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 32nd Annual Report on the protection of the European Union's financial interests - Fight against fraud - 2020
Date: 2021-09-20
Institutions: European Anti-Fraud Office, European Commission
Subjects: EU Member State, EU budget, EU strategy, activity report, coronavirus disease, epidemic, fight against crime, financial control, fraud, fraud against the EU

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 20.9.2021  SWD(2021) 259 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 32nd Annual Report on the protection of the European Union's financial interests - Fight against fraud - 2020 {COM(2021) 578 final} - {SWD(2021) 257 final} - {SWD(2021) 258 final} - {SWD(2021) 262 final} - {SWD(2021) 263 final} - {SWD(2021) 264 final}  
 
 
TABLE OF CONTENTS 

1. 

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

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

2.1.  Composition of the Panel .................................................................................. 2 

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

2.3.  Recommendations of the Panel ......................................................................... 7 

3.  THE  PUBLICATION  OF  SANCTIONS  IMPOSED  ON  PERSONS  AND 

ENTITIES ................................................................................................................... 8 

4.  COOPERATION WITH OLAF .................................................................................. 8 

5.  TERM OF THE MANDATE OF THE PANEL’S CHAIR ........................................ 9 

6.  ASSESSMENT OF REMEDIAL MEASURES ....................................................... 12 

7.  CHANGES IN WORKING METHODS DUE TO COVID-19 ................................ 13 

8.  OVERVIEW OF THE CASES ................................................................................. 13 

 
 
 
 
 
 
1. 

INTRODUCTION 

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 an effective tool for strengthening 
the protection of the EU’s financial interests against unreliable persons and entities and 
against fraudsters (e.g. the system provides for the exclusion of such persons and entities 
from receiving EU and/or European Development Funds (EDF) funds). 

The  EDES  provides  for  a  broad  range  of  sanctionable  practices.  It  ensures:  (i)  the 
independent  and  transparent  central  assessment  of  administrative  sanctions;  and  (ii) 
respect  for  the  fundamental  rights  of  the  persons  and  entities  concerned.  The  Financial 
Regulation  contains  rules  that  centralise  the  exclusion  process  for  all  EU  institutions, 
agencies, offices and bodies. In particular, Article 143 provides for an inter-institutional 
panel  (‘the  Panel’)  presided  over  by  a  standing,  high-level,  independent  chair  (‘the 
Chair’).  The  role  of  the  Chair  is  to  issue  recommendations  on  administrative  sanctions 
(i.e.  sanctions  such  as  exclusion  and/or  financial  penalties  and,  where  applicable,  the 
publication of information on these sanctions),  following a request  from an authorising 
officer  by  delegation2  of  any  of  the  EU  institutions,  agencies,  offices  and  bodies.  The 
Panel  addresses  these  recommendations  to  the  requesting  authorising  officers  by 
delegation  who  remain  solely  competent  to  take  the  decision  to  exclude  persons  or 
entities and/or to impose a financial penalty on them. 

The  administrative  constraints  induced  by  the  COVID-19  pandemic  made  2020  a 
challenging  year  for  the  operation  of  the  Panel,  including  for  entities  engaged  in 
adversarial  procedures.  In  particular,  the  Panel  had  to  meet  remotely  (except  on  two 
occasions),  and  entities  were  given  additional  time  to  submit  observations  where 
appropriate. 

This  Staff  Working  Document  presents  the  fifth  and  last  year  of  activity  of  the  EDES 
Panel and also covers the first half of 2021, which corresponds to the end of the mandate 
of the first Chair of the Panel and his Deputy. 

2.  THE PANEL 

The Panel ensures the coherence of the administrative sanctions procedure (i.e. exclusion 
and/or financial penalties and, where applicable, the publication of information related to 
these sanctions y). 

2.1.  The composition of the Panel 

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

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 generally have the rank of Director-General or Director. They are 
responsible for: (i) implementing revenue and expenditure  in accordance with the principle of sound 
management, including through ensuring reporting on performance; and (ii) ensuring compliance with 
the requirements of legality, regularity and equal treatment of recipients of EU funds. 

2 

 
                                                 
- 

- 

a standing, high-level, independent chair; 

two permanent 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 representative of the requesting authorising officer. 

The  Chair  of  the  Panel  and  his/her  Deputy3  are  appointed  by  the  Commission,  and  are 
independent in performing their duties4. They are chosen from among former members of 
the Court of Auditors, the Court of Justice, or former officials who have held at least the 
rank of Director-General in an institution of the EU other than the Commission. The term 
of office of the Chair of the Panel and his/her Deputy is 5 years. In the period covered by 
this  report,  the  chair  was  Mr  Christian  Pennera,  former  Jurisconsult  of  the  European 
Parliament,  and  his  Deputy  was  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 were Mr Hubert 
Szlaszewski, a Principal Adviser in the Secretariat General of the Commission, and Mr 
Olivier Waelbroeck, Director of the Central Financial Service in the Directorate-General 
for Budget5. 

