CELEX: 62000TJ0102
Language: en
Date: 2003-07-09
Title: Judgment of the Court of First Instance (Fourth Chamber) of 9 July 2003. # Vlaams Fonds voor de Sociale Integratie van Personen met een Handicap v Commission of the European Communities. # Social policy - European Social Fund - Reduction in financial assistance - Rights of the defence - Article 24 of Regulation (EEC) No 4253/88 - Statement of reasons. # Case T-102/00.

Case T-102/00 Vlaams Fonds voor de Sociale Integratievan Personen met een HandicapvCommission of the European Communities
            «(Social policy – European Social Fund – Reduction in financial assistance – Rights of the defence – Article 24 of Regulation (EEC) No 4253/88 – Statement of reasons)»
            
               
                  Judgment of the Court of First Instance (Fourth Chamber), 9 July 2003  
                     
                
               
            
                   
               
               
            
            Summary of the Judgment
         
         
                  1..
                  Social policy – European Social Fund – Financial assistance for vocational training – Decision reducing assistance originally granted – Rights of defence of the beneficiaries – Scope  
         
                  2..
                  Social policy – European Social Fund – Financial assistance for vocational training programmes – Decision reducing assistance originally granted – Opportunity for the Member State concerned to comment prior to the adoption of the decision – Essential procedural requirement – Breach – Illegality  
         
                  3..
                  Acts of the institutions – Statement of reasons – Obligation – Scope – Commission decision reducing assistance from the European Social Fund for vocational training  (Art. 253 EC) 
         
         1.
          Respect for the rights of the defence is, in all proceedings initiated against a person which are liable to culminate in a
         measure adversely affecting that person, a fundamental principle of Community law which must be guaranteed even in the absence
         of any rules governing the proceedings in question. That principle requires that the addressees of decisions which significantly
         affect their interests should be placed in a position in which they may effectively make known their views on the evidence
         against them which has been taken as the basis for such a decision. In that respect, a Commission decision reducing or cancelling financial assistance granted by the European social fund is
         capable of directly and individually concerning the beneficiaries of such assistance and of adversely affecting them, even
         though the Member State concerned is the sole interlocutor of the European social fund in the relevant administrative procedure.
         It is the beneficiaries of the aid who are adversely affected by the economic consequences of the decision to reduce or cancel
         the assistance since they have primary liability for repayment of the sums unduly paid. It follows that the Commission, which alone assumes legal liability towards the beneficiaries of European social fund assistance
         for the decision to reduce such assistance, is not entitled to adopt such a decision without first giving those beneficiaries
         the possibility, or ensuring that they have had the possibility, of effectively setting forth their views on the proposed
         reduction in assistance. see paras 59-61
         
         2.
          Having regard to the central role of the relevant Member State and to the importance of the responsibilities which that State
         assumes in the presentation and supervision of the financing by the European social fund of training measures, the opportunity
         for that State to comment before a definitive decision to reduce assistance is adopted constitutes an essential procedural
         requirement the disregard of which renders such a decision void. see para. 62
         
         3.
          The purpose of the obligation to state the reasons on which an individual decision is based is to provide the person concerned
         with sufficient information to make it possible to ascertain whether the decision is well founded or whether it is vitiated
         by a defect which may permit its legality to be contested, and to enable the Community judicature to review the lawfulness
         of the decision. The extent of that obligation depends on the nature of the measure in question and on the context in which
         it was adopted. Since a decision reducing the amount of the European social fund assistance originally granted has, in particular, serious
         consequences for the beneficiary of the assistance, that decision must state clearly the grounds which justify the reduction
         in the assistance in relation to the amount originally approved. Moreover, the statement of reasons for such a decision must
         also inform the beneficiary of the assistance of the method by which the reduction effected was calculated. see paras 100-101
      

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
            
            JUDGMENT OF THE COURT OF FIRST INSTANCE (Fourth Chamber)9 July 2003 (1)
         
         
               ((Social policy – European Social Fund – Reduction in financial assistance – Rights of the defence – Article 24 of Regulation (EEC) No 4253/88 – Statement of reasons))
               
             In Case T-102/00, 
            
            
            Vlaams Fonds voor de Sociale Integratie van Personen met een Handicap,   established in Brussels (Belgium), represented by J. Stuyck, lawyer, with an address for service in Luxembourg,
            
            
            applicant, 
            
            v
            Commission of the European Communities,   represented by H.M.H. Speyart and L. Flynn, acting as Agents, with an address for service in Luxembourg,
            
            defendant, 
            
             APPLICATION for annulment of Commission Decision C (2000) 36 of 31 January 2000 reducing the amount of the financial assistance
            originally provided for by Decision C (1994) 3059 of 25 November 1994 approving the grant by the European Social Fund of aid
            for an operational programme under the Community support framework for the attainment of Objective 3 in Belgium (Flemish Community),
            
            
            THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fourth Chamber),
            
             composed of: V. Tiili, President, P. Mengozzi and M. Vilaras, Judges, 
            
             Registrar: J. Plingers, Administrator, 
            
            
            having regard to the written procedure and further to the hearing on 29 January 2003,
         gives the following
         
         
         Judgment
            
               Legal background
            
         
         1
            
          Council Regulation (EEC) No 2052/88 of 24 June 1988 on the tasks of the Structural Funds and their effectiveness and on coordination
         of their activities between themselves and with the operations of the European Investment Bank and the other existing financial
         instruments (OJ 1988 L 185, p. 9), in the version resulting from the adoption of Council Regulation (EEC) No 2081/93 of 20
         July 1993 amending it (OJ 1993 L 193, p. 5) (hereinafter  
         the framework regulation), lays down in Article 1, among the priority objectives to be pursued by the Community through, in particular, the Structural
         Funds, that of  
         combating long-term unemployment and facilitating the integration into working life of young people and of persons exposed
         to exclusion from the labour market (hereinafter  
         Objective 3). 
         
         
         2
            
          More specifically, under Articles 2(1) and 3(2) of the framework regulation, it is the European Social Fund (ESF) which is
         to contribute to the attainment of Objective 3. 
         
         
         3
            
          Article 4 of the framework regulation sets out a number of principles governing the Community's structural policy as a whole.
         Among them, the principle of  
         complementarity, according to which Community operations are to be such as to complement or contribute to corresponding national operations,
         and the principle of  
         partnership, according to which Community operations are the result of consultations between the Commission, the Member State concerned
         and the competent authorities and bodies designated by the Member State at national, regional, local or other level, with
         all parties acting as partners in pursuit of a common goal.  
         
         
         4
            
          Council Regulation (EEC) No 4253/88 of 19 December 1988 laying down provisions for implementing the framework regulation as
         regards coordination of the activities of the different Structural Funds between themselves and with the operations of the
         European Investment Bank and the other existing financial instruments (OJ 1988 L 374, p. 1), in the version resulting from
         the adoption of Council Regulation (EEC) No 2082/93 of 20 July 1993 amending it (OJ 1993 L 193, p. 20) (hereinafter  
         the coordinating regulation), provides in Article 17(1) that the financial contribution of the Funds to the financing of measures covered by Objectives
         1 to 4 and 5(b) is to be laid down by the Commission, within the framework of the partnership, and states in Article 17(2)
         that  
         [t]he financial contribution from the Funds shall be calculated in relation to either the total eligible cost of, or the total
         public or similar eligible expenditure (national, regional or local, and Community) on, each measure (operational programme,
         aid scheme, global grant, project, technical assistance, study).  
         
