CELEX: 62001TJ0196
Language: en
Date: 2003-09-30
Title: Judgment of the Court of First Instance (Third Chamber) of 30 September 2003. # Aristoteleio Panepistimio Thessalonikis v Commission of the European Communities. # EAGGF - Statement of reasons. # Case T-196/01.

Case T-196/01 Aristoteleio Panepistimio ThessalonikisvCommission of the European Communities
            «(EAGGF – Withdrawal of financial assistance – Article 24 of Regulation (EEC) No 4253/88 – Error of assessment – Principle of proportionality – Reasonable duration – Statement of reasons)»
            
               
                  Judgment of the Court of First Instance (Third Chamber), 30 September 2003  
                     
                
               
            
                   
               
               
            
            Summary of the Judgment
         
         
                  1..
                  Economic and social cohesion – Structural assistance – Community financing granted for national operations – Withdrawal of financial assistance from the EAGGF on account of irregularities – Commission obliged to demonstrate the existence of irregularities in the carrying out of the project – Beneficiary obliged to demonstrate that the project complied with the applicable provisions – Commission obliged to formulate the various complaints precisely in the letter opening the procedure – Duty of applicants for, and beneficiaries of, EAGGF assistance to provide information and act in good faith  (Council Regulation No 4253/88, Art. 24) 
         
                  2..
                  Economic and social cohesion – Structural assistance – Community financing granted for national operations – Withdrawal of financial assistance from the EAGGF on account of irregularities – Community and national co-financing of a national project – Legal context of the decision withdrawing the assistance – Community law – Justification on the ground that the project was carried out in accordance with national rules – Not permissible  (Council Regulation No 4253/88, Art. 24(2)) 
         
                  3..
                  Economic and social cohesion – Structural assistance – Community financing – Commission's right to ask beneficiaries of Community financial assistance for additional information beyond that already supplied
                      
                  
         
                  4..
                  Economic and social cohesion – Structural assistance – Community financing – Withdrawal of financial assistance from the EAGGF on account of irregularities – Commission obliged to give the beneficiary precise indications as to what supporting documents and additional explanations
                     it must provide  
                  (Council Regulation No 4253/88, Art. 24) 
         
                  5..
                  Economic and social cohesion – Structural assistance – Community financing – Withdrawal of financial assistance from the EAGGF on account or irregularities – Obligation on the Commission to verify whether an operation has actually been carried out – None  (Council Regulation No 4253/88, Art. 24) 
         
                  6..
                  Community law – Principles – Proportionality – Withdrawal of financial assistance from the EAGGF on account of irregularities – Decision to withdraw assistance partially vitiated by errors of assessment – Annulment of the decision in its entirety – Commission's obligations in the light of the proportionality principle  (Art. 233 EC; Council Regulations Nos 2052/88 and 4253/88, Art. 23) 
         
                  7..
                  Economic and social cohesion – Structural assistance – Community financing – Procedure for withdrawing financial aid – Obligations of the Commission – Duty to act within a reasonable time – Criteria for assessment – Breach – Consequences  (Council Regulation No 4253/88, Art. 24) 
         