For  each  case,  the  additional  member  representing  the  requesting  authorising  officer  is 
designated according to the rules of procedure and the internal administrative rules of the 
institution, agency, office or body concerned. 

take  part 

The  Panel  is  assisted  by  observers,  and  in  all  cases  by  a  representative  of  the 
Commission’s  Legal  Service.  The  observers  do  not 
in  adopting 
recommendations.  Representatives  of  the  European  Anti-fraud  Office  (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: 
(i) the facts  and findings resulting  from  OLAF investigations;  (ii)  an assessment  of the 
preliminary  classification  in  law  of  the  investigation’s  facts  or  findings  ;  (iii)  the 
estimated  financial  impact  of  these  facts  or  findings;  (iv)  the  necessary  procedural 
guarantees;  and  (v)  the  state  of  exchanges  of  information  between  OLAF  and  the 
competent authorities of the Member States. The active contribution of the Commission’s 
Legal Service and of OLAF to the work of the Panel is key in providing the Panel with 
relevant information and allowing it to deliver high-quality and timely recommendations. 

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 procedure, which are laid down by Commission Decision 
2018/12206. These rules aim to: (i) govern the way the Panel organises its work; and (ii) 

3  The rules applicable to the Deputies are to be found in the Rules of Procedure of the Panel. These rules 

also apply to the Chair. 

4  Article 144(3) of the Financial Regulation. 

5  Deputies of the Permanent Members were: Mr Olivier Dandoy, an official (Deputy Head of Unit) 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. 

6  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 

3 

 
                                                 
make the way the work is organised clear for all parties involved, including the persons 
or entities subject to an exclusion procedure. These rules implement and supplement the 
rules of Article 143 of the Financial Regulation. 

2.2.  Role of the Panel 

Pursuant  to  the Financial  Regulation7, in  the absence of a final  national  judgment  – or, 
where applicable, in the absence of a final administrative decision – authorising officers 
who envisage to exclude and/or fine unreliable persons and entities must first request a 
recommendation  of  the  Panel.  The  grounds  for  exclusion  that  require  a  Panel 
recommendation are the following8: 

- 

- 

- 

- 

- 

grave professional misconduct resulting from: (i) the violation of applicable laws or 
regulations  or  ethical  standards  of  the  profession  to  which  the  economic  operator 
concerned  belongs,  or  (ii)  the  engagement  in  any  wrongful  conduct  which  has  an 
impact  on  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; 

significant  deficiencies  in  complying  with  the  main  obligations  in  performing  a 
contract financed by the budget (‘serious breach of obligations’), which: (i) has led 
to  early  termination  of  the  contract  or  to  the  application  of  liquidated  damages  or 
other  contractual  penalties;  or  (ii)  has  been  discovered  following  checks,  audits  or 
investigations by an authorising officer, OLAF or the Court of Auditors; 

irregularity within the meaning of Article 1(2) of Council Regulation (EC, Euratom) 
No 2988/959 and; 

two additional grounds for exclusion added in the Financial Regulation in 2018: (i) 
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;  (ii)  the  existence  of  such  entities 
themselves. 

In general, each case is examined by the Panel in two meetings10. In the first meeting, the 
Panel examines the facts and findings and the preliminary qualification of these facts and 
findings in law. The Panel ensures the right to be heard by sending a letter to the entity or 

the Council (OJ L 226, 7.9.2018, p. 7), amended by Commission Decision (EU) 2021/1081 of 28 June 
2021 (OJ L 234, 2.7.2021, pp. 99-101). 

7 

8 

See Article 136 Financial Regulation. 

See Article 136(2) Financial Regulation. 

9  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.’ 

10 

In the current COVID-19 situation, these meetings are mostly held by videoconference. 

4 

 
                                                                                                                                                 
person  concerned,  in  which  the  entity  or  person  concerned  is  given  the  possibility  of 
submitting observations in writing. In the second meeting, the Panel examines the written 
observations, if there are any, and adopts its recommendation, which is addressed to the 
requesting  authorising  officer.  Because  of  the  COVID-19  pandemic,  the  Panel 
proceedings mostly took place remotely and through written procedures in 2020 and the 
first half of 2021. In carrying out its work remotely, the Panel has taken particular care to 
comply with its obligations, in particular obligations to uphold the right of defence of the 
persons and entities concerned and the conditions surrounding the Panel’s deliberations. 

As a general rule, the Panel must adopt its recommendation within 3 months of the date 
the  chair  verifies  the  readiness  of  the  file,  after  requesting  additional  measures  of 
verification or examination, where applicable. This period may be extended by the chair 
for several reasons. Most commonly, the period is extended  to ensure that the right to be 
heard is upheld. However, in urgent and important cases, if the fundamental right to be 
heard is fully upheld, the Panel is flexible and can act more swiftly. For instance, there 
could be cases when a lengthy procedure could result in difficulties for the administrative 
operation  of  the  Commission,  institution  or  EU  body  concerned.  For  this  reason,  the 
requests of recommendation addressed to the Panel – taking into account other measures 
needed to allow the Panel to start its proceedings – are not necessarily processed in the 
order in which they are submitted through the Panel secretariat. 

