CELEX: 61989CC0032
Language: en
Date: 1990-12-06 00:00:00
Title: Opinion of Mr Advocate General Jacobs delivered on 6 December 1990. # Hellenic Republic v Commission of the European Communities. # Clearance of EAGGF accounts - 1986 financial year. # Case C-32/89.

Important legal notice

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61989C0032

Opinion of Mr Advocate General Jacobs delivered on 6 December 1990.  -  Hellenic Republic v Commission of the European Communities.  -  Clearance of EAGGF accounts - 1986 financial year.  -  Case C-32/89.  

European Court reports 1991 Page I-01321

Opinion of the Advocate-General

++++My Lords,  1. In these proceedings, Greece seeks the annulment under Article 173 of the EEC Treaty of Commission Decision 88/630 (Official Journal 1988 L 353, p. 30) in so far as it concerns the clearance of the accounts presented by Greece in respect of the expenditure for 1986 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund ("the Fund"). On 26 April 1989, an application by Greece for an interim order suspending the contested decision was rejected.  2. It appears from Article 1 of and the annex to the contested decision that the expenditure charged by the applicant in respect of the 1986 financial year amounted to DR 168 406 791 240. Of this, the Commission only recognized the sum of DR 161 532 024 085 as chargeable to the Fund, leaving DR 6 874 767 155 to be borne by the applicant.  3. The applicant was informed of the corrections which the Commission intended to make to the applicant' s accounts in the course of bilateral discussions which took place prior to the adoption of the contested decision. The reasons for the approach taken by the Commission are set out in the summary report concerning the results of investigations carried out in connection with the clearance of accounts for 1986 ("the Summary Report"), extracts from which are annexed to the Commission' s defence.  4. The present case is one of a series in which the conduct of the Greek authorities in managing agricultural produce has been in issue. Four such cases were decided earlier this year: judgments of 10 July 1990 in Cases C-259/87, C-334/87 and C-335/87, Greece v Commission [1990] ECR I-2845, I-2849 and I-2875; judgment of 12 July 1990 in Case C-35/88, Commission v Greece [1990] ECR I-3125. In the light of those judgments, the applicant withdrew a number of the claims made in these proceedings. There are in substance six remaining heads of claim. I will examine each in turn.  (a) The Commission' s power to adopt decisions  5. The applicant has put forward an argument which would, if successful, mean that the decision would have to be quashed in its entirety and that the Commission would be obliged to modify its whole approach to the clearance of the accounts presented by the Member States. The argument in question was advanced in relation to the Commission' s refusal to charge to the Fund certain expenditure incurred by the applicant in the cereals sector. That aspect of the applicant' s claim originally had a number of elements, but all the others have been withdrawn.  6. The applicant contends that, in clearing the accounts presented by the Member States, the Commission has no power to adopt decisions within the meaning of Article 189 of the EEC Treaty. According to the applicant, this conclusion follows from the terms of Article 5(2)(b) of Regulation No 729/70 on the financing of the common agricultural policy (Official Journal English Special Edition 1970 (I), p. 218), under which the accounts presented by the Member States are cleared. Unlike Article 5(2)(a), which uses the word "decide", Article 5(2)(b) simply states that the Commission "shall ... make up the accounts ...". According to the applicant, it does not confer on the Commission any power to adopt decisions for this purpose.  7. This argument is in my view fallacious. As the Commission points out, it is difficult to see how accounts could be cleared in the absence of a decision in respect of them. The applicant does not say whether it thinks the Commission has the power to adopt any other type of act within the meaning of Article 189 for this purpose. Moreover, Article 8 of Commission Regulation No 1723/72 on the clearance of accounts concerning the Guarantee Section of the Fund (Official Journal English Special Edition, Second Series (III), p. 109) refers specifically to decisions on the clearance of accounts adopted under Article 5(2)(b) of Regulation No 729/70, before setting out what such decisions should contain. I therefore have no doubt that the latter provision must be understood as conferring on the Commission the power to adopt decisions.  8. I conclude that the applicant' s claim that, in adopting the contested decision, the Commission exceeded its powers should be dismissed.  (b) Programme contracts  9. The Commission alleges that the Central Office for the Management of National Produce (KYDEP), an organization of agricultural cooperatives which acts as an EEC intervention agency in respect of certain products, undertook on behalf of the State to dispose of stocks of common wheat in its possession. This operation was, according to the Commission, carried out by means of two so-called programme contracts carrying an obligation to export within a certain time-limit flour obtained by processing. They are called "programme contracts" because they establish a programme for the disposal by KYDEP of its stocks of cereal. These contracts are also in issue in another case pending before the Court, Case C-61/90 Commission v Greece.  10. The Commission claims that the first such contract was made with a number of mills and covered 500 000 tonnes of common wheat, which is said to have left national stocks between January and May 1983. The purchasers were required to export the wheat within eight months of removal. The cost to the Greek State of this operation as, according to the Commission, DR 1 500 million. The second contract is said to have been concluded between KYDEP and the Government and related to 400 000 tonnes of common wheat. Pursuant to this contract, it is alleged, KYDEP exported 290 000 tonnes of flour in the course of 1984. The cost to the Greek State is said to have been DR 710 million. The Commission takes the view that the conclusion of these contracts encouraged the export of flour on which export refunds would be charged to the Fund and that, in addition, there was an element of national aid in the arrangements which enabled the flour to be disposed of on the world market below normal prices.  11. The Commission also claims that two similar contracts were concluded by KYDEP with the Ministry for the National Economy in 1985 for the exportation of 40 000 tonnes of durum wheat meal and a volume of pasta equivalent to 15 000 tonnes of durum wheat. According to the Commission, the losses incurred on these exports were covered by the State.  12. The applicant' s challenge to the corrections made by the Commission in respect of these contracts has two elements. The first concerns the existence of the contracts, the second the financial relationship between KYDEP and the Greek State.  13. The applicant does not deny that programme contracts in respect of common wheat flour and pasta were carried out, but denies that any such contracts were concluded in respect of durum wheat meal. The Commission refers in the Summary Report, however, to a note dated 6 June 1985 sent by the director-general of KYDEP to its administrative council. That note, which is attached to the Commission' s defence at Annex VI, refers to the signature by the Ministry for the National Economy of a programme contract for the exportation of 40 000 tonnes of meal, which would absorb 78 000 tonnes of durum wheat. It also mentions a programme contract for the exportation of a volume of pasta equivalent to 15 000 tonnes of durum wheat. The losses incurred on these contracts were, according to the note, to be covered by the State under a global appropriation of almost DR 535.5 million.  14. The applicant does not refer to this note, still less impugn its veracity. Moreover, no evidence has been put forward by the applicant that the disputed contracts were not executed. I therefore consider that the Commission was entitled to conclude that the four programme contracts mentioned in the Summary Report were carried out.  15. As far as the relationship between KYDEP and the Greek State is concerned, the applicant emphasizes that KYDEP is a cooperative acting on behalf of its members, which are associations of agricultural cooperatives composed in turn of individual producers. The applicant claims that, under Greek law, its deficits must be covered by its members and from its own reserves in equal proportions. The applicant does not deny that KYDEP receives substantial sums of money from the State, but claims that these sums are intended to finance its general running costs rather than to cover its deficits.  16. The Commission does not contest the formal status of KYDEP under Greek law, but produces compelling documentary evidence that it intervenes in the cereals sector in pursuit of domestic policy objectives on behalf of the Greek State, which makes good its losses from the national budget. For example, the minutes of a meeting of the joint committee of the Ministries of Trade and Agriculture held in Athens on 14 February 1984 (Annex VII to the defence) give details of the amount to be borne by the State as a result of the management by KYDEP of various cereals including durum wheat. In addition, the annual report of the Bank of Greece for 1986 (see Annex IX to the defence) sets out details of the contribution made by KYDEP' s operations to the Greek budget deficit. In the 1985 annual report (Annex X to the defence), KYDEP is classified by the bank as a public body.  17. The applicant points out that, in its annual report for 1987, the Bank of Greece classifies KYDEP in the private sector, but acknowledges that KYDEP receives money from the State in order to cover its "financial needs". The applicant distinguishes these from the deficits incurred by KYDEP in carrying out programme contracts.  