fight against fraud - 2019  {COM(2020) 363 final} - {SWD(2020) 156 final} - {SWD(2020) 158 final} - {SWD(2020) 159 final} - {SWD(2020) 160 final}  
 
 
Table of Contents 

1. 

INTRODUCTION ....................................................................................................... 2 

2.  THE PANEL ............................................................................................................... 3 

2.1.  The Composition of the Panel ........................................................................... 3 

2.2.  Role of the Panel ............................................................................................... 4 

2.3.  The recommendation of the Panel ..................................................................... 8 

3.  THE  PUBLICATION  OF  SANCTIONS  IMPOSED  ON  PERSONS  AND 

ENTITIES ................................................................................................................... 9 

4. 

INCREASED COOPERATION WITH OLAF ........................................................ 10 

5.  FIRST INTER-INSTITUTIONAL PANEL PROCEDURES ................................... 11 

6.  NOTIFICATION OF ADVERSARIAL LETTERS ................................................. 11 

7.  AWARENESS  RAISING  WITH 

INTERNAL  AND  EXTERNAL 

STAKEHOLDERS .................................................................................................... 12 

8.  OVERVIEW OF CASES .......................................................................................... 12 

ANNEX  1  -  SUMMARY  OF  ANONYMISED  CASES  REFERRED  TO  THE 

PANEL OF ARTICLE 143 OF THE FINANCIAL REGULATION ....................... 15 

ANNEX 2 – CHARTS ...................................................................................................... 26 

1 

 
 
 
 
 
 
1. 

INTRODUCTION 

SWD REPORT ACTIVITY 2019 

The European Commission manages the Early-Detection and Exclusion System (EDES). 
EDES was set up in 2016 and is rooted in the Financial Regulation applicable to the EU 
budget revised in 20181 (Articles 135 to 145). EDES is a strong tool for reinforcing the 
protection  of  the  EU's  financial  interests  against  unreliable  persons  and  entities  and 
fraudsters  (e.g.  exclusion  from  participation  in  obtaining  EU  and/or  European 
Developments Funds (EDF) funds).  

EDES provides for a broad range of sanctionable practices. It ensures an independent and 
transparent  central  assessment  of  administrative  sanctions  and  the  respect  of  the 
fundamental  rights  of  the  persons  and  entities  concerned.  The  Financial  Regulation 
provides for rules that centralise the exclusion process for all EU institutions, agencies, 
offices  and  bodies.  In  particular,  Article  143  establishes  an  inter-institutional  Panel 
presided  over  by  a  standing  high-level  independent  Chair,  whose  role  is  to  issue 
recommendations  on  administrative  sanctions,  i.e.  exclusion  and/or  financial  penalties 
and,  where  applicable,  the  publication  thereof,  following  a  request  from  an  authorising 
officer  by  delegation2  of  EU  institutions,  agencies,  offices  and  bodies.  These 
recommendations are addressed to the requesting authorising officers by delegation who 
remain  sole  competent  to  take  the  decision  to  exclude  persons  or  entities  and/or  to 
impose a financial penalty on them.  

2019  was  the  first  full  year  in  which  the  Panel  operated  under  the  revised  Financial 
Regulation. The latter has brought further improvements to the system. In particular, the 
provisions related to the system have been streamlined and clarified, the competence of 
exclusion and/or imposing a financial penalty by authorising officers has been extended 
to  the  whole  of  indirect  management3  and  new  grounds  of  exclusion  have  been 
introduced.  

While the extension of EDES to the whole of indirect management is a procedural rule 
applicable at once, the additional grounds of exclusion are substantive rules, whichonly 

1 Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on 
the  financial  rules  applicable  to  the  general  budget  of  the  Union,  amending  Regulations  (EU)  No 
1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 
1316/2013,  (EU)  No  223/2014,  (EU)  No  283/2014,  and  Decision  No  541/2014/EU  and  repealing 
Regulation (EU, Euratom) No 966/2012, OJ L 193 of 30.7.2018, p.1. 

2  Authorising  officers  by  delegation  are  the  persons  generally  with  the  rank  of  Director-General  or 
Director,  responsible for implementing revenue and expenditure in accordance with the principle of sound 
management, including through ensuring reporting on performance, and for ensuring compliance with the 
requirements of legality and regularity and equal treatment of recipients of EU funds.  

3  Previously  the  competence  of  authorising  officers  was  limited  to  indirect  management  whith  third 
countries, in case the latter were not in a position to exclude themselves unreliable persons and entities.  

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apply to the future effects of situations which arose when the earlier rules applied or to 
situations arisen after the netry into application of the revised Financial Regulation.  

This Staff Working Document presents the fourth year of activity of the EDES Panel and 
also includes the first semester of 2020. 

2.  THE PANEL 

The coherence of the administrative sanctions procedure (i.e. exclusion and/or financial 
penalties and, where applicable, the publication thereof) is ensured by the Panel. 

2.1.  The Composition of the Panel  

As laid down in Article 143 of the Financial Regulation, the Panel is composed of: 

- 

- 

a standing high-level independent Chair; 

two  permanent  Member  representatives  of  the  Commission  as  the  owner  of 
the system, who express a joint position for the cases submitted to the Panel 
and; 

-  one ad-hoc Member representative of the requesting authorising officer. 

The  Chair  of  the  Panel  and  his/her  Deputy4  are  appointed  by  the  Commission  and  are 
independent  in  the  performance  of  their  duties5.  They  are  chosen  from  among  former 
members of the Court of Auditors, the Court of Justice or former officials who have had 
at  least  the  rank  of  Director-General  in  an  institution  of  the  Union  other  than  the 
Commission.  Their  term  of  office  is  five  years.  The  current  Chair  is  Mr  Christian 
Pennera,  former  Jurisconsult  of  the  European  Parliament  and  his  Deputy  is  Ms  María 
Isabel Rofes i Pujol, former Member of the Court of Justice of the European Union (Civil 
Service Tribunal). 