As a general rule, the person or entity concerned by the procedure is granted 3 weeks to 
submit observations. In exceptional cases, 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 to ensure observance of the right to be 
heard. This also allows the Panel to adopt fully informed recommendations and to strike 
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  through  audits  or  investigations  carried  out  by:  (i)  in  future,  the 
European Public Prosecutor’s Office (EPPO)11
 ; (ii) the European Court of Auditors; 
(iii)  OLAF;  (iv)  internal  audit;  or  (v)  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  verifying  the  application  of 
professional ethical standards; 

c) 

d) 

facts  referred to  in  decisions  of persons and entities implementing EU funds under 
indirect management12; 

information sent by entities implementing EU funds under shared management with 
Member States; and 

11  As of 1 June 2021, the EPPO is operational and has started its investigative and prosecutorial tasks. 

12  For  example,  by:  the  European  Central  Bank;  the  European  Investment  Bank;  the  European 
Investment  Fund;  international  organisations;  non-EU  countries  or  the  bodies  designated  by  non-EU 
countries; and Member State administrations. 

5 

 
                                                 
e)  decisions of: (i) the Commission on the infringement of the EU’s competition rules; 
or  (ii)  a  national  competent  authority  on  the  infringement  of  EU  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  that  person  or  entity,  the  Panel’s 
recommendation contains the facts or findings and the preliminary classification of these 
facts or findings in law. In such cases, the Panel’s recommendation also includes one or 
several of the following assessments: 

a) 

b) 

c) 

d) 

the  need  to  exclude  the  person  or  entity  concerned  and,  in  that  case,  the 
recommended duration of such an exclusion; 

the need to publish the information related to the person or entity concerned that is 
excluded and/or subject to a financial penalty; 

the  possibility  of  imposing  –  and  the  need  to  impose  –  a  financial  penalty  and  the 
amount of this penalty and; 

the remedial measures taken by the economic operator, if any (if 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). 

All  of  these  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  its  recommendations,  the  Panel 
systematically weighs all these circumstances. 

In addition, after an assessment of the remedial measures taken, if there were any, by the 
entity or person concerned, the Panel may decide to recommend imposing no sanctions. 
This discretion is based on the Procurement Directives13 and makes it possible to avoid 
exclusion  altogether,  where  the  economic  operator  has  ‘cleaned  up’  its  situation.  The 
adoption and implementation of 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 EU  funds in the future.  In addition,  for the 
less serious cases of exclusion, excluded persons or entities can take remedial measures 
after being excluded and/or fined. In such cases, the competent authorising officer shall 
ex officio – or on request from that person or entity – refer a case to the Panel. The Panel 
can  then  revise  its  former  recommendation,  if  it  concludes  that  the  newly  submitted 
elements demonstrate that the reason for the original exclusion situation no longer exists. 
In such cases, the burden of proof is reversed, and the person or entity concerned must 
demonstrate  to  the  Panel  that:  (i)  the  measures  taken  are  sufficient  to  ensure  the 
recovered reliability of that person or entity; and (ii) the grounds for exclusion no longer 
apply. 

13  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,  28.3.2014,  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, 28.3.2014, p. 1). 

6 

 
                                                 
2.3.  Recommendations of the Panel 

In  the  light  of  the  principle  of  proportionality14,  and  taking  into  account  the  remedial 
measures – if any – taken by the person or entity concerned15, the Panel can recommend 
the penalties set out in the following three bullet points. 

- 

- 

Firstly, the Panel can recommend the exclusion of the person or entity concerned for 
up  to  3  years  (up  to  5  years  for  fraud,  corruption  and  any  similar  activities 
punishable  under  criminal  law)  from  participation  in  all  or  part  of  funding 
procedures  governed  by  the  EU  budget,  in  line  with  the  Financial  Regulation  and 
award procedures governed by the EDF. 

Secondly,  the  Panel  can  recommend  the  imposition  of  a  financial  penalty16  of  a 
maximum  of  10%  of  the  total  value  of  the  contract  on  a  person  or  entity  that  has 
attempted to obtain access to EU funds by participating or requesting to participate 
in  a  procurement  procedure,  while  being,  without  having  declared  it,  in  one  of  the 
exclusion situations. This penalty can be issued: 

(i) 

(ii) 

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

in  addition  to  an  exclusion  which  is  necessary  to  protect  the  EU’s  financial 
interests,  where  the  person  or  entity  has  adopted  systemic  and  recurrent 
conduct with the intention of unduly obtaining EU funds17. 

-  Thirdly, to strengthen the deterrent effect of the exclusion and/or financial penalty, 
the Panel can recommend the publication of information related to the exclusion and, 
where applicable, the financial penalty on the Commission’s website18. 

With  due  respect  to  the  administrative  autonomy  of  the  EU  institutions  and  other  EU 
bodies,  the  recommendations  of  the  Panel  have  a  quasi-binding  effect.  These 
recommendations  are  also  significant  because  of  the  composition  of  the  Panel  and  the 
recognised  authority  of  its  high-level  independent  chair.  This  significance  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  Panel  of  the 
reasons  that have led him/her to  take a different decision. This  explains why, since the 
creation of EDES in 2016, authorising officers have up to now strictly followed the Panel 
recommendations and no deviations from these recommendations have been recorded. 

14  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. 

15  Where remedial measures demonstrate the recovered reliability of the economic operator, no sanctions 

can be imposed on it. 

16  Article 138 of the Financial Regulation. 

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

complying with the main obligations of a contract. 

18 

Information  cannot  be  published  in  any  of  the  following  circumstances:  (i)  where  it  is  necessary  to 
preserve  the  confidentiality  of  an  investigation  or  of  national  judicial  proceedings;  (ii)  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; and (iii) where a natural person is concerned, unless the publication of personal 
data is exceptionally justified,  among other things by the seriousness of the conduct or its impact on 
the Union’s financial interests. 