         1.
          Whilst the Commission is required, as part of the procedure laid down in Article 24 of Regulation No 4253/88 laying down provisions
         for implementing Regulation No 2052/88 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, to demonstrate,
         following a suitable examination of the project, that there are irregularities in the way the project has been carried out
         which justify withdrawal of the assistance, it is none the less up to the beneficiary to carry out the project as approved
         and to ensure full compliance with the conditions under which the assistance has been awarded, as set out in the award decision
         and in the annexes thereto.  Consequently, if during its examination the Commission discovers evidence of such irregularities
         the beneficiary of the assistance must be capable of showing that the project has been carried out in full compliance with
         the relevant provisions and, in particular, with the award decision. In particular, it is up to the beneficiary to show that
         expenditure has actually been incurred, that it relates directly to the various operations provided for under the project
         and that that expenditure is appropriate in the light of the objectives of the project.In that context, the letter initiating the procedure plays a vital role.  At that stage of the administrative procedure the
         Commission must, following its investigation, set down the various complaints regarding the way in which the project has been
         carried out in a manner that is sufficiently precise to enable the beneficiary to adduce the evidence described above. For that purpose, in accordance with its duty to act in good faith, which stems from the obligation to carry out the project
         in a spirit of partnership and mutual trust, the beneficiary must provide the Commission with all the supporting documents
         and explanations which, in view of the special features of the project and the financial conditions laid down in the annexes
         to the award decision, may appear to it to be required in order to dispel the doubts the Commission has expressed. It is essential
         for the effective functioning of the system of inspection and evidence introduced in order to verify whether the conditions
         for granting assistance are met that applicants for, and beneficiaries of, such assistance submit to the Commission reliable
         information which is not liable to mislead it. Therefore, when examining the legality of a decision withdrawing Community financial aid, it also has to be determined whether
         the beneficiary has fulfilled its obligation to provide the Commission with all the supporting documents and explanations
         which, in view of the special features of the project and the financial conditions laid down in the annexes to the award decision,
         may appear to it to be required in order to ensure that the project has been carried out properly. see paras 47-50
         
         2.
          Although the project entitled  
         Pilot project to accelerate the regeneration of forests devastated by fire in Greece was co-financed by national resources and is therefore subject to national rules, the legal context of the contested decision
         is that determined by Community law, that is to say, in particular, Article 24(2) of Regulation No 4253/88 of Regulation No
         4253/88 laying down provisions for implementing Regulation No 2052/88 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, and the award decision.  The beneficiary of Community aid cannot therefore claim before the Commission merely
         that it carried out the approved project in accordance with the national rules. see para. 51
         
         3.
          The Commission is entitled to ask beneficiaries of Community assistance for extra information in addition to that already
         supplied if it considers that it is needed in order to establish that the project has been properly implemented. In that respect, the beneficiary of the assistance, being responsible for the management of the project, is in principle in
         the best position to know what information it should supply to the Commission in order to justify the expenses charged to
         the project.  If, in a particular situation, the Commission considers that in order to carry out a suitable examination of
         the project it needs more detailed information than that already provided, it must give the beneficiary sufficiently precise
         indications to enable the latter to give it that information before the procedure is closed and the assistance withdrawn.
         see paras 112-113, 116
         
         4.
          The fact that the tasks indicated in the employment contract of a person working for a project financed by Community resources
         do not correspond with those actually carried out by that person, and for which expenses are charged, does not constitute
         irrebuttable evidence of an irregularity within the meaning of Article 24 of   Regulation No 4253/88 of Regulation No 4253/88
         laying down provisions for implementing Regulation No 2052/88 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.
         The Commission cannot validly complain of a beneficiary's failure to provide it with documents justifying the travel expenses
         of a person working for a project financed by Community resources in relation to the project's objectives, if it has not given
         the beneficiary more precise indications as to what supporting documents and what additional explanations it should have provided.
         see paras 132, 138
         
         5.
          Article 24 of  Regulation No 4253/88 of Regulation No 4253/88 laying down provisions for implementing Regulation No 2052/88
         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, which provides that the Commission may decide to
         adopt measures for repayment of the financial assistance if, according to Article 24(2), ‘the examination reveals an irregularity
         and in particular a significant change affecting the nature or conditions of the operation or measure for which the Commission's
         approval has not been sought’, refers expressly to irregularities concerning the conditions under which the operation being
         financed has been implemented, which includes irregularities in the way it has been managed. It cannot therefore be argued that the penalties under Article 24 of Regulation No 4253/88 apply only where the operation
         financed by the Community has not been carried out in full or in part. Article 24 cannot therefore be interpreted as meaning that, when the Commission finds significant irregularities in the management
         of a project, it is required, before it withdraws assistance, to consider in every case whether an operation has actually
         been carried out or not. see paras 205-208
         