The two permanent Members of the Panel representing the Commission are Mr. Hubert 
Szlaszewski who is Principal Advisor in the Secretariat General of the Commission, and 

4 The  rules applicable to the  Deputies are  to be found in the Rules of Procedure of the  Panel.  They are 
mutatis mutandis those applicable to the Chair. 

5 Article 144(3) of the Financial Regulation. 

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SWD REPORT ACTIVITY 2019 

Mr.  Olivier  Waelbroeck,  Director  of  the  Central  Financial  Service  in  the  Directorate-
General for Budget6. 

For  each  case,  the  additional  Member  representing  the  requesting  authorising  officer  is 
designated in accordance with the rules of procedure and the internal administrative rules 
of the institution, agency, office or body concerned. 

The  Panel  is  assisted  by  observers  and  in  all  cases  by  a  representative  of  the  Legal 
Service  of  the  Commission.  The  observers  do  not  take  part  in  the  adoption  of  the 
recommendations.  Representatives  of  OLAF  also  participate  in  the  Panel  meetings  as 
observers in the cases referred to the Panel on the basis of an OLAF investigation. This 
status allows the Panel to be informed by OLAF of the facts and findings resulting from 
its  investigations,  of  an  assessment  of  their  preliminary  classification  in  law,  their 
estimated  financial  impact,  of  the  necessary  procedural  guarantees,  and  of  the  state  of 
exchanges of information between OLAF and the competent  authorities of the Member 
States. The active contribution of the Legal Service of the Commission and of OLAF to 
the work of the Panel is a key element in providing the Panel with relevant information 
and allowing it to deliver high quality recommendations in a timely way.  

The  Panel  is  supported  by  a  permanent  secretariat  provided  by  the  Commission  and 
administratively attached to the Directorate-General for Budget. 

The  Panel  has  its  own  Rules  of  Procedures  which  are  established  by  Commission 
Decision 2018/12207. These rules aim to govern the way the Panel organise its work and 
to make them clear for all parties involved, including the persons or entities subject to an 
exclusion  procedure.  They  implement  and  supplement  the  rules  of  Article  143  of  the 
Financial Regulation. 

2.2.  Role of the Panel 

In  the  absence  of  a  final  national  judgment  or,  where  applicable,  a  final  administrative 
decision, authorising officers who envisage to exclude and/or fine unreliable persons and 
entities have to first request a recommendation of the Panel. The grounds for exclusion 
which require a Panel recommendation are the following: 

6 Deputies of the Permanent Members are: Mr Olivier Dandoy, an official of the Directorate-General for 
Communication of the Commission designated ad personam and Ms Victoria Gil Casado, Head of Unit in 
the Central Financial Service in the Directorate-General for Budget. 
7  Commission  Decision  (EU)  2018/1220  of  6  September  2018  on  the  rules  of  procedure  of  the  panel 
referred to in Article 143 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the 
Council (OJ L 226, 7.9.2018, p.7). 

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-  grave professional misconduct resulting from the violation of applicable laws 
or  regulations  or  ethical  standards  of  the  profession  to  which  the  economic 
operator concerned belongs, or from the engagement in any wrongful conduct 
which  has  an  impact  on  the  professional  credibility  where  such  conduct 
denotes wrongful intent or gross negligence; 

- 

- 

- 

- 

fraud,  corruption,  participation  in  a  criminal  organisation,  money  laundering 
or terrorist financing, terrorist-related offences  or offences linked to  terrorist 
activities, and child labour or other forms of trafficking in human beings; 

in  complying  with  main  obligations 

significant  deficiencies 
the 
performance  of  a  contract  financed  by  the  budget  ('serious  breach  of 
obligations'),  which  has  led  to  its  early  termination  or  to  the  application  of 
liquidated  damages  or  other  contractual  penalties,  or  which  has  been 
discovered  following  checks,  audits  or  investigations  by  an  authorising 
officer, OLAF or the Court of Auditors; 

in 

irregularity  within  the  meaning  of  Article  1(2)  of  Council  Regulation  (EC, 
Euratom) No 2988/958 and; 

in  2018,  two  additional  grounds  for  exclusion  have  been  added  in  the 
Financial  Regulation,  i.e.  the  creation  of  entities  in  a  different  jurisdiction 
with the intent to circumvent fiscal, social or any other legal obligations in the 
jurisdiction of its registered office, central administration or principal place of 
business, and such entities created themselves. 

In general, each case is examined by the Panel in two meetings. In the first one, the Panel 
examines the facts and findings and their preliminary qualification in law. It ensures the 
right to be heard by sending a letter to the economic operator in which the latter is given 
the  possibility  of  submitting  observations  in  writing.  In  the  second  one,  the  Panel 
examines  the  written  observations,  if  any,  and  adopts  its  recommendation  which  is 
addressed  to  the  requesting  authorising  officer.  It  should  be  noted  that  in  view  of  the 
situation  created  by  COVID-19,  the  Panel  proceedings  have  mostly  continued  under 
written procedures over the first half of 2020. In doing so, the Panel has taken particular 
care to comply with its obligations, in particular with regard to the respect of the right of 

8 Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European 
Communities  financial  interests  (OJ  L  312,  23.12.1995,  p.  1)  which  defines  irregularity  as:  "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  or  budgets 
managed by them, either by reducing or losing revenue accruing from own resources collected directly on 
behalf of the Communities, or by an unjustified item of expenditure." 