7 

 
                                                 
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 five sanctions published on the Europa 
website: EDES database | European Commission (europa.eu). 

There  are  three  reasons  why  only  a  limited  number  of  sanctions  can  be  found  on  the 
website of the Commission. 

Firstly,  any  decision  to  publish  must  comply  with  the  protection  of  personal-data  rules 
and  be  necessary  to  ensure  the  deterrent  effect.  Therefore,  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 type of conduct. 

Secondly, publication can only occur 3 months19 after the decision has been taken by the 
authorising  officer,  by  which  time  the  decision  may  have  been  challenged  before  the 
General  Court.  Still  in  many  cases20,  the  exclusion  can  only  be  published  after  the 
judgment of the General Court (or the judgment of the Court of Justice if there has been 
an appeal) has been delivered if the last judgment upholds the decision of the authorising 
officer. Following this rule, the period of exclusion (and publication of this period) might 
have  elapsed  already  by  the  time  a  final  judgment  is  rendered  by  the  EU  courts.  This 
legal  anomaly  is  likely  to  disappear  over  time,  once  most  situations  of  exclusion  will 
have  arisen  at  a  time  where  the  applicable  substantive  rules  will  be  those  of  the  most 
recent versions of the Financial Regulation. 

Finally, the time of publication of an exclusion is strictly limited to  the duration of the 
exclusion.  This  is  why,  even  if  new  entities  are  included  over  time,  other  entries  are 
removed as soon as the exclusion period is over. 

4.  COOPERATION WITH OLAF 

The  use  of  information  from  OLAF  investigations  and  reports  is  key  to  the  exclusion 
system and successfully protecting the EU’s financial interests. 

In  the  light  of  the  OLAF  Regulation21,  the  Financial  Regulation  and  the  Rules  of 
Procedure of the Panel, the responsible authorising officers follow up on OLAF reports 
and other information stemming from – or relating to – OLAF investigations. They then 
use these reports and other information  in the context of EDES procedures. 

Information cannot be disclosed if it threatens the confidentiality of: (i) the investigations 
conducted  or  coordinated  by  OLAF,  including  the  protection  of  whistle-blowers;  (ii) 
national  investigations  or  judicial  proceedings;  or  (iii)  in  future,  investigations  by  the 

19  Article 140(1), subparagraph 3 of the Financial Regulation. 

20  This  depends  on  the  legislation  applicable  at  the  time  the  misconduct  occurred.  For  facts  that  took 
place  from  2016  onwards,  publication  occurs  3  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. 

21  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). 

8 

 
                                                 
European Public Prosecutor’s Office. This means that, in compliance with the principles 
of the rights of defence and that of ‘equality of arms’, during administrative proceedings, 
and in line with Article 13 of the Rules of Procedure of the Panel, only documents that 
the person or entity concerned has been able to examine are taken into account by: (i) the 
Panel  in  its recommendation on sanctions; and (ii) the  competent  authorising officer in 
the  ensuing  administrative  decision.  This  means  that  the  information  communicated  to 
the person or entity concerned during the adversarial procedure may be redacted22. If it is 
redacted,  the  Panel  will  only  take  into  consideration  the  redacted  version  of  the  OLAF 
report.  In  each  case,  the  expunction  is  strictly  limited  to  those  parts  of  the  report  that 
might affect the rights mentioned above. 

This  rule  will  apply  mutatis  mutandis  for  information  stemming  from  the  European 
Public  Prosecutor’s  Office,  since  it  started  on  1 June 2021  to  assume  the  investigative 
and  prosecutorial  tasks  conferred  upon  it.  The  same  principle  also  applies  to  all 
documents used by the Panel, in particular audit reports. 

5.  TERM OF THE MANDATE OF THE PANEL’S CHAIR23  

The Chair and the Deputy Chair of the Panel are appointed for a non-renewable term of 5 
years.  The  Panel  began  operations  in  2016,  after  the  2015  amendment  to  the  Financial 
Regulation that set it up. Since 2016, 51 recommendations to exclude or not to exclude 
were issued by the Panel24, and 47 entities were excluded from EU financing following 
those  recommendations  and  ensuing  decisions.  Out  of  those  cases,  13  are  still  open 
(exclusion ongoing), while the period of exclusion of the others has elapsed. 

Overall, the composition of – and the mission conferred to – the Panel by the Financial 
Regulation  have  proved  appropriate  and  effective.  In  particular,  the  Panel’s  balanced 
composition is ensured by the high-level independent chair, and the other two permanent 
members  representing  jointly  the  Commission  as  owner  of  the  EDES  system. 
Additionally,  in  each  case,  a  different  member  with  specific  subject  knowledge 
represents  the  referring  authorising  officer.  This  mixed  and  balanced  nature  of  the 
composition  of  the  Panel,  and  the  procedural  guarantees  which  govern  its  operations, 
have been essential to the workings of the Panel. They have ensured a thorough and fair 
assessment  of  both:  (i)  the  facts  and  findings  referred  to  it;  and  (ii)  the  preliminary 
classification in law of these facts and findings25. 

Like any newly established body, the Panel has had to face several challenges throughout 
its first mandate. In particular, this is because of: 

- 

the Panel’s very specific features, previously unknown in EU administrative law; 

22 

In practice, most OLAF reports and information must be redacted. 