         6.
          In view of the very nature of the financial assistance granted by the Community, the obligation to comply with the financial
         obligations laid down in the award decision constitutes, as does the obligation actually to carry out the project concerned,
         one of the beneficiary's essential undertakings, and so the granting of Community assistance is dependent upon compliance
         with it. In principle, where the Commission finds that a beneficiary of Community assistance has charged certain expenses to a project
         but failed to show that they were directly connected with the project or that they were appropriate, it may withdraw the assistance
         granted.  In such circumstances, the Commission may reasonably take the view that any penalty other than total withdrawal
         of the assistance and repayment of sums paid by the EAGGF might constitute an invitation to commit fraud, since potential
         beneficiaries would be tempted either to inflate artificially the amount of the expenses charged to the project in order to
         evade their obligation to provide co-financing and obtain the maximum contribution from the EAGGF provided for in the award
         decision, or to supply incorrect information or conceal certain information in order to obtain assistance or to increase the
         amount of assistance sought, the only deterrent being that the assistance might be reduced to the level it should have been
         in the light of the actual expenses incurred by the beneficiary and/or the accuracy of the information supplied by it to the
         Commission. However, in a situation where the decision to withdraw Community assistance is annulled in its entirety, even though vitiated
         by errors of assessment in relation to only some of the irregularities found, it is for the Commission, in accordance with
         Article 233 EC, in the light of the ruling in respect of those irregularities, to decide, according to the principle of proportionality,
         whether the assistance should still be withdrawn or another measure be adopted with regard to the project. see paras 220, 222-226
         
         7.
          Article 24 of  Regulation No 4253/88 of Regulation No 4253/88 laying down provisions for implementing Regulation No 2052/88
         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 does not lay down any specific time-limits with
         which the Commission should comply in the context of a procedure for the withdrawal of financial assistance. According to a general principle of Community law, the Commission is required to carry out its administrative procedures within
         a reasonable time, the duration of which is to be determined in relation to the particular circumstances of each case, particularly
         its background, the various procedural stages followed, its complexity, and its importance for the various parties involved.
         However, failure to comply with the principle that the Commission must act within a reasonable time, assuming it is established,
         does not justify automatic annulment of the contested decision. see paras 228-230, 233
      

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
            
            JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber)30 September 2003  (1)
         
         
               ((EAGGF – Withdrawal of financial assistance – Article 24 of Regulation (EEC) No 4253/88 – Error of assessment – Principle of proportionality – Reasonable duration – Statement of reasons))
               
             In Case T-196/01, 
            
            
            Aristoteleio Panepistimio Thessalonikis, established in Thessaloniki (Greece), represented by D. Nikopoulos, lawyer, with an address for service in Luxembourg,
            
            
            applicant, 
            
            v
            Commission of the European Communities, represented by M. Condou-Durande, acting as Agent, with an address for service in Luxembourg,
            
            defendant, 
            
             APPLICATION for annulment of Commission Decision C (2001) 1284 of 8 June 2001 withdrawing the assistance granted to the Laboratory
            for Forest Genetics and Improvement of Ligneous Plant Species at Aristoteleio Panepistimio Thessalonikis (the Aristotle University
            of Thessaloniki) by Commission Decision C (96) 2542 of 25 September 1996 on the granting of assistance from the Guidance Section
            of the European Agricultural Guidance and Guarantee Fund under Council Regulation (EEC) No 4256/88 in connection with programme
            No 93.EL.06.023, entitled  
            Pilot project to accelerate the regeneration of forests devastated by fire in Greece,
            
            
            THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber),
            
             composed of: K. Lenaerts, President, J. Azizi and M. Jaeger, Judges, 
            
             Registrar: I. Natsinas, Administrator, 
            
            
            having regard to the written procedure and further to the hearing on 1 July 2003,
         gives the following
         
         
         Judgment
            
               Legal background
            
         
         1
            
          In order to strengthen economic and social cohesion within the meaning of Article 158 EC, 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) entrusted to the structural funds inter alia the tasks of promoting the development and structural adjustment of
         the regions whose development was lagging behind, and speeding up the adjustment of agricultural structures and promoting
         the development of rural areas, with a view to reform of the common agricultural policy (Article 1(1) and Article 1(5)(a)
         and (b)).  That regulation was amended by Council Regulation (EEC) No 2081/93 of 20 July 1993 (OJ 1993 L 193, p. 5). 
         