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SWD REPORT ACTIVITY 2019 

defense  of  the  persons  and  entities  concerned  and  the  conditions  surrounding  its 
deliberations.    

As a general rule, the Panel must adopt this recommendation within three months from 
the  date  the  Chair  has  verified  the  readiness  of  the  file,  after  requesting  additional 
measures of verification or examination, where applicable. This period may be extended 
by the Chair in order, i.a., and foremost to ensure that the right to be heard is respected. 
However,  in  urgent  important  cases,  provided  that  the  fundamental  right  to  be  heard  is 
fully maintained, the Panel is flexible and can act more swiftly, where for instance a long 
duration of the procedure can result in difficulties for the administrative operation of the 
Commission or institution or EU body concerned. By way of consequence, the requests 
of  recommendation  addressed  to  the  Panel,  also  taking  into  account  other  measures 
needed for permitting it to start its proceedings, are not necessarily processed in the order 
in which they are submitted through the secretariat. 

The person or entity concerned by the procedure is granted three weeks as a general rules 
to submit observations. By way of exception, following a reasoned request by the person 
or  entity  concerned,  the  deadline  may  be  extended,  by  no  more  than  half  the  period 
initially granted. In practice, the Panel takes particular care of ensuring full compliance 
with the observance of the right to be heard, nonetheless since it allows it to adequately 
inform  its  recommendations,  making  a  balance  between  incriminating  and  exonerating 
circumstances. 

The  recommendation  of  the  Panel  includes  a  preliminary  classification  in  law  of  the 
conduct  referred  to  above,  with  regard  to  established  facts  or  other  findings.  It  is 
important  to  recall  that  the  Panel  has  no  investigative  powers.  It  therefore  principally 
relies on: 

a)  facts  established  in  the  context  of  audits  or  investigations  carried  out  by  the 
European  Public  Prosecutor’s  Office9,  the  Court  of  Auditors,  OLAF  or  internal 
audit, or any other check, audit or control performed under the responsibility of 
the authorising officer; 

b)  non-final administrative decisions which may include disciplinary measures taken 
by  the  competent  supervisory  body  responsible  for  the  verification  of  the 
application of standards of professional ethics; 

9 It will be operational at the earliest in November 2020. 

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SWD REPORT ACTIVITY 2019 

c)  facts referred to in decisions of persons and entities implementing Union funds 

under indirect management;10 

d)   

information transmitted by entities implementing Union funds under shared management 
with Member States and; 

e)  decisions  of  the  Commission  relating  to  the  infringement  of  the  Union's 
competition rules or of a national competent authority relating to the infringement 
of Union or national competition law. 

Where the Panel considers that the person or entity concerned should be excluded and/or 
that a financial penalty should be imposed on it, its recommendation contains the facts or 
findings  and  their  preliminary  classification  in  law  as  well  as  one  or  several  of  the 
following assessments: 

a)  the  need  to  exclude  the  economic  operator  concerned  and,  in  that  case,  the 

recommended duration of such an exclusion; 

b)  the  need  to  publish  the  information  related  to  the  economic  operator  which  is 

excluded and/or subject to a financial penalty; 

c)  the possibility and the need to impose a financial penalty and its amount and; 

d)  the remedial measures taken by the economic operator, if any and provided that 
the misconduct is not related to fraud, corruption, criminal organisations, money 
laundering,  terrorist  financing  or  offences,  child  labour  or  other  offences 
concerning trafficking in human beings. 

In practice, the Panel rarely recommends the imposition of financial penalties. The main 
reason for this is that the Panel sees its mission as protecting the EU financial interests 
and image as in the first place being of a preventive nature rather than a repressive one. 
The very purpose of the system of exclusion is to prevent unreliable persons and entities 
to have access to EU financing and not merely to punish them.    

All  of  those  assessments  are  made  in  the  light  of  the  principle  of  proportionality  as 
recalled in Article 136(3) of the Financial Regulation, so as to duly consider aggravating 
and/or  mitigating  circumstances.  In  giving  grounds  for  his  recommendations,  the  Panel 
systematically weighs all these circumstances.  

10 E.g. by the European  Central Bank, the European Investment Bank, the European Investment  Fund or 
international organisations. 

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SWD REPORT ACTIVITY 2019 

In  particular,  after  an  assessment  of  the  remedial  measures  the  Panel  may  decide  to 
recommend  imposing  no  sanctions  on  the  person  or  entity.  This  is    based  on  the 
procurement  Directives11  in  order,  where  the  economic  operator  has  “cleaned  up”  its 
situation, to avoid its exclusion altogether. The non-exhaustive list of measures referred 
to  in  Article  136(7)  of  the  Financial  Regulation  must  be  sufficient  to  demonstrate  the 
reliability  of  the  person  or  entity  for  receiving  and  spending  Union  funds  in  future.  In 
addition,  excluded  persons  or  entities  can  take  remedial  measures  after  being  excluded 
and/or fined. In such case, the competent authorising officer shall ex officio or on request 
from  that  person  or  entity,  refer  a  case  to  the  Panel  wich  may  revise  its  former 
recommendation,  where  it  concludes  that  new  elements  have  been  submitted  that 
demonstrate that the exclusion situation does no longer exist. In such case, the burden of 
proof is reversed, and the person or entity concerned has to demonstrate to the Panel that 
the  measures  taken  are  sufficient  for  ensuring  its  recovered  reliability  and  that  the 
situation of exclusion does no longer exist.  