18. The financial links between KYDEP and the Greek State were examined by the Court in some detail in Case C-35/88. There the Court found that, by intervening in the purchase and sale of feed grain by KYDEP, by making up the deficit incurred by KYDEP as a result of its intervention in the market for feed grain and by allowing KYDEP to obtain, by virtue of a State guarantee, loans from the Bank of Greece, Greece had failed to fulfil its obligations under Community law. Moreover, the Greek Government accepted in that case that subsidies granted to KYDEP to enable it to cover deficits incurred through the sale of feed grain at a loss constituted State aids within the meaning of Article 92 of the Treaty.  19. The Court' s ruling in that case related solely to the period 1 January 1981 to 26 March 1984. This does not wholly coincide with the period during which the programme contracts at issue in this case are alleged to have been carried out. Moreover, the product in question in Case C-35/88, namely feed grain, although related, was not identical. However, the applicant does not suggest that the role of KYDEP changed in any relevant respect after 26 March 1984, nor that the relationship between KYDEP and the State in respect of durum wheat and meal was looser than that pertaining to feed grain. The findings of the Court in Case C-35/88 together with the evidence presented by the Commission in these proceedings give rise to a strong inference that the deficits incurred by KYDEP in carrying out the programme contracts in question were made good by the State.  20. The applicant has not put forward any cogent evidence, either in the course of these proceedings or during the earlier investigations, to refute the conclusions the Commission invites the Court to draw. Indeed, the Summary Report contains a catalogue of the obstacles which were placed in the way of the Commission as it attempted to establish the extent of any financial transfers made to KYDEP on behalf of the Greek State. In particular, the Commission seems to have been unable to obtain access to KYDEP' s premises and KYDEP apparently refused to answer questions from the Commission on any transfers it might receive from public funds. The unwillingness of the Greek authorities to cooperate with the Commission in establishing the relationship between KYDEP and the State was criticised in Case C-35/88, where the Court found that Greece had failed to comply with its obligations under the first paragraph of Article 5 of the Treaty by failing to communicate to the Commission certain material relating to KYDEP' s activities. The Greek authorities do not seem to have been any more cooperative in relation to the matters at issue in these proceedings.  21. I conclude that the challenge to the Commission' s decision in respect of the programme contracts should be dismissed.  (c) Animal feed market  22. The Commission alleges that KYDEP deals in animal feed as the agent of the State and that any deficits thereby incurred are made good out of the national budget. In support of this allegation, the Commission again refers inter alia to the minutes of a meeting of the joint committee of the Ministries of Trade and Agriculture held in Athens on 14 February 1984 (see Annex VII to the defence). This document gives details of the cost to the State for the year 1982 of the management by KYDEP of the feed grain market, which amounted in total to over DR 7 900 million.  23. The Commission draws the following conclusions. First, KYDEP acts as a State monopoly in managing the feed grain market in general and the animal feed market in particular. Secondly, the underwriting by the State of the expenses incurred by KYDEP in carrying out its functions in this respect shows that the products in question were disposed of below their cost price. This amounted to the grant of a national aid. The Commission notes that Greece is a substantial exporter of compound feeds and claims that, without the subsidy granted by the Greek State, the exports in question would not have taken place, as the price would have been much higher. It has therefore refused to allow export refunds granted in respect of animal feed for the period 1982-86 to be charged to the Fund.  24. In its application, the applicant acknowledges that virtually all feed grain produced in Greece is handled by KYDEP. It also accepts that the price at which KYDEP purchases feed grain may be higher than the intervention price where market conditions make this necessary. However, the applicant denies that KYDEP constitutes a State monopoly, repeating its claim that 50% of any deficits it incurs are met by its members, the remainder being met from its own reserves.  