         
         5
            
          Article 24 of the coordinating regulation governs the reduction, suspension and cancellation of assistance from a Structural
         Fund. It states in particular: 
         
         1.
          If an operation or measure appears to justify neither part nor the whole of the assistance allocated, the Commission shall
         conduct a suitable examination of the case in the framework of the partnership, in particular requesting that the Member State
         or authorities designated by it to implement the operation submit their comments within a specified period of time.
         
         
         2.
          Following this examination, the Commission may reduce or suspend assistance in respect of the operation or measure concerned
         if the examination reveals an irregularity or a significant change affecting the nature or conditions for the implementation
         of the operation or measure for which the Commission's approval has not been sought.
         ...
         
         
         6
            
          Article 2 of Council Regulation (EEC) No 4255/88 of 19 December 1988 laying down provisions for implementing the framework
         regulation as regards the ESF (OJ 1988 L 374, p. 21), in the version resulting from the adoption of Council Regulation (EEC)
         No 2084/93 of 20 July 1993 amending it (OJ 1993 L 193, p. 39) (hereinafter  
         the ESF regulation), lists the  
         eligible expenditure for which ESF assistance may be granted. 
         
         
         7
            
          Finally, the framework regulation and the coordinating regulation were repealed with effect from 1 January 2000 by Council
         Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds (OJ 1999 L 161, p. 1),
         which states in Article 52, entitled  
         Transitional provisions, that it  
         shall not affect the continuation or modification, including the total or partial cancellation, of assistance approved by
         the Council or by the Commission on the basis of Council Regulations (EEC) No 2052/88 and (EEC) No 4253/88 or any other legislation
         which applied to that assistance on 31 December 1999. Likewise, the ESF regulation was repealed with effect from 1 January 2000 by Regulation (EC) No 1784/1999 of the European
         Parliament and of the Council of 12 July 1999 on the ESF (OJ 1999 L 213, p. 5), which states in Article 9, entitled  
         Transitional provisions, that the transitional provisions set out in Article 52 of Regulation No 1260/1999 are to apply to it  
         mutatis mutandis. 
         Facts
         
         8
            
          The Vlaams Fonds voor de Sociale Integratie van Personen met een Handicap (Flemish Fund for the Social Integration of Disabled
         Persons, hereinafter  
         the VFSIPH or  
         the applicant) is a Flemish public-law body possessing legal personality. It was established by decree of 27 June 1990 and placed under
         the supervision of the Vlaamse regering (Flemish Government). 
         
         
         9
            
          The VFSIPH is intended to encourage the social integration of disabled persons, in particular into the work environment. To
         that end, it undertakes a number of activities designed to improve opportunities for such persons on the labour market and
         in particular initiatives aimed at providing them with vocational training. The VFSIPH does not provide any vocational training
         itself but organises the contracting-out of training activities to private-law persons managing centres for the vocational
         training or rehabilitation of disabled persons (hereinafter  
         VTCs), which are service providers approved and subsidised by the VFSIPH in accordance with the Flemish Government Decree of 22
         April 1997 on the approval and subsidisation of vocational training or rehabilitation centres for disabled persons. 
         
         
         10
            
          With regard to the subsidisation of VTCs by the VFSIPH, the Flemish legislation provides for a system under which VTCs are
         not reimbursed for the expenditure which they have actually incurred in the delivery of training projects on behalf of the
         VFSIPH, but receive lump sums (hereinafter also  
         the global allocation). In particular, the Decree of 22 April 1997 provides in Article 11(1) that  
         [e]ach centre shall be subsidised to the amount of 550 000 [Belgian francs (BEF)] per training package and per year. In Article 1(4), the decree defines a training programme as the  
         operating unit comprising 3 600 hours of training spread over a maximum of 24 months and in Article 8 states that  
         [t]raining and support may consist, per disabled person, of up to 3 600 actual hours and be spread over a maximum period of
         24 months. In addition, Article 12(1) of that decree provides that  
         [o]ver and above the grant referred to in Article 11, each centre shall receive an additional lump sum for  
         equipment-related operating costs, which shall amount per training programme and per year to [BEF] 39 000 for training programmes which prepare the trainee
         for employment as a salaried employee and [BEF] 26 000 for training programmes which prepare the trainee for other occupations. 
         
         
         11
            
          By Decision C (94) 3059 of 25 November 1994, the Commission approved, at the request of the Kingdom of Belgium, the grant
         of ESF assistance for a Flemish Community operational programme (No 94.3040B3) covering the period from 1 January 1994 to
         31 December 1999 and forming part of the Community support framework for Objective 3 in Belgium (Flemish Community). That
         decision was subsequently amended on several occasions, most recently by Commission Decision C (99) 4286 of 23 December 1999,
         in order to adapt the financing plan for the assistance in question to take into account the annual indexations and actual
         implementation of the measures concerned. 
         
         
         12
            
          The VFSIPH was designated as promoter of joint projects under that operational programme, the delivery of which involved the
         VTCs De Werkgaard and GOCI. Under Decision C (94) 3059, the VFSIPH therefore received, through the Flemish Community, European
         Community financial aid in respect of those projects. 
         
         
         13
            
          Between 7 and 11 December 1998, the Commission carried out, in accordance with Article 23(2) of the coordinating regulation,
         an on-the-spot financial check (hereinafter  
         the first check) relating to the delivery, during 1997, of several projects provided for by the operational programme in question. The check
         concerned projects selected by sampling and was carried out at the level of the VTCs concerned, including De Werkgaard and
         GOCI, thus leading to the review of the management of the projects by the VFSIPH. 
         
         
         14
            
          Following that check, the VFSIPH sent to the Commission, by letter of 18 December 1998, an explanatory note on the calculations
         made. 
         
         
         15
            
          In its report of 29 December 1998 (hereinafter  
         the first check report), forwarded on 18 February 1999 to the Ministry of the Flemish Community as the designated authority for Flemish operational
         programmes, the Commission mentioned irregularities which its staff had found during the first check. 
         
         
         16
            
          Subsequently, by letter of 25 February 1999, the Afdeling Europa en Werkgelegenheid (Europe and Employment Division; hereinafter
          
         the AEW), which was responsible, within the Ministry of the Flemish Community, for all administrative tasks connected with the ESF,
         forwarded to the VFSIPH the parts of that check report concerning it. The VFSIPH was informed that it had the right to send
         its comments to the AEW by 19 March 1999. Those comments would be forwarded to the Commission. 
         
         
         17
            
          On 16 March 1999 the VFSIPH sent its written comments to the AEW.  
         
         
         18
            
          By letter of 5 May 1999 from the AEW, the Commission was informed of the comments of the AEW and the promoters concerned,
         including the VFSIPH, on the first check report. 
         
         
         19
            
          The AEW therefore instructed the firm of auditors Deloitte & Touche (D & T) to undertake a detailed examination of the operations
         implemented in 1997 by the VTCs De Werkgaard and GOCI and of the management and control system which the VFSIPH applied to
         the VTCs for that year.  
         
         
         20
            
          By registered letter of 17 August 1999, the Commission, referring to Article 24(1) of the coordinating regulation, notified
         the Belgian authorities of the initiation of the procedure relating to the possible withdrawal, on account of the irregularities
         found in the first check report, of the ESF assistance granted for the operations and/or initiatives concerned. It invited
         those authorities to inform the promoters concerned of this and to send it any comments they might have within two months.
         