2.3.  The recommendation of the Panel  

In the light of the principle of proportionality12 and the remedial measures taken by the 
economic operator concerned13, if any, the Panel can recommend: 

-  The exclusion of the person or entity  concerned  for up to  three  years (up to 
five years in the case of fraud, corruption and any similar activities punishable 
under  criminal  law))  from  participation  in  all  or  part  of  funding  procedures, 
governed  by  the  Union  budget  in  line  with  the  Financial  Regulation  and 
award procedures governed by the European Development Funds; 

-  The imposition of a financial penalty14 of maximum 10 % of the total value of 
the contract on a person or entity that has attempted to obtain access to Union 
funds by participating or requesting to participate in a procurement procedure, 
while being, without having declared it in one of the exclusion situations; 

11  Directive  2014/24/EU  of  the  European  Parliament  and  of  the  Council  of  26  February  2014  on  public 
procurement and repealing Directive 2004/18/EC (OJ L 94, 28.03.2014, p.65) and Directive 2014/23/EU of 
the European Parliament and of the Council of 26 February 2014 on the award of concession contracts (OJ 
L 94, 28.03.2014, p.1). 

12 This principle is enshrined in Articles 49 and 52 of the Charter of Fundamental Rights of the European 
Union and recalled in the Financial Regulation. 

13 Where remedial measures demonstrate the recovered reliability of the economic operator, no sanctions 
can be imposed on it.  

14 Article 138 of the Financial Regulation. 

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SWD REPORT ACTIVITY 2019 

(i) either as an alternative to a decision to exclude the person or entity, where 
such an exclusion would be disproportionate or; 

(ii)  in  addition  to  an  exclusion  which  is  necessary  to  protect  the  Union's 
financial  interests,  where  the  person  or  entity  has  adopted  a  systemic  and 
recurrent conduct with the intention of unduly obtaining Union funds15. 

- 

In  order  to  reinforce  the  deterrent  effect  of  the  exclusion  and/or  financial 
penalty,  the  publication  on  the  internet  site  of  the  Commission  information 
related to the exclusion and, where applicable, the financial penalty16. 

With  due  respect  the  administrative  autonomy  of  the  Institutions  and  other  EU  bodies, 
the recommendations of the Panel bear a high weight due to the composition of the Panel 
and  the  recognised  authority  of  its  high  level  independent  Chair.  This  is  further 
evidenced by the fact that if the Authorising Officer, who is also a member of the Panel, 
decides  not  to  follow  a  recommendation  of  the  Panel,  he  must  inform  the  latter  of  the 
reasons which have led him/her to take a different decision. This explains why since the 
outset of the Early-Detection and Exclusion System in 2016, authorising officers have up 
to now strictly followed the Panel recommendations without deviations. 

3.  THE  PUBLICATION  OF  SANCTIONS  IMPOSED  ON  PERSONS  AND 

ENTITIES 

The  publication  of  the  sanctions  is  a  powerful  tool  to  ensure  a  deterrent  effect  and  to 
prevent misuse of EU funds. Currently, there are 10 sanctions published on the Europa 
website:  

http://ec.europa.eu/budget/edes/index_en.cfm 

The recommendation to publish must comply with the protection of personal data and be 
necessary to ensure this deterrent effect. Therefore, the publication is only recommended 
in  serious  cases  with  aggravating  factors,  for  instance  the  refusal  to  cooperate  with 
investigations or audits, or the recurrence of a conduct.  In addition, the publication can 
only  intervene  three  months  after  the  decision  is  taken  by  the  authorising  officer,  by 

15  This  possibility  is  not  applicable  to  cases  where  the  conduct  consists  of  significant  deficiencies  in 

complying with main obligations in the performance of a contract. 

16 Information cannot be published in any of the following circumstances:- where it is necessary to preserve 
the confidentiality of an investigation or of national judicial proceedings;- where publication would cause 
disproportionate  damage  to  the  economic  operator  concerned  or  would  otherwise  be  disproportionate  on 
the basis of the proportionality criteria set out and to the amount of the financial penalty; where a natural 
person  is  concerned,  unless  the  publication  of  personal  data  is  exceptionally  justified,  inter  alia,  by  the 
seriousness of the conduct or its impact on the Union's financial interests. 

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SWD REPORT ACTIVITY 2019 

which  time  the  decision  may  have  been  challenged  before  the  General  Court.  In  some 
cases17, the publication will only take place  after the judgment of the  General  Court or 
that of the Court of Justice, if there has been an appeal, have been delivered, should the 
last judgment uphold the decision of the Authorising Officer. Following this rule, there 
are [4] decisions waiting for publication.  

4. 

INCREASED COOPERATION WITH OLAF  

The  use  of  information  resulting  from  OLAF  investigations  and  reports  is  key  to  the 
exclusion system and the success of the protection of EU financial interests. 

In  the  light  of  the  OLAF  Regulation18,  the  Financial  Regulation  (FR)  and  the  Rules  of 
Procedure  of  the  Panel,  it  has  been  clarified  at  Commission  level  how  the  competent 
authorising  officers  may  use  information  contained  in  OLAF  reports  and  other 
information stemming from or relating to OLAF investigations, in the context of EDES 
procedures. Based on the information contained in an OLAF report or other information 
transmitted by OLAF, it has been confirmed that it is the responsibility of the competent 
authorising  officers  to  decide  on  any  actions  to  be  undertaken,  including  requesting  a 
recommendation on an administrative sanction from the Panel. 

In  this  respect,  information  related  to  the  preservation  of  the  confidentiality  of  the 
investigations  conducted  or  coordinated  by  OLAF,  including  the  protection  of  whistle-
blowers,  and  that  of  national  investigations  or  judicial  proceedings  or  those  by  the 
European Public Prosecutor's Office cannot be disclosed.  