         
         2
            
          The original version of Article 5(2)(e) of Regulation No 2052/88 provided that financial assistance by the structural funds
         could take the form of support for technical assistance and studies in preparation for operations.  In the version amended
         by Regulation No 2081/93 it states that financial assistance from the structural funds may be provided in the form of support
         for technical assistance, including the measures to prepare, appraise, monitor and evaluate operations, and pilot and demonstration
         projects. 
         
         
         3
            
          On 19 December 1988 the Council adopted Regulation (EEC) No 4256/88 laying down provisions for implementing Regulation No
         2052/88 as regards the EAGGF Guidance Section (OJ 1988 L 374, p. 25).  That regulation was amended by Council Regulation (EEC)
         No 2085/93 of 20 July 1993 (OJ 1993 L 193, p. 44). 
         
         
         4
            
          The original version of Article 8 of Regulation No 4256/88 stated that assistance from the European Agricultural Guidance
         and Guarantee Fund (
         the Fund) for the measures provided for in Article 5(2)(e) of Regulation No 2052/88 could cover inter alia carrying out pilot projects
         for promoting the development of rural areas, including the development and exploitation of woodland (first indent) and carrying
         out demonstration projects to show farmers the real possibilities of systems, methods and techniques of production which were
         in accordance with the objectives of the reform of the common agricultural policy (fourth indent).  In the version amended
         by Regulation No 2085/93 that article provides that in carrying out its tasks the Fund may devote up to 1% of its annual budget
         to financing inter alia pilot projects for adjusting agricultural and forestry structures and promoting rural development,
         and demonstration projects, including projects for developing and exploiting forests and projects for processing and marketing
         agricultural products, to show the real possibilities of systems, methods and techniques of production and management which
         are in accordance with the objectives of the common agricultural policy. 
         
         
         5
            
          On 19 December 1988 the Council also adopted Regulation (EEC) No 4253/88 laying down provisions for implementing Regulation
         No 2052/88 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).  That regulation was amended
         by Council Regulation (EEC) No 2082/93 of 20 July 1993 (OJ 1993 L 193, p. 20). 
         
         
         6
            
          Article 23(2) of Regulation No 4253/88, as amended, provides with regard to financial checks: Without prejudice to checks carried out by Member States, in accordance with national laws, regulations and administrative
         provisions and without prejudice to the provisions of Article 206 of the Treaty or to any inspection arranged on the basis
         of Article 209(c) of the Treaty, Commission officials or servants may carry out on-the-spot checks, including sample checks,
         in respect of operations financed by the structural funds and management and control of systems.Before carrying out an on-the-spot check, the Commission shall give notice to the Member State concerned with a view to obtaining
         all the assistance necessary.  If the Commission carries out on-the-spot checks without giving notice, it shall be subject
         to agreements reached in accordance with the provisions of the Financial Regulation within the framework of the partnership.
          Officials of the Member State concerned may take part in such checks.The Commission may require the Member State concerned to carry out an on-the-spot check to verify the regularity of payment
         requests.  Commission officials or servants may take part in such checks and must do so if the Member State concerned so requests.The Commission shall ensure that any checks that it carries out are performed in a coordinated manner so as to avoid repeating
         checks in respect of the same subject-matter during the same period.  The Member State concerned and the Commission shall
         immediately exchange any relevant information concerning the results of the checks carried out.
         
         
         7
            
          Article 24 of Regulation No 4253/88, as amended, provides with regard to reduction, suspension and cancellation of assistance:
          
         
         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 a 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.
         
         
         3.
          Any sum received unduly and to be recovered shall be repaid to the Commission.  Interest on account of late payment may be
         charged on sums not repaid in compliance with the provisions of the Financial Regulation and in accordance with the arrangements
         to be drawn up by the Commission pursuant to the procedures referred to in Title VIII.
         