         
         
         21
            
          By registered letter of 26 August 1999, the AEW informed the VFSIPH of the Commission's intention to recover, in accordance
         with Article 24 of the coordinating regulation, a total of BEF 15 327 449 in respect of VFSIPH projects delivered by De Werkgaard
         and GOCI, and invited it to submit its written comments by 1 October 1999 at the latest. 
         
         
         22
            
          By registered letter of 28 September 1999, the VFSIPH sent its comments to the AEW. 
         
         
         23
            
          On 13 October 1999, D & T submitted its final audit report (hereinafter  
         the D & T report) to the AEW, which forwarded it to the Commission on 15 October 1999, together with the comments of the operators concerned,
         including the VFSIPH. 
         
         
         24
            
          On 28 October 1999, the Commission carried out a second financial check, this time directly at the premises of the VFSIPH,
         covering all its associated VTCs and the years 1997 and 1998 (hereinafter  
         the second check). 
         
         
         25
            
          On 31 January 2000 the Commission adopted a decision, the addressee of which was the Kingdom of Belgium (hereinafter  
         the contested decision), making a reduction, equivalent to EUR 638 859, in the maximum amount of ESF financial assistance granted to the Flemish
         Community for the operational programme covered by Decision C (94) 3059, as amended by Decision C (99) 4286. The contested
         decision states that that reduction concerns the operations implemented by the organisations and/or establishments specified
         in its annex, which include the VFSIPH and the VTCs De Werkgaard and GOCI.  
         
         
         26
            
          By registered letter of 21 February 2000, the AEW informed the VFSIPH that the Commission had asked it, by letter of 15 February
         2000, to submit its comments on the report relating to the second check (hereinafter  
         the second check report) and invited the VFSIPH to send it any comments it might have by 6 March 2000.  
         
         
         27
            
          By registered letter of 23 February 2000, received on 24 February 2000, the AEW communicated the contested decision to the
         VFSIPH and informed it that it considered itself bound, pursuant to that decision, to reclaim from it a sum of BEF 7 502 564
         (EUR 181 087 at the exchange rate on 25 November 1994, the date of approval of the operational programme). 
         
         
         28
            
          By 29 January 2003 the Commission had not yet concluded the procedure relating to the irregularities established by the second
         check report. 
         The contested decision
         
         29
            
          In the contested decision, referring to the results of the first check, the Commission found, so far as the applicant is concerned,
         first, that Article 17 of the coordinating regulation had been infringed inasmuch as the applicant had declared to the ESF
         for 1997 the actual costs incurred by De Werkgaard and GOCI, even though it had in fact paid them lower lump sums, thus claiming
         an excessive ESF contribution, and, second, in respect of the GOCI dossier, that Article 2 of the ESF regulation had been
         infringed inasmuch as the applicant had accepted from GOCI an excessive number of training hours, since public holidays and
         leave had been treated as training days.  
         
         
         30
            
          In the seventh recital in the preamble to the contested decision, the Commission states that,  
         after examining the comments of the recipients of assistance and the project initiators concerned, it  
         found that their arguments could not be accepted for the following reasons, which are set out in detail in the annex: 
         
         
         ─
             infringement of Article 17 of the [coordinating] regulation (so far as concerns ... the VFSIPH-GOCI and De Werkgaard); 
          infringement of Article 17 of the [coordinating] regulation (so far as concerns ... the VFSIPH-GOCI and De Werkgaard); 
         
         
         
         ─
             infringement of Article 2 of the [ESF] regulation (so far as concerns ... the VFSIPH-GOCI)
          infringement of Article 2 of the [ESF] regulation (so far as concerns ... the VFSIPH-GOCI)
         .  
         
         
         31
            
          In the annex to the contested decision, the  
         [r]easons for which the comments of the project operators and/or designated authorities cannot be accepted are explained as follows: The VFSIPH calculates the Community contribution on the basis of the actual costs of the project operators ... the VTCs. However,
         the expenditure actually incurred by the VFSIPH, which acts as applicant in this dossier, comes, for each training module
         of 1 800 hours per year, to only BEF 550 000 (before indexation) plus BEF 26 000 (training of manual worker) or BEF 39 000
         (training of salaried employee). In point of fact that results in a cost of, respectively, BEF 320/hour actually provided
         as part of a manual worker's training [(550 000 + 26 000)/1 800] and BEF 327.22/hour actually provided as part of a salaried
         employee's training [(550 000 + 39 000)/1 800]. For the purposes of the correction, account was taken of the amounts actually
         paid out by the VFSIPH, after indexation.However, since the VFSIPH declares the expenditure incurred by the VTCs/project operators without paying the training cost/hour
         difference, the VFSIPH carries out the calculation on too high a basis, thereby claiming too large a financial contribution
         from the ESF and thus failing to take any account of Article 17 of the [coordinating] regulation (maximum financial contribution
         from the Funds).The foregoing line of argument concerns the VFSIPH GOCI and De Werkgaard dossier. In addition, with regard to the VTC GOCI, it was found that public holidays and leave were treated as training days. Under
         Article 2 of the [ESF] regulation and the [ESF] rules adopted in 1997 by the designated authority, that necessitates a 13%
         correction to the hours accepted by the VFSIPH.
         
         
         32
            
          Finally, the annex in question contains a  
         correction calculation made  
         on the basis of the amounts communicated by the VFSIPH and the designated authority. The structure of that calculation can be described as follows. 
         
         
         33
            
          The Commission first shows the amount actually paid out by the applicant, under its system of lump-sum grants, to the VTC
         concerned (
         amount granted). It thus shows that the applicant granted an amount of BEF 14 471 188 to De Werkgaard for 25 training modules and an amount
         of BEF 26 635 331 to GOCI for 45 training modules. 
         
         
         34
            
          The Commission then indicates the number of hours of training provided by the VTC, which the applicant itself accepted as
         eligible for ESF co-financing (
         hours accepted). The Commission adopts as hours eligible for ESF co-financing the  
         hours accepted by the applicant, subject, in the case of GOCI, to the reduction of 13% made to the  
         hours accepted in order to exclude those corresponding to public holidays and leave. The eligible hours are thus fixed at 17 563 for De
         Werkgaard and 26 694 for GOCI. 
         
         
         35
            
          Next, in order to calculate the  
         eligible amount to be declared ... to the ESF, the Commission multiplies the  
         amount granted by a coefficient (hereinafter  
         the apportionment coefficient) designed to reduce the ESF co-financing in proportion to the fraction of that amount which the Commission considers ineligible
         for co-financing. More specifically, the apportionment coefficient consists, for each of the two dossiers, of the ratio between
         the number of eligible hours (17 563 and 26 694 respectively) and the number of training hours resulting from multiplication
         of the number of training modules declared (25 and 45 respectively) by 1 800 hours. 
         
         
         36
            
          The Commission determines the amount of ESF assistance to which the applicant was entitled (
         maximum acceptable ESF assistance) by applying to the  
         eligible amount to be declared to the ESF, arrived at by the method described in the previous paragraph (BEF 5 647 944 and BEF 8 777 821 respectively), the rate of
         45%, which represents the maximum rate of assistance applicable in this case. 
         