In compliance with the principles of the rights of defence and that of ‘equality of arms’, 
during administrative proceedings, in line with  Article 13 of the Rules  of Procedure of 
the Panel only documents which the person or entity concerned has been able to examine 
are  taken  into  account  by  the  Panel  in  its  recommendation  on  sanctions  and  by  the 
competent authorising officer in the ensuing administrative decision. This means that the 
information  communicated  to  the  person  or    entity  concerned  in  the  context  of  the 
adversarial  procedure  may  be  redacted,  in  which  case,  the  Panel  will  only  take  into 
consideration the redacted version of the OLAF report.  

17 This depends on the legislation applicable at the time the misconduct occurred. For facts that took place 
from  2016  onwards,  the  publication  is  made  three  months  after  its  notification  to  the  person  or  entity 
concerned, notwithstanding the lodging of an action contesting the decision. This means that the deferral of 
the publication of cases should gradually disappear over time. 

18    Regulation  (EU,  Euratom  )  No  883/2013  of  the  European  Parliament  and  of  the  Council  of  11 
September  2013  concerning  investigations  conducted  by  the  European  Anti-Fraud  Office  (OLAF)  and 
repealing  Regulation  (EC)  No  1073/1999  of  the  European  Parliament  and  of  the  Council  and  Council 
Regulation (Euratom) No 1074/1999 (OJ L 248 18.9.2013, p. 1).   

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SWD REPORT ACTIVITY 2019 

This  rule  will  be  applicable  mutatis  mutandis  for  information  stemming  from  the 
European  Public  Prosecutor's  Office,  once  the  latter  has  started  assuming  the 
investigative and prosecutorial tasks conferred on it. Also, the same principle applies to 
all documents used by the Panel, in particular audit reports. 

5.  FIRST INTER-INSTITUTIONAL PANEL PROCEDURES 

Most cases are referred to the Panel by Commission departments or executive agencies, 
which bear responsibility for implementation of operational expenditure under direct and 
indirect  management  covered  by  the  general  budget  of  the  EU.  However,  in  line  with 
Article 317 of the Treaty on the Functioning of the European Union and Article 59 of the 
Financial Regulation, EU institutions other than the Commission are responsible for the 
implementation of their respective administrative expenditure. 

For the first time in 2019, a case was referred to the Panel by a EU institution other than 
the  Commission,  in  the  context  of  a  tender  procedure  related  to  its  administrative 
expenditure.  In  this  case,  in  addition  to  the  Commission,  six  other  EU  institutions  and 
two decentralised agencies were concerned by the case and were invited as observers to 
the proceedings.  

This case has shown that the Panel, when it proceeds to its assessment, may need useful 
information  stemming  from  various  authorising  officers  from  different  institutions  and 
EU agencies and bodies helping it in  arriving to  its assessment. In particular, the Panel 
attaches great importance to having a detailed knowledge of the situations concerned and 
of the surrounding circumstances. 

6.  NOTIFICATION OF ADVERSARIAL LETTERS 

It is settled case-law that a decision is properly notified within the meaning of the sixth 
paragraph  of  Article 263  and  the  third  subparagraph  of  Article 297(2)  of  the  Treaty  on 
the Functioning of the European Union if it reaches the addressee and puts the latter in a 
position to take cognisance of it19.   

It is also common ground that unreliable and fraudulent persons and entities may try to 
conceal  themselves  either  in  a  contractual  context  in  order  to  not  reimburse  unduly 
received  funds  or  in  jurisdictional  or  administrative  procedure  in  order  not  to  be 
sanctioned.  

19 See in particular judgment of 21.2.2018, C-326/16, not yet published, 

11 

 
                                                 
SWD REPORT ACTIVITY 2019 

In this respect, in cases, where, despite all efforts made by the Panel secretariat to notify 
the  adversarial  letters  to  entities  or  persons,  there  is  a  high  probability  that  they  have 
received  them,  even  though  they  have  continuously  and  deliberately  not  acknowledged 
their  receipt,  the  Panel  cannot  rely  on  a  presumption  that  the  notifications  have  been 
properly  effected.  Obviously,  authorising  officers  meet  the  same  difficulties  when 
notifying decisions of exclusion. 

While it affects the conduct of some proceedings before the Panel, this situation is in the 
end mostly potentially detrimental to the efficient protection of the financial interests of 
the EU.  

7.  AWARENESS  RAISING  WITH 

INTERNAL  AND  EXTERNAL 

STAKEHOLDERS  

In  2019,  the  Commission  has  continued  its  efforts  to  raise  awareness  all  over  the 
board. In particular: 

–  by  spreading  information  and  disseminating  good  practice  among  others 
Commission services, EU Delegations and CSDP missions, including at senior and 
middle  management  level  and  this  by  various  communication  tools,  including 
instructions given to services, dedicated workshops and training20; 

–  with  due  respect  to  the  independence  of  the  investigative  function  of  OLAF,  by 
strengthening  the  internal  cooperation  with  the  Office  at  senior  level,  including  as 
regards the monitoring of OLAF administrative and financial recommendations and; 

- by developing a targeted communication strategy.  

8.  OVERVIEW OF CASES  

In  2019,  19  referrals21  to  the  Panel  were  made  through  its  permanent  secretariat  by 
authorising  officers.  In  addition,  3  cases  sent  to  the  permanent  secretariat  in  2018  are 
considered  in  the  present  report,  since  they  were,  once  the  respective  files  had  been 
completed, dealt with by the Panel in 2019 and early 2020. One case submitted in early 
2020 has also been taken into consideration. 

Out  of  these  23  referrals,  the  Panel  issued  a  recommendation  to  exclude  economic 
operators  from  EU  funds  in  10  occurrences.  This  was  based  on  various  legal  grounds, 

20 Some of them in narrow collaboration with OLAF services. 

21 Admissible from the administrative point of view. 

12 

 
                                                 
SWD REPORT ACTIVITY 2019 

including fraud, grave professional misconduct and significant breaches with complying 
with main obligations in the implementation of a contract.  