         Facts
         
         8
            
          On 8 November 1995 Aristoteleio Panepistimio Thessalonikis (the Aristotle University of Thessaloniki,  
         the applicant) applied to the Commission for Community assistance for a pilot project entitled  
         Pilot project to accelerate the regeneration of forests devastated by fire in Greece (Project No 93.EL.06.023,  
         the project). 
         
         
         9
            
          The project stated that its overall objective was principally, as its title indicates, to accelerate the regeneration of forests
         devastated by fire in Greece. 
         
         
         10
            
          By Decision C (96) 2542 of 25 September 1996, addressed to the applicant, the Commission granted the project assistance from
         the Guidance Section of the Fund (
         the award decision). 
         
         
         11
            
          Article 1 of the award decision stated that responsibility for implementing the project, details of which were set out in
         Annex 1 to that decision, lay with the Laboratory for Forest Genetics and the Improvement of Ligneous Plant Species, a research
         laboratory attached to the applicant (
         the Laboratory or  
         the beneficiary).  Article 2 of the award decision stated that the project was to be carried out between 1 September 1996 and 28 February
         2001. 
         
         
         12
            
          The first paragraph of Article 3 of the award decision gave the total eligible cost of the project as ECU 717 532 and the
         maximum Community contribution was set at ECU 538 149.  The third paragraph of that article stated:  
         If the final cost shows that the eligible expenditure is lower than that originally estimated, the amount of assistance will
         be reduced accordingly at the time the final payment is made. 
         
         
         13
            
          Article 4 of the award decision stated that  
         the conditions for applying this decision are laid down in Annex 2. 
         
         
         14
            
          Annex 1 to the award decision contained a description of all the various aspects of the project in question: title, overall
         and specific objectives, implementation schedule, details of each operation designed to achieve the set objectives, information
         regarding the beneficiary (in this case the bank account is in the name of the Research Committee of the Aristotle University
         of Thessaloniki,  
         the Committee), the significance of the expected results for the Commission, the cost of the project and its total budget, as divided up
         between the bodies financing it. The Community contribution was to be 75% of the total cost. 
         
         
         15
            
          Annex 2 to the award decision laid down the financial conditions relating to the award of the assistance.  In particular,
         it stated that staffing and travel costs should relate directly to the implementation of the operation and that the amount
         of such costs should be sufficient to cover the expenses for the operation (point 2); that the Commission was authorised,
         for the purpose of checking the financial information concerning the various expenses, to ask to examine any original supporting
         document or a certified copy thereof and to carry out that examination on the spot, or to request that the documents in question
         be sent to it (point 5); that the beneficiary should keep available for the Commission, for five years from the last payment
         by the Commission, all originals of documents substantiating expenditure (point 6).  Last, in point 10 of Annex 2, it was
         stated in essence that if any of the conditions laid down in that annex was not met, or if operations not provided for in
         Annex 1 were undertaken, the Commission could suspend, reduce or withdraw the assistance and require repayment of assistance
         already paid, in which case the beneficiary would be entitled to submit observations beforehand within a time-limit set by
         the Commission. 
         
         
         16
            
          The beneficiary received from the Community from 1 September 1996 onwards a total of ECU 215 260, which was 40% of the Community
         funding provided for. 
         
         
         17
            
          Following a proposal from Mr Panetsos, the Director of the Laboratory, sent to the Committee by letter of 19 November 1996,
         the Committee decided to entrust the management of the project to him. 
         
         
         18
            
          On 5 June 1998 Mr Panetsos sent the Commission, under point 3 of Annex 2 to the award decision, an interim technical report
         on the state of progress on the project and on the expenditure already incurred in respect of each of the operations provided
         for (
         the interim technical report).  He applied at the same time for payment of the second advance. 
         