         
         37
            
          Finally, after reiterating the  
         amount declared to the ESF and the amount of assistance allocated by the ESF (equal to 45% of the  
         amount declared), the Commission finds, with regard to both the De Werkgaard dossier and the GOCI dossier, a difference between the amount
         received by the applicant in respect of ESF assistance and the amount to which it was entitled in that respect, which difference
         thus constitutes the overpayment received by the applicant. That overpayment amounts to BEF 3 560 040 and BEF 3 942 524 for
         the De Werkgaard dossier and the GOCI dossier respectively, that is, in total, to the sum of EUR 181 067 mentioned in paragraph 27
         above. 
         Procedure and forms of order sought by the parties
         
         38
            
          By application lodged at the Registry of the Court on 25 April 2000, the applicant brought the present action. 
         
         
         39
            
          The written procedure was concluded on 1 December 2000. 
         
         
         40
            
          Upon hearing the report of the Judge-Rapporteur, the Court (Fourth Chamber) opened the oral procedure and, by way of measures
         of organisation of procedure as provided for in Article 64 of the Court's Rules of Procedure, requested the defendant to produce
         its Decision C (99) 4286 of 23 December 1999, mentioned in paragraph 11 above, and both parties to reply in writing to certain
         questions. The parties complied with that request within the time-limits set.  
         
         
         41
            
          The parties presented oral argument and their replies to the Court's questions at the hearing on 29 January 2003. 
         
         
         42
            
          The applicant claims that the Court should: 
         
         
         ─
             annul the contested decision; 
          annul the contested decision; 
         
         
         
         ─
             order the Commission to pay the costs. 
          order the Commission to pay the costs. 
         
         
         
         
         43
            
          The defendant contends that the Court should: 
         
         
         ─
             dismiss the application; 
          dismiss the application; 
         
         
         
         ─
             order the applicant to pay the costs. 
          order the applicant to pay the costs. 
         
         
         Law Admissibility
         
         
         44
            
          It should be observed as a preliminary point that the contested decision makes a reduction equivalent to EUR 638 859 in the
         ESF financial assistance for operational programme No 94.3040B3, whereas it quantifies the overpayment received by the applicant
         at only EUR 181 067. The difference between those two amounts, that is, EUR 457 792, is accounted for by the sums alleged
         to have been wrongly received from the ESF by another beneficiary of that assistance. 
         
         
         45
            
          In the form of order which it seeks, the applicant claims that the contested decision should be annulled, without expressly
         limiting that claim to the part of the decision which concerns it and which is, moreover, the only part referred to by the
         pleas in law raised by it in support of its action. Since the applicant has by no means established a legal interest in bringing
         an action against that part of the Commission decision which concerns that other beneficiary of the assistance at issue, the
         form of order sought by it must be considered inadmissible in so far as it relates to that part. 
          Substance
         
         
         46
            
          In support of its action, the applicant alleges, first, infringement of the rights of the defence and infringement of an essential
         procedural requirement; second, infringement of Articles 23 and 24 of the coordinating regulation; third, infringement of
         Article 17 of the coordinating regulation; fourth, infringement of Article 2 of the ESF regulation; fifth, breach of the obligation
         to state reasons; sixth, infringement of the principle of cooperation in good faith enshrined in Article 10 EC; seventh, infringement
         of the principle of the protection of legitimate expectations; eighth, infringement of the principle of legal certainty. 
         
          The first plea in law: infringement of the rights of the defence and infringement of an essential procedural requirement
         ─ Arguments of the parties
         
         
         47
            
          The applicant points out that the principle of respect for the rights of the defence requires that any person who may be adversely
         affected by the adoption of a decision should be placed in a position in which he may effectively make known his views on
         the evidence against him which has been taken as the basis for such a decision (Case T-450/93  
         Lisrestal and Others   v  
         Commission  [1994] ECR II-1177, paragraph 42). In this case, according to the applicant, the Commission infringed that principle on two
         counts. On the one hand, it adopted the contested decision without first placing the applicant in a position to submit its
         comments on the second check report, and, on the other, it did not take account of the detailed D & T report on the first
         check, the conclusions of which were favourable to the applicant.  
         
         
         48
            
          In addition, the applicant points out that, where the financial assistance allocated for an operation does not seem justified,
         Article 24(1) of the coordinating regulation requires the Commission to conduct a suitable examination in the framework of
         the partnership, in particular by requesting that the Member State or authorities designated by it to implement the operation
         submit their comments within a specified period of time. In that regard, it maintains that that opportunity which, according
         to the case-law, constitutes an essential procedural requirement, the disregard of which renders the measure adopted void
         (Case C-291/89  
         Interhotel v  
         Commission [1991] ECR I-2257, paragraph 17, and Case C-304/89  
         Oliveira v  
         Commission [1991] ECR I-2283, paragraph 21), was not afforded to the Belgian authorities since the results of the second check and the
         invitation to submit comments in regard to them were not sent to the AEW until 15 February 2000, that is to say, after the
         contested decision had been adopted.  
         
         
         49
            
          The applicant points out that, although the Commission refers in it only to the first check, that decision is in reality also
         based on facts which were established by the Commission only at the time of the second check. It was in fact the second check
         which led it to raise questions regarding the system of lump-sum grants for VTCs, which was considered contrary to Article 17
         of the coordinating regulation in the contested decision. 
         
         
         50
            
          Without the second check report, the Commission could not have come to the findings on which it bases the contested decision.
         In order to assess the amount of assistance allegedly overpaid, it applied in that decision a different method of calculation
         from that used in the first check report, namely, the method specifically adopted in the second check report.  
         
         
         51
            
          With regard to the D & T report, the applicant observes that Chapter 2 of that report relates to a consolidated audit of the
         VFSIPH, aimed in particular at ascertaining whether, as a whole, the system which it applied enabled the data from the VTCs
         to be reflected accurately in the declaration to the ESF. It infers from this that the Commission could not simply disregard
         that report, especially since the first check had been conducted at project level. 
         
         
         52
            
          The defendant contends that it complied rigorously with the procedure laid down in Article 24(1) of the coordinating regulation
         and with the guarantees described in the judgment in  
         Lisrestal and Others   v  
         Commission, cited above, by sending both to the Belgian authorities and to several interested parties (including the applicant and GOCI)
         the letter of 17 August 1999 requesting them to submit their comments within two months. It adds that all those parties had
         already previously been afforded the opportunity to make known their comments on the first check report. 
         
         
         53
            
          The defendant points out that the applicant's complaint regarding the second check report flows from the erroneous premiss
         that the content of that report is relevant to the contested decision. The latter is in fact based solely on the results of
         the first check and of the procedure laid down by Article 24 of the coordinating regulation which followed it. All the irregularities
         described in that decision (systematic disparity between the expenditure declared to the ESF and the expenditure incurred
         by the applicant, declaration of hours of training during holidays, etc.) are analysed in the first check report.  
         
         
         54
            
          The defendant concedes that the figures used in the contested decision are different from those contained in the first check
         report, while pointing out that that is merely the consequence of applying the very principle that the parties should be heard,
         in that it took account of the comments on the first check report which the applicant and the AEW had sent to it. In particular,
         in its decision, the defendant took account, at the applicant's request, of the indexations, equipment grants and definitive
         amounts declared by the applicant, in accordance with the data communicated by the AEW in an annex to its letter of 5 May
         1999. 
         