In  5 out of the 10 cases, the Panel also recommended to register in the EDES database 
“persons  with  power  of  representation,  decision-making  or  control"  over  the  excluded 
company,  as  linked  to  the  exclusion.  The  purpose  of  this  registration  is  to  inform  all 
authorising  officers  that  these  individuals  were  personally  involved  in  the  related 
situations of exclusion of the entities concerned. 

In 2 cases, the Panel recommended not to impose sanctions, in 1 since the conditions for 
the  application  of  Article  136(4)  of  the  Financial  Regulation22  were  not  met  and  in  the 
other, in application of the principle of proportionality. 

In  7  cases,  the  Panel  did  not  adopt  recommendations  mostly  because  the  cases  were 
definitively or temporarily inadmissible for – somewhat complex – legal motives. 

In 2 cases, the requesting authorising officers withdrew their referral. 2 cases referred in 
2019 are still under instructions and should be soon submitted to the Panel. 

As regards the 10 recommendations adopted so far, [8] decisions have been taken by the 
authorising  officers  concerned.  Two  further  decisions  should  have  been  adopted  at  the 
date  of  publication  of  this  report.  All  decisions  already  adopted  follow  in  full  the 
corresponding recommendation of the Panel.  

In addition, out of the 10 recommendations, the Panel recommended in 7 cases23 that the 
sanctions were published. The publication was justified by e.g. the inherent gravity of the 
violations and the high impact of the EU financial interests and/or image. 

Overall, out of the [83] cases referred to the Panel so far24 since its setting-up, the Panel 
has  adopted  43  recommendations,  including  in  5  cases  a  recommendation  of  non-
exclusion.  This  has  led  until  now  to  [33]  exclusion  decisions  taken  by  authorising 
officers.  

22 This provision provides i.a. that a person or entity shall be excluded where‘a natural or legal person who 
is a  member of a member of the administrative, management or supervisory body of the person or entity 
subject to exclusion , or who  has powers of representation, decision or control with regard to that person or 
entity is in one or more of the most prominent situations of exclusion. 

23 Up to now, [x] out of these 7 cases have been already published. 

24 This discrepancy also results from the facts that a number of cases have been referred  closely before the 
adoption of this document and are not covered herein. 

13 

 
 
 
                                                 
SWD REPORT ACTIVITY 2019 

The  following  table  presents  an  overview  of  the  cases  where  the  Panel  issued  a 
recommendation in 2019 and 2020 for the cases  submitted to  it in  2018 and where the 
recommendations  were  issued  in  the  first  semester  of  2020.  It  contains  a  summary  of 
facts  and  findings,  their  preliminary  qualification  in  law  where  applicable,  the 
recommended  administrative  sanction  and  the  date  thereof,  and  if  a  publication  on  the 
website of the Commission was recommended. The cases have been anonymised. 

Full  judicial  review  at  EU  level:  decisions  taken  by  the  EU  Institution/agency/body  on 
the basis of the Panel recommendation may be contested before the EU Court of Justice. 

The  Court  of  Justice  has  again  upheld  the  validity  of  the  early-detection  and  exclusion 
system (Judgment of the General Court of 13 May 2020 in Case T-290/18, “AGMIN” v 
Commission).  In    its  judgment  the  General  Court  has,  in  particular,  confirmed  the 
validity  of  the  respective  roles  of  the  Panel  and  the  authorising    officers,  and  that  the 
adversarial  procedure  led  by  the  Panel  had  fully  respected  the  right  to  be  heard  of  the 
entity  concerned.  Since,  the  Panel  has  started  its  proceedings  in  2016,  8  applications 
against exclusion decisions based on its recommendations have been lodged.  In 1 case, 
the  decision  was  annulled  for  procedural  reasonsf  and  had  to  be  adopted  again.  In  3 
cases, the Court rejected the applications, and 4 cases are pending. 

14 

 
 
SWD REPORT ACTIVITY 2019 

ANNEX 1 - SUMMARY OF ANONYMISED CASES REFERRED TO THE PANEL OF ARTICLE 143 OF THE FINANCIAL REGULATION 

CLASSIFICATION IN 
LAW (exclusion 
ground) 

“Significant 
deficiencies in 
complying with main 
obligations in the 
implementation of 
the contract”  

“Grave professional 
misconduct” 

“Irregularities” 

CASE 
NUMBER 

FACTS 

Case 2018/01  

Failure to ensure 
that payments 
were made to the 
other beneficiaries 
on the project.  

Failure to submit 
reports and 
financial accounts 
relevant for 
receiving the 
financial 
contribution. 

Misrepresentation 

Date of decision 
of the 
Authorising 
Officer 

16.12.2019 

Date of The Panel 
Recommendation 

REOMMENDED 
SANCTIONS 

RECOMMENDED 
PUBLICATION 

26.11.2019 

Exclusion for a  
period of 3 years 

Publication of the 
exclusion, given the 
high amount 
involved, the 
misrepresentation 
of information, the 
serious breach of 
contractual 
provisions. 

15 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SWD REPORT ACTIVITY 2019 

Case 2018/01/a 

Case 2018/05 

of information to 
the Contracting 
Authority  

The parent 
company is in an 
exclusion situation 
established by a 
final administrative 
decision 

Serious breach of 
the contractual 
provisions on the 
eligibility of costs 
charged to the EU 
funded project. 

Irregularities 
concerning the use 
of EU funds. 