23  The rules applicable to the appointment, termination of appointment, and dismissal of the Chair must 

also apply to his/her deputy. 

24 

In a number of cases, instead of making recommendations, the Panel replied to requests of authorising 
officers. This is particularly the case where the Panel considers that, on the basis of the examination of 
the file submitted to it and before any adversarial proceedings, the adoption of administrative sanctions 
cannot be contemplated. 

25  The legal classification is preliminary in the sense that, except for serious contractual breaches, it does 
not prejudge the content of the final decisions of the final judgements to be adopted by the competent 
authorities. 

9 

 
                                                 
- 

- 

- 

- 

- 

the novel, complex and varying nature of the conduct referred to the Panel and the 
context in which this conduct took place; 

the  need  to  interpret  correctly  the  wide  and  dense  new  set  of  rules  on  exclusion 
enshrined in the Financial Regulation; 

the  number  of  other  legal  rules  and  general  principles  of  law  to  be  taken  into 
account,  which  lie  at  the  intersection  of  EU  administrative  and  financial  law, 
business law, contractual law, and criminal law; 

the  need  to  gain  thorough  knowledge  of  various  EU  policies  and  the  way  they  are 
funded under direct and indirect management rules; 

the fact that the Panel could not base its recommendations on precedents26 (however, 
on the other hand, the absence of case-law and of past references have enabled the 
Panel  to  draw  out  strong  principles,  which  pave  the  way  for  the  coherent  and 
effective  application  of  the  system  of  administrative  sanctions  against  unreliable 
economic operators). 

By way of example, it is worth mentioning some of the salient issues dealt with by the 
Panel. 

Firstly,  on  the  legal  side,  there  is  the  need  to  apply  the  appropriate  version(s)  of  the 
Financial  Regulation,  whose  rules  on  exclusion  have  been  updated  a  number  of  times 
over  the  years  (applicable  law  ratione  temporis).  In  particular,  the  Panel  has  attached 
great  importance  to  upholding  Article  49  of  the  Charter  of  Fundamental  Rights, 
according to which the more lenient rule must apply. This has led the Panel to find that 
some situations could not legally be sanctioned. For example, misconduct committed in 
the context of indirect management could not be sanctioned for facts that occurred before 
2016.  Similarly,  fraud  and  corruption  could  not  be  sanctioned  on  the  basis  of  a 
recommendation by the Panel for facts that occurred before 2016. Similarly, where facts 
occur  over  a  number  of  years,  the  Panel  needs  to  assess  these  facts  in  the  light  of 
different provisions throughout different versions of the Financial Regulation. 

Secondly, the Panel has frequently faced questions about the reliability of the sources of 
information  supporting  the  establishment  of  the  facts  and  findings  it  has  to  classify  in 
law. Since the Panel has no investigative powers, it has attached the greatest importance 
to the adversarial process with the entities concerned. In particular, the Panel has ensured 
in each case that entities’ right to be heard is fully upheld. 

Thirdly,  and  as  already  stated  in  the  previous  report,  the  Panel  has  faced  a  number  of 
instances where  entities and persons have  avoided the notification of adversarial letters 
addressed to them. In line with the case-law of the European Court of Justice27, the Panel 
had  to  verify  in  each  case  whether  the  entity  and/or  person  concerned  acknowledged 
express receipt of communications made to them through different means and attempts. 

26  The domain of administrative sanctions was widely uncharted before 2016, since by then only a few 
authorising officers had taken administrative sanctions. These sanctions were isolated and taken by the 
authorising officers on their own. 

27  Case  T‑280/17,  GE.CO. P. Generale  Costruzioni  e  Progettazioni  SpA,  v.  European  Commission  (§62-
63).  

10 

 
                                                 
This  has  been  especially  challenging  during  the  COVID-19  crisis,  where  no  alternate 
means of notification (i.e. post or express delivery courier) could be ensured. 

This  is  only  a  limited  snapshot  of  the  kind  of  issues  the  Panel  faces.  Overall,  over  the 
past 5 years, the impact of the system of administrative sanctions on the protection of the 
EU’s  financial  interests  has  been  positive.  The  central  and  coherent  assessment  of 
exclusion  situations  through  recommendations  of  the  Panel  has  contributed  to  a  higher 
level of protection. This higher level of protection can be seen in both a ‘curative’ side 
(exclusions) and a preventive side (publication of exclusions, which has a deterrent effect 
now that the system is better known by entities managing EU funds). The soundness of 
the  exclusion  system,  as  acknowledged  by  the  Court  of  Justice28,  is  based  on:  (i)  the 
quality of recommendations issued;  and  (ii) the increasing number of  cases referred by 
authorising officers, (this increasing number is partly due to awareness-raising activities 
carried out to increase the system’s visibility). 

On the spending areas most covered through cases submitted to the Panel in recent years, 
the Panel has dealt with cases involving the most relevant programmes under direct and 
indirect management: 

  Horizon 2020 and its previous versions (FP7 and FP6 namely); 

  SAFER; 

  SESAR  2020  (Single  European  Sky  ATM  Research)  Research  and  Innovation 

(R&I); 

 

 the European Instrument for Democracy and Human Rights; 

 

the Marco Polo programme or SME support actions; 

  programmes funded with the EDF; 

  other  programmes  implemented  by  third  entities  concerning  enlargement  and 
neighbourhood  policies  (e.g.  ENLARG,  the  European  Neighbourhood  and 
Partnership Instrument or the Instrument for Pre-accession).  