         
         55
            
          With regard to the calculations made, the defendant maintains that there is no difference in method between those contained
         in the first check report and those in the contested decision, but merely a difference in presentation of the same calculations.
         It submits that the applicant has completely failed to show in what respect the calculations set out in the decision are based
         on the calculations which appear in the second check report.  
         
         
         56
            
          The defendant points out that it is not entirely correct to state, as the applicant does, that the first check took place
         exclusively at project level. It was in fact a verification of the whole chain of financial flows relating to projects selected
         by sampling, the emphasis being placed systematically on the applicant. 
         
         
         57
            
          Finally, with regard to the D & T report, the defendant argues that it relates to the projects, whereas the systematic problem
         found to exist by the contested decision lies, not in the implementation of the projects by the VTCs, nor in the accuracy
         of the data on the VTCs in the declaration to the ESF, but in the declaration to the ESF by the applicant of the costs relating
         to those projects and in the disparity existing between those data and the amounts actually paid by the applicant to the VTCs.
         According to the defendant, since the D & T report did not cover that question, that report could be disregarded in so far
         as the irregularity penalised by that decision was concerned. 
         
         
         58
            
          Only one passage of the D & T report mentions that question, namely point 2.4.4, which summarises the Commission's objections.
         D & T's comments, however, deal exclusively with the fact that the costs declared by the applicant correspond to the expenditure
         actually incurred by the VTCs and there is not a single word about the disparity between the applicant's expenditure and the
         declarations made to the Commission.  
         ─ Findings of the Court
         
         
         59
            
          First, it is settled case-law that respect for the rights of the defence is, in all proceedings initiated against a person
         which are liable to culminate in a measure adversely affecting that person, a fundamental principle of Community law which
         must be guaranteed even in the absence of any rules governing the proceedings in question. That principle requires that the
         addressees of decisions which significantly affect their interests should be placed in a position in which they may effectively
         make known their views on the evidence against them which has been taken as the basis for such a decision (judgments of the
         Court of Justice in Case C-32/95 P  
         Commission v  
         Lisrestal and Others [1996] ECR I-5373, paragraph 21, and Case C-462/98 P  
         Mediocurso v  
         Commission [2000] ECR I-7183, paragraph 36; judgment in  
         Lisrestal and Others   v  
         Commission, cited above, paragraph 42). 
         
         
         60
            
          It is equally settled case-law that a Commission decision reducing or cancelling financial assistance granted by the ESF is
         capable of directly and individually concerning the beneficiaries of such assistance and of adversely affecting them, even
         though the Member State concerned is the sole interlocutor of the ESF in the relevant administrative procedure. It is the
         beneficiaries of the aid who are adversely affected by the economic consequences of the decision to reduce or cancel the assistance
         since they have primary liability for repayment of the sums paid without warrant (see, to that effect,  
         Lisrestal and Others v  
         Commission, paragraphs 43 to 48 and the case-law cited). 
         
         
         61
            
          It follows that the Commission, which alone assumes legal liability to the beneficiaries of the ESF assistance for the decision
         to reduce it, is not entitled to adopt such a decision without first giving those undertakings the possibility, or ensuring
         that they have had the possibility, of effectively setting forth their views on the proposed reduction in assistance (
         Lisrestal and Others v  
         Commission, paragraph 49, and Case T-72/97  
         Proderec   v  
         Commission  [1998] ECR II-2847, paragraph 127). 
         
         
         62
            
          Second, the Court has already ruled that, having regard to the central role of the relevant Member State and to the importance
         of the responsibilities which that State assumes in the presentation and supervision of the financing by the ESF of training
         measures, the opportunity for that State to comment before a definitive decision to reduce assistance is adopted constitutes
         an essential procedural requirement the disregard of which renders such a decision void (
         Interhotel v  
         Commission, cited above, paragraph 17, and  
         Oliveira v  
         Commission, cited above, paragraph 21). 
         
         
         63
            
          In this case, the documents before the Court, and in particular the circumstances mentioned in paragraphs 14 to 18 and 20
         to 23 above, show that the applicant and the AEW were kept informed of the results of the first check and of the Commission's
         intention to reduce the ESF assistance on account of the alleged irregularities found during that check, and that they were
         given the opportunity to submit comments on the first check report and on that intention before the contested decision was
         adopted. 
         
         
         64
            
          Nevertheless, in order to ascertain whether the Commission discharged properly both its obligation to ensure that the applicant
         had been placed in a position in which it could effectively set forth its views before a decision to reduce the ESF financial
         assistance was taken in this case and its obligation to enable the relevant Member State to do likewise, it is necessary to
         examine the two arguments which the applicant puts forward regarding the failure to take into account the D & T report and
         the failure to communicate the second check report beforehand. 
         
         
         65
            
          With regard to the failure to take into account the D & T report, it must be pointed out that such a failure cannot in any
         event constitute an infringement of the applicant's rights of defence. On the one hand, it is common ground that the evidence
         against the applicant which the Commission took as the basis of the contested decision is not taken from the D & T report,
         which had in any case been submitted by the AEW for the purpose of exculpating the operators concerned, and, on the other
         hand, the applicant neither alleges nor complains that it was prevented from submitting its comments on that report.  
         
         
         66
            
          With regard to the failure to communicate the second check report beforehand, it is clear from the documents before the Court
         that that report, which was drawn up following the check carried out on 28 October 1999, was forwarded first to the AEW by
         letter from the Commission on 15 February 2000, requesting comments on the report, and then by the AEW to the applicant on
         21 February 2000. It is therefore established that neither the AEW nor the applicant was placed in a position in which it
         could make known its views on the second check report before the contested decision was adopted on 31 January 2000. 
         
         
         67
            
          In those circumstances, in order to establish whether the applicant's rights of defence and the procedural requirement laid
         down by Article 24(1) of the coordinating regulation were infringed in this case, it must be determined whether the Commission
         was entitled to adopt the contested decision without having first placed the applicant and the AEW in a position to make known
         their views on the evidence contained in the second check report. 
         
         
         68
            
          In that regard, the defendant contends that the first and second checks form part of two strictly separate procedures. The
         contested decision is based exclusively on the data which were collected during the first procedure and on which the applicant
         expressed its views on two occasions. The second check therefore did not affect the contested decision. 
         
         
         69
            
          The purpose of the first check was to verify the delivery in 1997 of certain training projects co-financed by the ESF as part
         of operational programme No 94.3040B3, which were selected by sampling. That check, which was carried out at the premises
         of the VTCs themselves, had, according to the Commission, revealed not only irregularities specific to each project, but also
         a  
         systematic irregularity at the level of the VFSIPH itself, concerning the manner in which it declared to the ESF the expenditure incurred
         in connection with projects co-financed by the ESF. 
         
         
         70
            
          The second check was initiated following the detection of that alleged systematic irregularity and consequently covered the
         VFSIPH itself and all the projects for which it had sought ESF assistance.  
         
         
         71
            
          The second check report therefore mentions the results of an audit carried out by the Commission in respect of all the VFSIPH's
         expenditure statements to the ESF for 1997 and 1998 and therefore has a wider scope than the first check report, which concerned
         only certain training projects delivered in 1997. The second report nevertheless contains references to the projects delivered
         in 1997 by the VTCs De Werkgaard and GOCI, which were covered by the first check. 
         