Misrepresentation 

“Exclusion of a 
natural or legal 
person with powers 
of representation, 
decision or control 
with regard to that 
person or entity that 
is in one or more 
exclusion situations” 
“Significant 
deficiencies in 
complying with main 
obligations in the 
implementation of 
the contract”  

“Grave professional 
misconduct” 

15.05.2020 

No  

Exclusion period 
aligned with the 
sanction to the 
parent company 

(About to be 
adopted) 

13.11.2019 

Exclusion for a 
period of 3 years. 

20.02.2020 

Publication of the 
exclusion, given the 
seriousness of the 
facts, the 
intentionality of the 
conduct and the 
high financial 
impact. 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SWD REPORT ACTIVITY 2019 

of information 
during the tender 
procedure.  

Case 2019/01 

Situation of 
conflict of interest.  

Manipulation of 
tender procedure. 

Obstruction to 
audit and 
verification by the 
Contracting 
Authority.  

Ineligible costs 
charged on the EU 
funded project.  

Activities of anti-
Semitic nature, 
inciting to 
violence, and 

Case 2019/02 

18.07.2019 

Exclusion for a 
period of 2 years 

“Significant 
deficiencies in 
complying with main 
obligations in the 
implementation of 
the contract”  

“Grave professional 
misconduct” 

16.10.2019 

Publication of the 
exclusion, given the 
high impact on the 
image and 
reputation of the 
European Union as 
well as the fact that 
the economic 
operator has not 
undertaken any 
remedial action. 

“Grave professional 
misconduct” 

11.10.2019 

Exclusion for a 
period of 1 year 
and 6 months.  

No 

04.11.2019 

17 

 
 
 
 
 
 
 
SWD REPORT ACTIVITY 2019 

Case 2019/03 

constituting a 
wrongful conduct 
which ultimately 
impacted on the 
image and 
reliability of the 
economic 
operator. 

Violation of rules 
governing the 
procurement 
procedures by 
obtaining 
information 
conferring upon it 
undue advantage 
in the award 
procedure.  

Misrepresentation 
of information to 
the Contracting 
Authority as to the 

“Grave professional 
misconduct” 

14.11.2019 

Exclusion for a 
period of 1 year 
and six months. 

22.01.2020 

Publication of the 
exclusion. The 
publication is 
considered justified 
due to the 
seriousness of the 
misconduct, as well 
at the impact on the 
image and 
reputation of the 
European Union. 

18 

 
 
 
 
SWD REPORT ACTIVITY 2019 

14.11.2019 

Exclusion for a 
period of 2 years. 

“Significant 
deficiencies in 
complying with main 
obligations in the 
implementation of 
the contract”  

“Grave professional 
misconduct” 

Case 2019/04 

presence of 
conflict of interest 
situation. 

Leak of 
confidential 
information 
related to an 
ongoing tender 
procedure.  

Misrepresentation 
of information to 
the Contracting 
Authority as to the 
presence of a 
conflict of interest 
situation. 

False declarations 
during the tender 
procedure. 

03.02.2020 

Publication of the 
exclusion given the 
seriousness of the 
misconduct, as well 
at the impact on the 
image and 
reputation of the 
European Union. In 
particular, the 
manipulation of the 
procurement 
procedure by 
collusive practices 
led to the non-
respect of principle 
of equal treatment 
and non-
discrimination 
between applicants. 

19 

 
 
 
 
2019/05 

2019/06 

Failure to comply 
with the provision 
on the rule of 
origin for supplies 
contracts. 

Misrepresentation 
of information 
during the tender 
procedure.   

The subsidiary 
company is in an 
exclusion situation 

SWD REPORT ACTIVITY 2019 

“Grave professional 
misconduct” 

18.12.2019 

Exclusion for a 
period of 1 year 
and six months. 

No 

21.02.2020 

No 

No 

No 

None. Panel reply 
of 24.9.2019 
instead: case 
inadmissible 
(limitation period 
reached) 

“Grave professional 
misconduct” 

“Exclusion of a 
natural or legal 
person with powers 
of representation, 
decision or control 
with regard to that 
person or entity that 
is in one or more 
exclusion situations” 

2019/07 

Serious breach of 
contractual 
provisions on the 
eligibility of costs 

“Significant 
deficiencies in 
complying with main 
obligations in the 

13.11.2019 

Exclusion for a 
period of 1 year. 

04.02.2020 

Publication of  the 
exclusion, given the 
seriousness of the 
misconduct and the 

20 

 
 
 
 
 
 
SWD REPORT ACTIVITY 2019 

charged to an EU 
funded project. 

implementation of 
the contract” 

2019/08 

Failure to comply 
with contractual 
provisions on 
accounting reports 
and eligibility of 
costs.  

“Significant 
deficiencies in 
complying with main 
obligations in the 
implementation of 
the contract” 

No 

None.Panel reply 
instead: 
inadmissible since 
outside the legal 
scope ratione 
personae of the 
exclusion system 

impact on the 
financial interests of 
the European 
Union. 
No 

No 

Irregular 
subcontracting. 

2019/09 

Poor performance 
of the contract. 

2019/12 

The entity 
promised and paid 
sums to high-level 
officials in a third 

None: case 
withdrawn 

[xx.06.2020] 

“Significant 
deficiencies in 
complying with main 
obligations in the 
implementation of 
the contract” 
“Corruption” 

“Grave professional 
misconduct” 

21 

No 

No 

No 

Exclusion for a 
period of four 
years 

Publication of the 
exclusion, given the 
seriousness of the 
misconduct, the 

To be adopted 

 
 
 
 
recurrence of the 
misconduct 
throughout two 
contracts [and the 
high amount of the 
two contracts 
involved.] 

No 

No 

No 

No 

country in order to 
be awarded EU 
funded contracts. 