25. The applicant also maintains that the price of animal feed has little effect on demand, as only feed with certain well-defined characteristics will satisfy the requirements of purchasers. The applicant does not, however, suggest that Greece is the only source of good quality animal feed, nor that price has no effect on purchasers where the quality of feed from different sources is comparable. The applicant also produces a series of statistics purporting to show that Greek animal feed is often uncompetitive on the world market. Greece exports such feed principally, so it is claimed, to countries in which the other Member States show little interest, such as Bulgaria and Malta. In the view of the applicant, these figures show that KYDEP' s activities have no effect on competition in the common market. The applicant also points out that, in any event, Greece only exports a small fraction of the difference between its total production of animal feed and national consumption.  26. The applicant' s claim that KYDEP' s activities on the animal feed market had no effect on competition between Member States is in my view irrelevant. The essence of the Commission' s case is that the activities of KYDEP and of the Greek State facilitated exports of animal feed which would not otherwise have taken place. The result, according to the Commission, was to increase the amount of the export refunds which the applicant sought to charge to the Fund. The applicant' s claim that other Member States showed little interest in many of the markets to which Greece exported animal feed has no bearing on the Commission' s claim that those exports only took place because they were subsidized.  27. As far as the financial links between KYDEP and the Greek State are concerned, the Commission has produced the balance sheets of KYDEP for the years 1983, 1984 and 1985. These show that KYDEP' s total reserves in each of those years amounted to approximately DR 1 200 million, DR 1 400 million and DR 1 440 million respectively. As the Commission points out, the losses incurred by KYDEP in 1982 alone in respect of feed grain amounted to over DR 7 900 million. These figures show that KYDEP' s reserves would have been wholly inadequate to meet even 50% of its deficit. Moreover, the minutes dated 14 February 1984 in which the extent of KYDEP' s losses in 1982 is set out state unequivocally that those losses would be borne by the State.  28. The evidence put forward by the Commission in these proceedings is corroborated by the findings of the Court in Case C-35/88, to which I have already referred. There the Court based its conclusion that Greece had failed, during the period 1 January 1981 to 26 March 1984, to fulfil its obligations under the legislation establishing a common organization of the market in cereals on the following findings of fact.  29. First, the Greek authorities fixed the selling price of feed grain and the quantity sold by KYDEP to farmers and to undertakings producing compound feed for animals. Secondly, the Greek State underwrote the deficit incurred by KYDEP as a result of its Government-imposed practice of selling at a loss. Thirdly, by standing as guarantor, the Greek State enabled KYDEP to borrow money from the Bank of Greece in order to finance its operations on the feed grain market. Fourthly, the price at which KYDEP bought in feed grain was fixed by the Greek authorities. The Court concluded that the Greek authorities therefore controlled the way in which KYDEP intervened on the feed grain market.  30. Again, the period with which the Court was concerned in Case C-35/88 does not coincide precisely with the period at issue here. However, the two do overlap and the applicant has not advanced any evidence to suggest that KYDEP' s role altered in any relevant respect after 26 March 1984. Although the applicant suggests in its reply that any deficit incurred by KYDEP in managing the feed grain sector could have been met by borrowing from the Bank of Greece, it does not put forward any evidence that advantage was taken of any such facility nor of the terms on which the Bank of Greece might have been willing to make finance available to KYDEP. It is clear from the Court' s judgment in Case C-35/88 that, between 1981 and 1984, the relationship between KYDEP and the bank was not an arm' s length one and it seems unlikely that that relationship changed fundamentally between 1984 and 1986.  31. The benefit of any doubt that remains (and I do not entertain a great deal) must in my view be accorded to the Commission. As I mentioned above and as the Court found in Case C-35/88, the applicant was less than frank in its dealings with the Commission over the relationship between KYDEP and the Greek State. On the basis of the information available to it, the Commission was in my view entitled to conclude that the contested refunds in respect of animal feed should not be charged to the Fund.  (d) Durum wheat  32. According to the report of the 36th general assembly of KYDEP (defence, Annex XII), approximately 65 000 tonnes of durum wheat were taken into Community intervention by KYDEP in 1985. The wheat in question was not purchased from producers but merely transferred from national stocks already held by KYDEP. According to the Commission, the State reimbursed KYDEP for the difference between the original cost of the wheat to KYDEP and the intervention price. This claim is supported by the note dated 6 June 1985 sent by the director-general of KYDEP to its administrative council (defence, Annex VI).  