Contracts  managed  directly  by  EU  institutions  (in  areas  like  security,  IT  programmes, 
communication activities, or technical  support to  Member States) have also been at  the 
centre of exclusion procedures.  However, it should  be stressed that:  (i) the  grounds for 
exclusion in these cases are not exclusively related to the implementation of EU funds; 
and (ii) the potential impact on the budget is significant because these unreliable entities 
would  implement  EU  funds  if  they  are  not  excluded.  This  is  the  case,  for  example,  of 
economic operatorsfined at national level for breaching competition rules, and where EU 
funds are not always at play. 

Amongst  the  various  sources  of  information  at  the  origin  of  Panel  cases,  OLAF 
investigations29 have already been discussed.  However, it is  important  to  also  highlight 
the work carried out by the different authorising officers in detecting misconduct, which 
is essential for the work of the Panel and the adoption of the relevant recommendations. 

28 Case T-290/18, Agmin Italy v. European Commission. 

29 Half (54) of the cases were referred following an OLAF investigation. 

11 

 
                                                 
Some of the OLAF reports were launched following an audit carried out at the request of 
–  or  following  a  notification  from  –  the  authorising  officer.  However,  15  cases  started 
following an audit report carried out at the request of  – or directly by – the authorising 
officer. Furthermore, most cases were referred to the Panel following an inquiry by the 
authorising officer due to their close monitoring of ongoing legal commitments (grants or 
contracts  mainly),  or  during  the  award  procedure.  During  the  award  procedures,  other 
less  typical  sources  (such  as  whistle-blowers’  information,  or  national/international 
decisions) triggered Panel cases. 

6.  ASSESSMENT OF REMEDIAL MEASURES 

According  to  the  Financial  Regulation30,  the  Panel  must  assess  whether  the  remedial 
measures adopted by the said person or entity are sufficient to lift the exclusion or not. 
The  Panel  does  not  have  any  other  power  to  alter  its  previous  recommendation31.  This 
assessment can be made ex officio by the Panel or following a request to the authorising 
officer  responsible  by  the  person  or  entity  concerned.  The  Panel  must  carry  out  a 
discretional  assessment,  and  therefore  has  to  precisely  state  the  reasons  for  its 
recommendation.  Article  136(7)  of  the  Financial  Regulation  presents  a  non-exhaustive 
list  of  possible  remedial  measures  that  economic  operators  can  adopt.  However,  the 
definition of the measures is quite vague, and leaves to the discretion of the Panel (and of 
the authorising officer if appropriate) the assessment as to  whether the  person or entity 
concerned has taken remedial measures ‘to an extent that [are] sufficient to demonstrate 
its reliability’32. 

In 2020, the Panel received the first cases referred by authorising officers requesting an 
assessment of remedial measures adopted by an economic operator. The Panel specified 
that, even if an entity has  adopted measures that have the potential effect of preventing 
future wrongdoing as part of strong internal-control systems, it is indispensable that the 
entity  also  takes:  (i)  all  the  concrete  technical  and  personnel  measures  appropriate  to 
correct  the  conduct  and  prevent  its  further  occurrence;  or  (ii)  measures  to  address  the 
underlying  problems  raised  in  the  decision  of  exclusion.  In  other  words,  the  person  or 
entity  concerned  must  be  able  to  convince  the  Panel,  and  the  authorising  officer 
responsible,  that  the  remedial  measures  are  effective,  well  implemented,  and  –  where 
entities are concerned –  embedded in the corporate culture of the company. Because of 
this, the Panel, which does not have any investigative powers, attaches great importance 
to  assessments  made  by  external  and  independent  professional  third  parties.  Such 
assessments may be accepted as showing that remedial measures are sufficient, insofar as 
they  give  a  reasonable  assurance  that:  (i)  the  remedial  measures  would  prevent  future 
occurrences of similar misconduct; and (ii) if the misconduct occurred again, it would be 
rapidly identified and corrected by the company. 

The  remedial  measures  are  not  only  assessed  after  an  exclusion  decision  has  been 
adopted.  Where  they  are  submitted  by  an  economic  operator  as  part  of  an  adversarial 
procedure  as  part  of  an  exclusion  situation,  remedial  measures  are  already  assessed  by 
the Panel. If those measures are deemed sufficient by the Panel to prevent the recurrence 
of  the  misconduct,  they  are  likely  to  prevent  the  exclusion  of  the  entity33  and  the 

30  Articles 136(8) and 143(7). 

31  For instance, the Panel cannot recommend a reduction in the length of the exclusion. 

32  Article 136(6) of the Financial Regulation. 

33 Article 136(6)(a) of the Financial Regulation.  

12 

 
                                                 
recommendation of the Panel will state the reasons for its assessment34. The Panel may 
also  consider  that  excluding  an  entity  may  be  disproportionate  partly  because:  (i)  the 
entity has adopted remedial measures that, even if not fully implemented, go in the right 
direction to  restore the reliability of the company; and (ii) there is  strong evidence that 
the  entity  was  substantially  improving  its  corporate  governance  and  therefore  the 
likelihood of recurrence of the misconduct is low. 