         
         72
            
          That being so, it must be observed that the applicant bases the main points of its argument on the assertion that, in the
         contested decision, the Commission used a different method to calculate the amount of assistance allegedly overpaid from that
         used in the first check report, namely that specifically applied in the second check report. Consequently, by its complaint
         relating to the failure to communicate the second check report beforehand, it seeks in essence a declaration that there was
         no prior exchange of arguments between the parties with regard to the reasoning which ultimately led the Commission to assess
         the amount of assistance overpaid. That is also clear from the conclusion which the applicant draws in Annex 2 to its reply,
         in which it complains that the Commission did not give it the opportunity to set out beforehand its comments on the reasoning
         followed in that decision (and not in the first check report), which consisted in determining the eligible amount to be declared
         to the ESF (
         amount of grants made by the VFSIPH for hours of training eligible for ESF assistance) by applying to the amount granted an apportionment coefficient having as its denominator the  
         maximum number of hours capable of being provided (45 000) and not the number of  
         hours actually provided (21 342). 
         
         
         73
            
          The applicant has also provided concrete evidence that the second check report and the contested decision, notwithstanding
         different presentations of the data, are based on a common methodology which consists in determining the eligible amount which
         should have been declared to the ESF by taking into account only the fraction of the amounts granted to the VTCs which corresponds
         to the ratio between the eligible hours of training actually provided and a figure arrived at by multiplying the number of
         training modules declared by 1 800 hours. Moreover, the defendant has not disputed that identity of approach which characterises
         both the documents referred to above.  
         
         
         74
            
          The defendant does, however, dispute the claim that the contested decision departs from the method of calculating the overpayment
         which was adopted in the first check report. The only relevant differences between those two documents concern the results
         of the calculation and are due to the very fact that, in the contested decision, the defendant accepted the definitive data
         communicated by the AEW in its comments annexed to the letter of 5 May 1999 to the Commission (cited in paragraph 18 above),
         which were essentially a reiteration of the comments which the applicant itself had sent to the AEW by letter of 16 March
         1999 (cited in paragraph 17 above). 
         
         
         75
            
          In that regard, it must be pointed out that, since, in the contested decision, the Commission complains that the applicant
         made an excessive claim on the ESF, the method of calculating the overpayment is an integral part of the reasoning underlying
         such a complaint. It follows that respect for the rights of the defence, in the same way, moreover, as compliance with the
         obligation to state reasons (see, in that regard, paragraph 99 et seq. below), must also be verified in relation to the method
         of calculation applied. 
         
         
         76
            
          A comparison between the  
         correction calculation contained in the annex to the contested decision and the relevant passages of the first check report shows that there is
         a quite striking difference in result as regards the determination of the overpayment in the two documents and that such a
         difference, which is unfavourable to the applicant, is not, as the defendant claims, attributable solely to its acceptance
         of the data forwarded by the AEW. 
         
         
         77
            
          As the table below shows, the two documents contain different figures for all the relevant items, with the exception of the
          
         hours accepted by the applicant and the  
         eligible hours in the case of the De Werkgaard dossier. 
         De Werkgaard
               GOCI
            First Report
               Contested Decision
               First Report
               Contested Decision
            1
               Eligible amount declared to the ESF
               14 002 094
               13 559 144
               20 299 171
               17 538 985
            2
               Amount granted to the VTC
               13 750 000
               14 471 188
               24 750 000
               26 635 331
            3
               Hours accepted by the VFSIPH
                   17 563
                   17 563
                   30 164
                   30 164
            4
               Eligible hours
                   17 563
                   17 563
                   30 164
                   26 694
            5
               Hours subsidised by the amount granted
                   21 342
                   45 000
                   66 918
                   81 000
            6
               Apportionment coefficient
                   17 563/    21 342
                 17 563/  45 000
                   30 164/    66 918
                 26 694/  81 000
            7
               Eligible amount to be declared
               11 315 305
               5 647 944
               11 156 325
               8 777 821
            8
               Assistance received by the VFSIPH
                 6 300 942
               6 101 615
               9 134 627
               7 892 543
            9
               Assistance payable to the VFSIPH
               (5 091 887)
               2 541 575
               (5 020 346)
               3 950 019
            10
               Overpayment
                 1 209 055
               3 560 040
               4 114 281
               3 942 524
             The figures in brackets do not appear in the document but are the result of applying the 45% rate of assistance to the eligible
         amount to be declared.
         
         
         78
            
          Although the amount declared to the ESF in respect of eligible expenditure (line 1 of the table) and the amount granted by
         the applicant to the VTCs (line 2 of the table), as they appear in the contested decision, are identical to those mentioned
         by the AEW and the applicant in their comments referred to in paragraph 74 above, it must be pointed out that the contested
         decision applies, in particular, an apportionment coefficient (line 6 of the table) with a denominator significantly higher
         than in the first check report, that denominator having increased from 21 342 to 45 000 for De Werkgaard and from 66 918 to
         81 000 for GOCI. 
         
         
         79
            
          In the first check report, the Commission had applied an apportionment coefficient having, as a numerator, the training hours
         allocated by the VTC which were eligible for ESF co-financing and, as a denominator, the total number of training hours completed
         by the VTC, which the Commission regarded as having been subsidised by the amount granted by the VFSIPH to the VTC in the
         form of a global allocation. 
         
         
         80
            
          In the first check report, the Commission justified the application, to the amounts granted by the applicant to the VTCs in
         the form of a global allocation, of apportionment coefficients having such a value as their denominator by the fact that the
         amounts in question were intended to subsidise not only hours of training eligible for ESF co-financing, but also hours of
         training provided over and above the ceiling of 1 800 hours per year or to students not included in the accounts rendered
         by the VFSIPH to the ESF. 
         
         
         81
            
          By taking, in the contested decision, the figures 45 000 and 81 000 as the denominators of the apportionment coefficients,
         the Commission did not simply correct upwards the total number of hours of training carried out by the VTC, from which it
         could still have been concluded that the method of calculation used in the contested decision and that used in the first check
         report were identical, but adopted a completely different parameter which, moreover, had not been suggested in the comments
         of the AEW and the applicant. As the latter correctly pointed out, taking the example of the calculation relating to the De
         Werkgaard dossier, in the contested decision the global allocation made by the VFSIPH is no longer set against the total number
         of hours of training actually provided by the VTC (as was the case in the first report), namely 21 342 hours, but against
         a maximum number of hours capable of being provided, equal to 25 training modules multiplied by 1 800 hours, that is, 45 000
         hours. 
         
         
         82
            
          Consequently, although the corrections to the amount declared to the ESF and to the amount granted to the VTCs, made on the
         basis of the definitive data communicated by the AEW, were in the direction of a reduction in the overpayment of assistance
         mentioned in the first check report, in the contested decision that overpayment (line 10 of the table) turns out to be almost
         trebled in the case of the De Werkgaard dossier (from BEF 1 209 055 to BEF 3 506 040) and only slightly reduced in the case
         of the GOCI dossier (from BEF 4 114 281 to BEF 3 942 524), mainly as a result of the significant increase in the denominator
         of the apportionment coefficients. If, however, the Commission had made its calculations on the basis of the definitive data
         communicated by the AEW, without modifying the apportionment coefficients which it had fixed in the first check report, the
         results would have been much more favourable to the applicant. 
         