33. The report of the 36th general assembly of KYDEP recognizes that durum wheat produced in Greece often fails to reach the quality criteria laid down by Community legislation for taking cereals into intervention. It appears to acknowledge that the quantity taken into intervention in 1985 presented "minimal divergences" from the quality criteria laid down by the Community. The Commission also suggests in the Summary Report that the durum wheat was taken into intervention in 1985 not in furtherance of the objectives of the common agricultural policy but pursuant to a national market support policy, the cost of which the Greek authorities were seeking to transfer to the Fund. The Commission has therefore disallowed the intervention costs relating to the 65 000 tonnes of durum wheat bought in 1985.  34. The Greek record on durum wheat is not a good one. In Case C-214/86 Greece v Commission [1989] ECR 367, in which Greece challenged the clearance of accounts for 1982, the Court accepted that durum wheat of the 1982 harvest was taken into intervention in Greece in breach of the Community quality standards. Moreover, in Case C-281/87 Commission v Greece [1989] ECR 4015 the Court held, in proceedings under Article 169 of the Treaty, that Greece had breached its obligations under the legislation relating to the common organization of the market in cereals by instructing KYDEP to purchase inferior quality durum wheat of the 1982 harvest.  35. Nonetheless, the applicant does not accept that the contested wheat failed to meet the relevant quality standards. Despite the remarks made in the report of the 36th general assembly of KYDEP, it claims that all the wheat was inspected when it was offered to KYDEP and found to meet the quality criteria laid down in Commission Regulation No 1569/77 fixing the procedure and conditions for the taking over of cereals by intervention agencies (Official Journal 1977 L 174, p. 15). In support of this claim, the applicant has produced a number of records made at the time the inspections were carried out. The applicant claims that the Commission' s inspectors were informed of the existence of these records on a number of occasions but that the Commission chose not to examine them.  36. In its defence, the Commission alleges that the records in question were not presented to it, but that the fact that KYDEP acknowledged that the wheat in question did not quite meet the quality standards applicable was strong, if not conclusive, evidence that this was in fact the case. Then, in the course of the defence, the Commission switches the emphasis of its case from the quality of the wheat to the reasons why it was taken into intervention. The Commission claims that the principal reason why the intervention costs were disallowed was that the wheat had been taken into intervention, not in accordance with the objectives of the common agricultural policy, but to reduce the cost to KYDEP of its growing stockpile of unsold cereal. In its rejoinder, the Commission argues that, whether or not the contested wheat complied with the applicable quality standards, the fact that it was taken into intervention in pursuance of national policy objectives is in itself enough to justify the Commission' s refusal to allow the cost of the operation to be charged to the Fund.  37. As far as the quality of the disputed wheat is concerned, the applicant bears the burden of establishing that the applicable standards were satisfied: see Case 347/85 United Kingdom v Commission [1988] ECR 1749, paragraph 14. However, I consider that, by producing records made at the time the wheat was offered to KYDEP which purport to show that the applicable quality standards were met, the applicant has done enough to shift that burden to the Commission. It transpired at the hearing that the Commission was unable to produce any direct evidence to substantiate its claim that the disputed wheat was substandard, as it had not actually examined the quality of the wheat in question. I therefore proceed on the basis that the disputed wheat complied with the relevant quality standards.  38. The applicant' s claim under this head accordingly turns on the legitimacy of KYDEP' s decision to take the disputed wheat into intervention. This aspect of the dispute is not discussed by the applicant either in its application or in its reply, perhaps because the Commission initially placed greater emphasis on its claim that the contested wheat was substandard. Nonetheless, the Commission' s allegations to the effect that the wheat was improperly taken into intervention are mentioned in the Summary Report and dealt with more fully in the defence. I do not therefore consider that the applicant' s right to be heard has been prejudiced.  