Misrepresentation 
of information as 
part of the offer 
submitted in a 
tender procedure. 
The entity was 
involved in tender 
manipulation. 

The parent 
company is in an 
exclusion situation 
established by a 
non-final 
administrative 
decision. 

2019/13 

2019/15 

SWD REPORT ACTIVITY 2019 

“Grave professional 
misconduct” 

None: case 
withdrawn 

No 

13.11.2019 

Non-exclusion due 
to the non-final 
character of the 
decision on 
exclusion of the 
parent company. 

“Exclusion of a 
natural or legal 
person with powers 
of representation, 
decision or control 
with regard to that 
person or entity that 
is in one or more 
exclusion situations” 

22 

 
 
 
SWD REPORT ACTIVITY 2019 

2019/16  

2019/17 

The subsidiary 
company is in an 
exclusion situation 
established by a 
non-final 
administrative 
decision. 

The subsidiary 
company is in an 
exclusion situation 

2019/18 

Manipulation of 
tender procedure. 

“Exclusion of a 
natural or legal 
person with powers 
of representation, 
decision or control 
with regard to that 
person or entity that 
is in one or more 
exclusion situations” 
“Exclusion of a 
natural or legal 
person with powers 
of representation, 
decision or control 
with regard to that 
person or entity that 
is in one or more 
exclusion situations” 
“Grave professional 
misconduct” 

None: Panel reply 
of 28.1.2020 
instead: 
inadmissible as 
long as the 
exclusion of the 
parent company is 
not yet final 

None: Panel reply 
of 28.1.2020 
instead: 
inadmissible as 
the competence 
to exclude did not 
yet exist when the 
facts occurred 

None: Panel reply 
of 28.1.2020 
instead: 
inadmissible as 
the competence 
to exclude did not 

23 

No 

No 

No 

No 

No 

No 

No 

No 

No 

 
 
 
SWD REPORT ACTIVITY 2019 

2019/19 

2019/20 

Violation of rules 
governing the 
procurement 
procedure. 

“Grave professional 
misconduct” 

“Grave professional 
misconduct” 

Non-final decision 
of a national 
competition 
authority  
according to which 
the entity has 
entered into an 
agreement with 
other companies 
with the aim of 
distorting 
competition. 

yet exist when the 
facts occurred 

None. Panel reply 
of 28.1.2020 
instead: 
inadmissible as 
the limitation 
period has been 
reached 
29.05.2020 

24 

No 

No 

No 

No 

No 

Non-exclusion by 
application of  the 
principle of 
proportionality  

 
SWD REPORT ACTIVITY 2019 

No 

No 

No 

“Grave professional 
misconduct” 

None: Panel reply 
of 15.5.2020 
instead:  
inadmissible since 
conditions ratione 
personae for 
imposing 
sanctions not met 
at the time the 
facts occurred 

2020/01 

The entity on 
whose capacity the 
candidate or 
tenderer intend to 
rely is in an 
exclusion situation. 

Non-final decision 
of a national 
competition 
authority 
according to which 
the entity has 
entered into an 
agreement with 
other companies 
with the aim of 
distorting 
competition. 

25 

 
 
 
SWD REPORT ACTIVITY 2019 

ANNEX 2 – CHARTS 

Legal basis of Panel Recommendations (number of cases 
presented to the Panel during 2019) 

1 

3 

3 

1 

1 

1 

Grave professional misconduct

Serious breach of contractual obligations and Grave professional misconduct

Serious breach of contractual obligations, Grave professional misconduct and irregularities

Exclusion of a natural or legal person with powers of representation

Serious breach of contractual obligations

Corruption and Grave professional misconduct

Sanctions Recommended by the Panel (number of cases 
presented during 2019) 

3,5

3

2,5

2

1,5

1

0,5

0

3 

2 

3 

1 

1 

4 years exclusion

3 years exclusion

2 years exclusion

1 year and 6 months
exclusion

1 year exclusion

26 

 
 
 
 
 
SWD REPORT ACTIVITY 2019 

Recommended Publication (number of cases presented to the 
Panel during 2019) 

3 

4 

Published

Recommended Publication

 Summary of Cases per Year of filing (number of cases 
presented to the Panel during 2019 and January 2020) 

10
9
8
7
6
5
4
3
2
1
0

3 

3 

9 

4 

Research &
Innovation and
Communications
Networks, content
and Technology

External Action and
Neighboorhood
Policy

Administrative
Expenses

2018

2019

2020

1 
1 

1 

Other Institutions

Joint Undertaking

27 

 
 
 
 
 
SWD REPORT ACTIVITY 2019 

Summary of Case Status (number of cases presented to the 
Panel in 2019 and January 2020) 

10

9

8

7

6

5

4

3

2

1

0

1 

1 

4 

1 

3 

5 

2 

2 

1 

1 

1 

Research & Innovation
and Communications
Networks, content
and Technology

External Action and
Neighboorhood Policy

Administrative
Expenses

Other Institutions

Joint Undertaking

Cases assessed by the Panel

Inadmissible

Ongoing Cases

Cases Withdrawn

Summary of Case Status  
(number of cases presented to the Panel during 2019 and 
January 2020) 

10 

Sanctioned Cases

2 

Non-Sanctioned Cases
(e.g.considering
remedial
actions,situation of
exclusion not legally
established)

7 

1 

2 

Inadmissible

Pending Cases

Cases withdrawn by
the Authorising Officer

28 

 
 
 
 
SWD REPORT ACTIVITY 2019 

Sources of triggering the Panel Cases presented in 2019 and 
January 2020  

7 

1 

5 

3 

6 

Audit Report

Olaf Report

Both Audit and Olaf Report

Audit Report, Olaf Report and another Source

Another Source

29