         
         83
            
          The contested decision therefore contains conclusive evidence for the purpose of establishing the existence and extent of
         the alleged overpayment of assistance (namely the value represented by the denominator of the apportionment coefficients),
         which is taken neither from the first check report nor from the comments submitted by the AEW and the applicant during the
         administrative procedure, and which the Commission was therefore not entitled to use against the applicant without having
         first placed it and the AEW in a position to submit comments on the matter. 
         
         
         84
            
          Finally, there is no need in this case to consider whether that procedural irregularity may have had a particular effect on
         the contested decision, in accordance with the case-law which requires that such a condition must also be satisfied for failure
         to respect the rights of the defence to result in annulment of the contested decision (Case C-142/87  
         Belgium v  
         Commission  [1990] ECR I-959, paragraph 48, and Case C-191/98 P  
         Tzoanos v  
         Commission [1999] ECR I-8223, paragraph 34). 
         
         
         85
            
          In view, on the one hand, of the difficulties of understanding the statement of reasons for the contested decision, as highlighted
         in the examination of the fifth plea in law, alleging breach of the obligation to state reasons (see paragraph 99 et seq.
         below) and, on the other hand, of the case-law which allows the Commission a considerable measure of latitude in evaluating
         complex facts and accounts with a view to a possible reduction of ESF assistance (Joined Cases T-180/96 and T-181/96  
         Mediocurso v  
         Commission [1998] ECR II-3477, paragraph 120, Joined Cases T-194/97 and T-83/98  
         Branco v  
         Commission [2000] ECR II-69, paragraph 76, and Case T-80/00  
         Associação Comercial de Aveiro v  
         Commission [2002] ECR II-2465, paragraph 51), the Court is unable to adjudicate on the question whether the Commission was, in any event,
         obliged to take the decision which it took. 
         
         
         86
            
          Consequently, the first plea in law, alleging infringement of the rights of the defence and infringement of an essential procedural
         requirement, must be accepted to the extent resulting from the foregoing considerations. 
          The fifth plea in law: breach of the obligation to state reasons
         ─ Arguments of the parties
         
         
         87
            
          The applicant submits that the Commission failed to give an adequate statement of reasons for the contested decision and therefore
         infringed Article 253 EC. 
         
         
         88
            
          It points out that, according to the Court's case-law, the obligation to state reasons has a particular scope in cases where
         it is necessary for the Commission to adopt a decision reducing the amount of financial assistance already paid. The Court
         refers in that connection to  
         Lisrestal and Others v  
         Commission, cited above, paragraph 52, in which it held that a decision to reduce assistance originally granted, which has serious consequences
         for those applying for it, must show clearly the grounds which justify a reduction in the amount of the assistance in relation
         to the amount originally approved. 
         
         
         89
            
          In that regard, the applicant observes, first, that in the contested decision the Commission merely gives a brief summary
         of its findings and does not indicate clearly why it rejected the applicant's comments on the first check report and the conclusions
         of the D & T report. 
         
         
         90
            
          Second, the Commission also failed to state the reasons why the second check report did not merit consideration with a view
         to the adoption of the contested decision. 
         
         
         91
            
          Third, the applicant complains that the Commission failed to state reasons for the rejection of its system of lump-sum grants
         and failed to set out its interpretation of Article 17 of the coordinating regulation.  
         
         
         92
            
          Fourth, it is almost impossible to ascertain from the data furnished in the contested decision the method by which the Commission
         reached the conclusion that there had been an overpayment of assistance.  
         
         
         93
            
          The applicant adds, finally, that those failures of the Commission are all the more serious since the reasoning behind the
         contested decision does not correspond to that followed in the first check report and the Commission was unable, in order
         to substantiate its decision, to accept the results of that report, in regard to which it must have had doubts, since it decided
         to carry out a second check after studying the D & T report.  
         
         
         94
            
          The defendant contends that a decision is not required to go into every relevant point of fact and law. The question whether
         the statement of reasons for a decision is sufficient must be assessed with reference not only to its wording but also to
         its context and the whole body of legal rules governing the matter in question (Case C-122/94  
         Commission v  
         Council [1996] ECR I-881, paragraph 29, and Case C-278/95 P  
         Siemens v  
         Commission [1997] ECR I-2507, paragraph 17). In that regard, it points out that, since co-financing rates play a crucial role in the
         administration of the structural funds, it must be assumed that the staff responsible for implementing structural measures
         in the Member States are made broadly familiar with the application of those rates, an assumption which lowers the threshold
         of the requirement to state reasons as far as the technical aspects of the reduction are concerned.  
         
         
         95
            
          In any event, the decision shows clearly the nature of the irregularities and the figures on which it is based, thus indicating
         with clarity the reasons justifying the reduction in the assistance. In particular, in the annex to the contested decision,
         the defendant described the system which the applicant operated and explained why that system was incompatible with Article 17
         of the coordinating regulation. It adds that the sentence  
         [The VFSIPH] carries out the calculation on too high a basis, thereby claiming too large a financial contribution from the
         ESF shows that the decision refers to failure to abide by the co-financing rates. In addition, it points out that the seventh
         recital in the preamble to the decision expressly refers to Article 2 of the ESF regulation which, read in conjunction with
         the general concept of actual expenditure (Article 21 of the coordinating regulation) implies an a priori rejection of lump-sum
         systems.  
         
         
         96
            
          The defendant further observes that, in its judgment in Case T-182/96  
         Partex v  
         Commission [1999] ECR II-2673, at paragraphs 76 to 78, the Court held that earlier measures adopted by the national authorities could
         be regarded as contributing to the reasons for a decision to reduce assistance, provided that the decision in question referred
         clearly to those measures and in so far as the beneficiary of the assistance was able to take cognisance of them. That reasoning
         is even more valid as regards the first check report, on which the applicant was able to express its views and to which the
         fifth recital in the preamble to the contested decision refers clearly. Account should therefore also be taken, in assessing
         the adequacy of the statement of reasons on which the decision in question is based, of that report, which describes the irregularity
         in question in clear terms consistent with those used in that decision, and of the letter of 17 August 1999 (see paragraph 20
         above), by which the Commission again set out its views on the irregularities found. 
         
         
         97
            
          As far as the second check report and the D & T report are concerned, the defendant repeats its arguments to the effect that
         those reports are not relevant to the examination of the lawfulness of the contested decision. 
         
         
         98
            
          Finally, the defendant points out that the decision contains in its annex the exact calculations which gave rise to a reduction
         in respect of the projects delivered by De Werkgaard and GOCI. The applicant has not specified in what respect those calculations
         are incomplete or incorrect.  
         ─ Findings of the Court 
         
         
         99
            
          First of all, it is necessary to consider the fourth part of the present plea in law, by which the applicant complains that
         it is impossible to ascertain from the data contained in the contested decision the reasons which led the Commission to conclude
         that there had been an overpayment of assistance. 
         
         
         100
            
          According to consistent case-law, the purpose of the obligation to state the reasons on which an individual decision is based
         is to provide the person concerned with sufficient information to make it possible to ascertain whether the decision is well
         founded or whether it is vitiated by a defect which may permit its legality to be contested, and to enable the Community judicature
         to review the lawfulness of the decision. The extent of that obligation depends on the nature of the measure in question and
         on the context in which it was adopted (judgments of the Court of Justice in Case 32/86  
         Sisma v  
         Commission [1987] ECR 1645, paragraph 8, Case C-181/90  
         Consorgan v  
         Commission [1992] ECR I-3557, paragraph 14, and Case C-189/90  
         Cipeke   v  
         Commission  [1992] ECR I-3573, paragraph 14; and judgments of the Court of First Instance in Case T-85/94  
         Branco v  
         Commission [1995] ECR II-45, paragraph 32,  
         Partex v  
         Commission, cited above, paragraph 73, and  
         Asssociação Comercial de Aveiro v  
         Commission, cited above, paragraph 35). 
         