39. In Case 281/87 Commission v Greece, cited above, the Court stated, reiterating its previous case-law, that in sectors covered by a common organization of the market, and a fortiori when that organization is based on a common price system, Member States can no longer take action, through national provisions adopted unilaterally, affecting the machinery of price formation as established under the common organization. The Court therefore held that, by instructing KYDEP to purchase inferior quality durum wheat of the 1982 harvest, Greece had failed to fulfil its obligations under the legislation relating to the common organization of the market in cereals.  40. In the present case, the applicant does not deny that the disputed wheat was originally bought in by KYDEP in accordance with a national price support policy and only later transferred to Community intervention. The Court' s decision in Case 281/87 makes it clear that the arrangements under which the wheat was originally bought in were unlawful, since they interfered with the machinery established by the legislation on the common organization of the market in cereals. The subsequent transfer of the wheat into Community intervention was wholly artificial, since it was carried out not to provide a safety net for producers, the purpose of genuine intervention buying, but to transfer to the Fund part of the cost of a national price support policy which was itself unlawful.  41. I conclude that, even if the 65 000 tonnes of durum wheat bought in by the Greek authorities in 1985 complied with the relevant quality standards, the cost of the operation is not chargeable to the Fund since the operation was not carried out in accordance with the objectives of the legislation establishing a common organization of the market in cereals. This head of the applicant' s claim should therefore be dismissed.  (e) Contract concluded outside deadline  42. Article 2(2)(b) of Regulation No 1082/85 introducing private storage aid for Kefalotyri and Kasseri cheeses (Official Journal 1985 L 114, p. 29) provides that storage contracts shall be concluded "at the latest 40 days after the date on which the storage covered by the contract begins". The Commission claims that a contract in respect of a particular quantity of cheese covered by that regulation was not concluded until 63 days after it entered storage. It has therefore refused to charge the cost of storage to the Fund.  43. The applicant states that, before such contracts can be signed, the storer must provide evidence that the cheese in question has actually been put into storage. In the case of this particular quantity, the evidence was allegedly delayed in the post during the period approaching Christmas. (The date on which the evidence was posted is not, however, specified in the application.) The applicant claims that the postal delay constitutes force majeure and that the failure to comply with the time-limit laid down in Regulation No 1082/85 should therefore be condoned.  44. I am unable to accept this argument. It is well established that, although the concept of force majeure "does not presuppose absolute impossibility, it nevertheless requires the non-performance of the act in question to be due to circumstances beyond the control of the person claiming force majeure which are abnormal and unforeseeable and of which the consequences could not have been avoided despite the exercise of all due care" (see Case C-109/86 Theodorakis v Greece [1987] ECR 4319; Cases C-334 and C-335/87, already cited). The Greek Government acknowledges in its application that it is well known that the post is subject to delay in the period immediately preceding Christmas. It is therefore not unreasonable to expect those who have important deadlines to meet to make allowance for this by posting early or using some other means of transmitting documents, such as fax, messenger or personal delivery.  45. I conclude that the applicant' s claim should in this respect be dismissed.  (f) Sales at fixed prices of dried grapes from the 1983 harvest  46. In the clearance of accounts for 1985, a correction was made to take account of the effect on the Fund of expenditure on storage costs and financial compensation arising out of restrictions placed by the Greek authorities on exports of dried grapes from the 1983 harvest. The Commission takes the view that those restrictions interfered with the proper functioning of the system established by Regulation No 3444/84 on the sale at a price fixed in advance of dried grapes from the 1983 harvest held by Greek storage agencies (Official Journal 1984 L 318, p. 33), which was in force between 10 December 1984 and 31 January 1985. The result is said to have been a sharp fall in the quantity sold and a corresponding increase in storage costs. Moreover, it is claimed, by the time the restrictions were relaxed, the quality of the dried grapes had deteriorated and lower prices had to be accepted.  47. The Commission considers that the actions of the Greek authorities also affected the amounts declared to the Fund in respect of 1986. Financial corrections were therefore made in relation to that year on a similar basis as for 1985.  