In harmonising administrative sanctions against unreliable companies, the Panel plays an 
important  role  in  ensuring  that  businesses  are  sound  from  a  professional  and  ethical 
perspective. 

7.  CHANGES IN WORKING METHODS DUE TO COVID-19  

As  stated  above,  the  COVID-19  pandemic  induced  a  change  in  the  Panel’s  working 
methods.  The  meetings  held  in  Brussels  every  6  weeks  were  replaced  by  regular 
meetings by videoconference. This situation continued during the whole of 2020 and it is 
still the rule during the first half of 2021. 

The arrangements proposed by the chair and agreed by the Panel members have allowed 
the Panel to cope with a steady increase in its workload. In this situation, the Panel kept 
to its usual schedule of preparatory and Panel meetings. Although this new system was 
implemented to face the situation created by COVID-19, it cannot be ruled out that the 
Panel  will  continue  with  regular  remote  meetings  even  if  face-to-face  meetings  are 
reinstated. 

The  main  challenges  raised  by  the  remote  working  methods  were  addressed  through 
technical  solutions  and  –  sometimes  –  the  good  faith  of  economic  operators.  In  this 
regard,  the  acknowledgement  of  receipt  of  adversarial  letters  by  targeted  persons  or 
entities  (not  by  all  but  by  most)  has  allowed  the  Panel  to  complete  Panel  procedures 
without  having  to  send  the  documents  by  regular  mail  or  courier  service.  Sending 
documents by regular mail or courier would have complicated the work of the Panel due 
to teleworking arrangements and the impossibility of accessing certain buildings decided 
by the European Commission. 

In any case, the most pressing concern of the Panel when following a written procedure 
is to uphold the right of defence of the persons and entities concerned and the conditions 
surrounding  the  Panel’s  own  deliberations.  To  this  end,  the  general  use  of  qualified 
electronic  signature  by  EU  staff  has  made  it  possible  to  exchange  information  among 
institutions  through  encrypted  mails,  ensuring  the  integrity  and  security  of  the 
information shared. The same system of electronic signatures will also make it possible 
to sign adversarial letters and recommendations electronically, and to store electronically 
certified documents. 

In general, the Panel has been able to cope with the main difficulties caused by COVID-
19, and so far it has not received any complaint or appeal founded on the new working 
methods adopted. 

34 Article 143(6)(e) of the Financial Regulation.  

13 

 
                                                 
8.  OVERVIEW OF THE CASES 

In  2020,  20  referrals  to  the  Panel  were  made  through  its  permanent  secretariat  by 
authorising  officers.  In  addition,  3  cases  sent  to  the  permanent  secretariat  in  2019  are 
considered  in  the  present  report,  since  these  cases  were,  once  the  respective  files  had 
been completed, dealt with by the Panel in 2020. 

Out of these referrals, 3 concerned the revision of prior recommendations, following the 
adoption by the entity of remedial measures.  The Panel issued 10 recommendations, of 
which 3 covered the cases of remedial  measures cases mentioned before. Of these 3, 2 
recommended the revision of the exclusion decision because of the adoption of remedial 
measures and in application of the principle of proportionality, while the other considered 
that the measures were not yet sufficient to warrant revision. From the rest of the cases 
(18  from  2020  and  3  from  2019)  the  Panel  recommended  the  exclusion  of  4  economic 
operators.  This  was  based  on  various  legal  grounds,  including  corruption,  fraud,  grave 
professional  misconduct,  and  significant  breaches  in  complying  with  the  main 
obligations in implementing a contract. 

The  Panel  recommended  not  to  exclude  the  entities  in  2  cases  in  application  of  the 
principle of proportionality and in another case due to a lack of evidence. 

In  5  cases,  the  Panel  did  not  adopt  recommendations,  mostly  because  the  cases  were 
definitively or temporarily inadmissible for – somewhat complex – legal reasons. 

In 1 case, the requesting authorising officers withdrew the referral. Three cases referred 
in 2020 are ongoing. 

On the recommendations to exclude entities adopted so far, all of these recommendations 
have been taken by the authorising officers concerned, fully following the corresponding 
recommendation of the Panel. 

In addition, out of the 4 recommendations to exclude entities, the Panel recommended in 
all  cases35  that  the  sanctions  be  published.  The  publication  was  justified  by:  (i)  the 
inherent gravity of the violations; and (ii) the high impact of the violations on the EU’s 
financial interests and/or image. 

The  following  table  presents  an  overview  of  the  cases  where  the  Panel  issued  a 
recommendation in 2020 and in the first half of 2021. It contains a summary of: (i) facts 
and findings; (ii) where applicable, the preliminary qualification in law of these facts and 
findings ; (iii) the recommended administrative sanction and the date of this sanction; and 
(iv)  information  on  whether  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.