         
         101
            
          Since a decision reducing the amount of ESF assistance originally granted has, in particular, serious consequences for the
         beneficiary of the assistance, that decision must state clearly the grounds which justify the reduction in the assistance
         in relation to the amount originally approved (
         Consorgan v  
         Commission, cited above, paragraph 18;  
         Cipeke v  
         Commission, cited above, paragraph 18;  
         Lisrestal and Others   v  
         Commission, paragraph 52;  
         Branco v  
         Commission, cited above, paragraph 33,  
         Partex v  
         Commission, paragraph 74, and  
         Associação Comercial de Aveiro   v  
         Commission, paragraph 36). Moreover, the statement of reasons for such a decision must also inform the beneficiary of the assistance
         of the method by which the reduction effected was calculated (see, to that effect,  
         Consorgan v  
         Commission, paragraphs 22 to 24, and  
         Cipeke v  
         Commission, paragraphs 21 and 22). 
         
         
         102
            
          It is relevant in that regard that, in the present case, although the contested decision certainly makes it clear that the
         applicant declared to the ESF amounts (expenditure actually incurred by the VTCs) greater than the (lump-sum) amounts which
         it actually granted to the VTCs, it does not show sufficiently clearly the reasoning on the basis of which the Commission
         concluded that the amounts declared were greater than the amounts granted. 
         
         
         103
            
          It is noteworthy that, according to the data contained in the annex to the contested decision, the amounts granted by the
         applicant to the VTCs are greater than the amounts declared to the ESF (BEF 14 471 188 against BEF 13 559 144 for De Werkgaard;
         BEF 26 635 331 against BEF 17 538 985 for GOCI). 
         
         
         104
            
          However, in determining, for each dossier, the eligible amount to be declared by the VFSIPH to the ESF, the Commission did
         not take into account the full amounts granted to the VTCs, but excluded a portion of those amounts by the application of
         an apportionment coefficient.  
         
         
         105
            
          In those circumstances, the Commission had a duty, under Article 253 EC, to explain clearly in its decision the reasons for
         which it found it necessary not to take into account the full amounts granted by the applicant to the VTCs and to apply to
         those amounts the apportionment coefficients adopted by it. 
         
         
         106
            
          The unavoidable conclusion is that the Commission did not discharge such an obligation since, in particular, it did not state
         in the contested decision, any more than it has during the present proceedings before the Court, the reason which led it to
         fix at 45 000 and 81 000 respectively the denominators of the apportionment coefficients applied to the De Werkgaard and GOCI
         dossiers, since the wording of the contested decision indicates only that those figures are the product of the multiplication
         by 1 800 hours of the number of training modules declared by the applicant for each dossier. 
         
         
         107
            
          The relatively obscure explanations concerning the hourly cost of training, contained in the first two paragraphs of the reasons
         set out in the annex to the contested decision, the meaning and relevance of which were not adequately clarified for legal
         purposes by the defendant's replies to the questions put by the Court, fail to provide any guidance in this regard. On the
         contrary, they even seem to be in conflict with the data contained in the  
         correction calculation. The Commission states, in those explanations, that the cost of training amounted, per  
         hour actually provided, to BEF 320 in the case of De Werkgaard (training of a manual worker), whereas if the  
         amount granted to De Werkgaard, as set out in the calculation in question (BEF 14 471 188), is divided by the number of hours actually provided
         by that VTC (21 342 according to the first check report and the applicant, a figure not disputed by the defendant), the cost
         borne by the applicant per hour actually provided was equal to BEF 678.06, and therefore much higher than BEF 320. 
         
         
         108
            
          In reply to a written question from the Court, the Commission confined itself to contending that, in adopting as denominators
         for the apportionment coefficients the amounts of 45 000 and 81 000 respectively, it was merely adhering to the choices made
         by the Flemish Government when it adopted the Decree of 22 April 1997, which provided for a system of lump-sum grants for
         VTCs. 
         
         
         109
            
          A mere reference to that decree and to that system is not in itself sufficient to facilitate an understanding of the reasoning
         followed in the contested decision. In that regard, in the first check report, the Commission, while recalling the characteristic
         features of the system of lump-sum grants for VTCs, under which  
         for the VFSIPH, training costs are limited to a lump-sum amount of BEF 550 000 per training module ... and the maximum number
         of training hours is subject to a ceiling of 1 800 hours per year, was nevertheless able to adopt, as the denominator of the apportionment coefficients, not the value mentioned in paragraph 106
         above, but a completely different value, namely, the hours actually provided by the VTC concerned. 
         
         
         110
            
          For that same reason, the defendant cannot claim that the reasoning underlying the fixing of the denominator of the apportionment
         coefficients applied in the  
         correction calculation is apparent from the first check report or, indeed, from the letter of 17 August 1999, in which the Commission merely made
         a reference to that report, without altering its wording in any way.  
         
         
         111
            
          It must therefore be concluded that the statement of reasons for the contested decision, even when assessed in the light of
         the context, the legal rules and the previous documents referred to by the defendant, does not show clearly the reasoning
         on the basis of which the Commission established the eligible amounts paid by the applicant to the VTCs concerned under the
         system of lump-sum grants and was therefore able to form the view that those amounts were lower than the amounts which the
         applicant declared to the ESF as eligible for co-financing.  
         
         
         112
            
          The fourth part of the present plea in law, alleging breach of the obligation to state reasons, must therefore be accepted.
         
         
         
         113
            
          In the light of all the foregoing, the contested decision must be annulled in so far as it makes a reduction, equivalent to
         EUR 181 067, in the ESF financial assistance of which the applicant was the beneficiary, and there is no need to examine the
         other arguments and pleas in law raised by the applicant. 
         
         Costs
         114
            
          Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been
         applied for in the successful party's pleadings. In this instance, since the Commission has been unsuccessful, it must, in
         accordance with the form of order sought by the applicant, be ordered to pay the costs. 
         
         On those grounds, 
         
         
         
            
            THE COURT OF FIRST INSTANCE (Fourth Chamber)
         
         
          hereby:  
         
            
            1.
             Annuls Commission Decision C (2000) 36 of 31 January 2000 reducing the amount of the financial assistance originally provided
            for by Decision C (1994) 3059 of 25 November 1994 approving the grant by the European Social Fund of aid for an operational
            programme under the Community support framework for the attainment of Objective 3 in Belgium (Flemish Community) in so far
            as it makes a reduction, equivalent to EUR 181 067, in the European Social Fund financial assistance of which the Vlaams Fonds
            voor de Sociale Integratie van Personen met een Handicap was the beneficiary; 
            
            
            2.
             Orders the Commission to pay the costs. 
            
            
                  Tiili
               
               
                  Mengozzi
               
               
                  Vilaras
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
            
            
            
            
            
            
            
         
         
          Delivered in open court in Luxembourg on 9 July 2003. 
         
         
         
         
                  H. Jung 
               
               
                  V. Tiili  
               
            
         
         
         
                  Registrar
               
               
                  President
               
            
         
            
         
      
          1 –
            
             Language of the case: Dutch.