48. In Case C-335/87, Greece unsuccessfully challenged the corrections made in respect of dried grapes for 1985. The Court found that the Greek authorities had implemented the restrictions alleged to have been imposed and that the Commission had been justified in making appropriate adjustments to the accounts presented by Greece for 1985.  49. In the instant proceedings, the applicant has again denied that any restrictions were placed on the export of dried grapes from the 1983 harvest. The only factor advanced by the applicant to distinguish 1986 from 1985 in this respect is the adoption of Presidential Decree No 215/86. The applicant claims that that decree removed any remaining restrictions on the export of dried grapes. The decree was not adopted until 13 June 1986, however, and its adoption is not in my view enough to establish that the effects of the restrictions on the export of dried grapes considered by the Court in Case C-335/87 were confined to 1985. Indeed, it emerges from the file that most of the storage costs in respect of which the Commission made financial corrections for 1986 were incurred between 1 January 1986 and 30 June 1986.  50. It also emerges from the file that the applicant sought to charge to the Fund for 1986 financial compensation paid in respect of dried grapes from the 1983 harvest which were sold at prices below that fixed by Regulation No 3444/84. The applicant has not however sought to refute the Commission' s finding that those lower prices were due to the restrictions on exports which were considered by the Court in Case C-335/87 to have interfered with the proper functioning of the system established by that regulation.  51. I therefore consider that the applicant' s final head of claim should also be dismissed.  General observations  52. Finally, I consider it appropriate to add some general observations about the duties of Member States in their dealings with the Fund. The financing of the common agricultural policy is achieved by means of a system based on trust in which the management of the Fund is left principally in the hands of the competent national authorities: see Case 349/85 Denmark v Commission [1988] ECR 169, paragraph 19. Thus, Article 8(1) of Regulation No 729/70 requires the Member States to:  "- satisfy themselves that transactions financed by the Fund are actually carried out and are executed correctly;  - prevent and deal with irregularities;  - recover sums lost as a result of irregularities or negligence."  If it proves impossible to recover such sums in their entirety, the financial consequences are, by virtue of Article 8(2), to be borne by the Community only where the national authorities were not at fault.  53. In exercising their responsibility for ensuring that the relevant Community rules are strictly observed, the Member States act essentially as trustees of the Fund. Any verification which the Commission decides to undertake is ancillary to the supervision carried out by the Member States, as the eighth recital to Regulation No 729/70 makes clear and as the Court acknowledged in Case C-366/88 France v Commission, judgment of 9 October 1990, paragraph 20. Nevertheless, the national authorities are under an obligation to cooperate fully with the Commission in the exercise of its own supervisory functions. That obligation finds expression in Article 9(1) of Regulation No 729/70, the first paragraph of which states:  "Member States shall make available to the Commission all information required for the proper working of the Fund and shall take all suitable measures to facilitate the supervision which the Commission may consider it necessary to undertake within the framework of the management of Community financing, including inspections on the spot."  The obligation imposed on Member States by that provision is reinforced by Article 5 of the Treaty.  54. I consider that the Member States, in their capacity as trustees of the Fund, have a duty to ensure that the conditions under which expenditure, intended to be charged to the Fund, is effected are as transparent as possible. Otherwise, an unreasonably heavy burden is placed on the Commission in the exercise of the supervisory functions accorded to it by Regulation No 729/70. The Commission is not merely entitled but required to disallow all expenditure effected by the Member States unless satisfied that it was carried out strictly in accordance with the relevant Community rules. Where the Commission refuses to charge certain expenditure to the Fund on the basis that the relevant rules have been breached, the Member State concerned bears the burden of establishing that the conditions for obtaining the finances in question were met: see Case 347/85 United Kingdom v Commission [1988] ECR 1749, paragraph 14, cited above at paragraph 37. Member States which fail to comply with their duty to ensure transparency and which are less than frank in their dealings with the Commission will inevitably find that burden a difficult one to discharge.  Conclusion  55. I am accordingly of the opinion that the application should be dismissed and that the applicant should be ordered to bear the costs.  (*) Original language: English.  Translation