35  Up to now, 1 out of these 4 cases has already been published. 

14 

 
                                                 
Annex 1 - Summary of anonymised cases referred to the Panel under Article 143 of the Financial Regulation36 

Case 
number 

Alleged and/or established 
facts 

Classification in law 
(exclusion grounds) 

Date of the Panel 
recommendation  

Recommended 
sanctions 

Recommended 
publication 

Date of 
decision of 
the 
authorising 
officer 
20.7.2020 

Corruption and grave 
professional misconduct 

3.7.2020 

Exclusion for a four-
year period 

Yes  

Significant deficiencies in 
complying with the main 
obligations in the 
performance of contracts 
financed by the budget of 
the European Union 

Grave professional 
misconduct 

29.9.2020 

Exclusion for a three-
year period  

Yes 

4.5.2020 

29.5.2020 

No exclusion 

No 

No 

Grave professional 
misconduct 

18.12.2020 

Revision of the prior 
recommendation of 
exclusion  

22.12.2020 

2019/12 

2019/14 

Bribery of high-ranked officials 
in the public administration of a 
non-EU country 

Several grave and significant 
violations of contractual 
provisions 

2019/20 

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

2018/08/R  Assessment of remedial 

measures taken: Frequent use of 
false information to disguise the 
criminal nature of the operator’s 
activities in exchange for 
economic benefits  

36  Only finalised cases are included. 

 
 
  
                                                 
Date of 
decision of 
the 
authorising 
officer 
No 

Case 
number 

Alleged and/or established 
facts 

Classification in law 
(exclusion grounds) 

Date of the Panel 
recommendation  

Recommended 
sanctions 

Recommended 
publication 

2019/03/R  Assessment of remedial 

measures taken: violation of 
rules governing procurement 
procedures by obtaining 
information conferring upon it 
undue advantage in the award 
procedure. 
Misrepresentation of information 
to the Contracting Authority as to 
the presence of a conflict-of-
interest situation. 

2019/03/R2  Assessment of remedial 

measures taken: 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 presence of a conflict-of-
interest situation. 

Grave professional 
misconduct 

26.6.2020  

No revision of a prior 
recommendation of 
exclusion 

Publication of the 
exclusion. The 
publication is 
considered 
justified due to: (i) 
the seriousness of 
the misconduct; 
and (ii) the impact 
on the image and 
reputation of the 
European Union. 

Grave professional 
misconduct 

30.11.2020 

Revision of a prior 
recommendation of 
exclusion 

No 

16 

 
  
Case 
number 

Alleged and/or established 
facts 

Classification in law 
(exclusion grounds) 

Date of the Panel 
recommendation  

Recommended 
sanctions 

Recommended 
publication 

None 

None: Panel reply 
instead  

No exclusion 

No 

Date of 
decision of 
the 
authorising 
officer 
No 

2020/01 

2020/2  

2020/03 

2020/04 

Non-final decision of a national 
competition authority according 
to which the entity entered into 
an agreement with other 
companies with the aim of 
distorting competition. 
The entity on whose capacity the 
candidate or tenderer intended to 
rely is in an exclusion situation. 

Grave violation of several main 
contractual provisions; conflict 
of interest, unethical behaviour 

Colluding with civil servants to 
obtain confidential tender 
information and use it to gain 
competitive advantage 

Illegal hiring of civil 
servants/members of the 
administration of a non-EU 
country to implement a project 
funded by the EU 

Grave professional 
misconduct. 
Significant deficiencies in 
complying with 
contractual obligations. 

2.7.2021 

Exclusion for a three-
year period and 
registration of 
persons of interest 

Yes 

No 

Grave professional 
misconduct 

11.1.2021 

Exclusion for 18 
months  

Yes 

19.2.2021 

None 

11.2.2021 

No exclusion 

No 

No 

17 

 
 
Case 
number 

Alleged and/or established 
facts 

Classification in law 
(exclusion grounds) 

Date of the Panel 
recommendation  

Recommended 
sanctions 

Recommended 
publication 

2020/05 

Alleged payment of the illegally 
hired civil servants/members of a 
non-EU country administration 
to implement an EU-funded 
project 

None 

2020/06  Manipulation of tender procedure  None 

2020/07 

2020/08 

Unlawful agreement with the aim 
of distorting competition 

None 

Unlawful agreement with the aim 
of distorting competition 

None 

None: Panel reply 
instead  

No exclusion 

No 

None: Panel reply 
instead 

None: Panel reply 
instead 

None: Panel reply 
instead  

No exclusion 

No exclusion 

No exclusion 

2020/09  Misrepresentation of 
information; fraud;  
conduct related to a criminal 
organisation;  
human trafficking 

2020/10 

Conflict of interest; false 
declaration; overcharging of 
costs 

None 

None 

No exclusion 

Serious breach of the 
obligations of the grant 
agreement and 
misrepresentation of 
information 

2.7.2021 

Exclusion for a three-
year period and 
registration of a 
person of interest 

18 

Date of 
decision of 
the 
authorising 
officer 
No 

No 

No 

No 

No 

No 

No 

No 

No 

Yes 

No 

 
 
Case 
number 

Alleged and/or established 
facts 

Classification in law 
(exclusion grounds) 

Date of the Panel 
recommendation  

Recommended 
sanctions 

Recommended 
publication 

2020/11 

2020/13 

Final judgment on person with 
powers of representation and 
decision over an entity 

NA 

7.4.2021 

No exclusion 

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

agreement  with 

Grave professional 
misconduct  

1.7.2021 

No exclusion 

2020/14 

False declaration during a tender 
procedure 

2021/01 

Unlawful agreement with the aim 
of distorting competition 

Grave professional 
misconduct  

None: case 
withdrawn  

2.7.2021 

No exclusion 

Exclusion for 18 
months 

No 

No 

No 

Yes 

Date of 
decision of 
the 
authorising 
officer 
No 

No 

No 

No 

19