         
         19
            
          On 9 July 1998 the Commission acknowledged receipt of the interim technical report and informed the applicant that it had
         initiated a general audit of all the projects financed under Article 8 of Regulation No 4256/88, including the applicant's
         project.  It also requested the applicant to send it, under point 5 of Annex 2 to the award decision, a formal application
         for payment of the second advance, a list of all the supporting documents relating to the eligible expenditure incurred in
         connection with implementation of the project, grouped according to the type of cost, and a certified copy of each of those
         supporting documents. 
         
         
         20
            
          On 29 July 1998 the applicant sent the Commission documents confirming that the expenditure had been incurred in accordance
         with the award decision.  It also highlighted the particular features of the programme in question, namely that the lifecycle
         of the trees in the regions selected for reforestation required the programme to be conducted without a break and hence the
         Commission to pay the second advance without delay.  According to the applicant it was not possible to obtain alternative
         financing for the project even temporarily. 
         
         
         21
            
          By letters of 12 and 14 October 1998 the Commission informed the applicant of its intention to conduct an on-the-spot inspection
         to see how the project was being carried out before payment of the second advance. 
         
         
         22
            
          The on-the-spot inspection took place at the applicant's premises from 9 to 12 November 1998. 
         
         
         23
            
          On 27 January 1999 the Commission inspectors submitted an inspection report on the project to the Commission. 
         
         
         24
            
          By letter of 2 March 1999 the applicant reminded the Commission of the special features of the project and repeated its request
         for payment of the second advance, stating that any delay  
         would prevent it from carrying out the work in compliance with the terms of the contract and would jeopardise the impact of
         the project. 
         
         
         25
            
          By letter of 21 April 1999 the Commission asked the applicant to produce a list of all the documents relating to the project,
         and a detailed report on the activities of all the people involved in the project in order to justify the staffing costs charged
         to the project, a copy of the contracts of employment of all those people and documentary evidence of the sums paid to certain
         people. 
         
         
         26
            
          On 4 May 1999 the applicant again applied to the Commission for payment of the second advance. 
         
         
         27
            
          In a letter of 12 May 1999 the applicant stressed the difficulties being encountered due to the delay in the payment of the
         second advance.  It also drew the Commission's attention to the fact that a system had been introduced by the Committee to
         check on expenses incurred in connection with the project, and to the fact that it was not possible to charge particular expenses
         to specific operations in connection with the project.  In addition, the applicant sent the Commission tables showing wages,
         consumables, equipment, travel costs and the total expenditure on the project and also  
         detailed activity reports and contracts of employment for the people involved in the project. 
         
         
         28
            
          By letter of 2 June 1999 the Commission replied to the applicant's letter of 4 May 1999 informing it that Commission officials
         were examining the documents sent with the letter of 12 May 1999. 
         
         
         29
            
          On 13 October 1999 the applicant again drew the Commission's attention to the delay in paying the second advance and stated
         that in the circumstances it was not in a position to implement the project in the way the Commission had decided. 
         
         
         30
            
          By letter of 25 October 1999 the Commission informed the applicant that, under Article 24 of Regulation No 4253/88, as amended,
         it had conducted an examination of the financial assistance for the project and that, as that examination had revealed evidence
         of possible irregularities, it had decided to initiate the procedure provided for in that article and in point 10 of Annex
         2 to the award decision (
         the letter initiating the procedure).  It asked the applicant to produce within six weeks certified copies of all the administrative documents and accounts relating
         to the project and, in respect of each item of evidence of a possible irregularity, proof that it had complied with its obligations
         under the award decision. 
         
         
         31
            
          On 3 December 1999 the applicant submitted its observations in response to the Commission's claims and sent the Commission
         certain supporting documents (
         the observations on the letter initiating the procedure). 
         
         
         32
            
          On 7 July 2000 a firm of auditors submitted to the Commission, at its request, an audit report on the project. 
         
         
         33
            
          By decision of 8 June 2001, addressed to the Hellenic Republic and to the applicant and notified to the latter on 19 June
         2001, the Commission, acting under Article 24(2) of Regulation No 4253/88, as amended, withdrew the financial assistance granted
         for the project and requested the applicant to repay in full the assistance already paid (
         the contested decision). 
         
         
         34
            
          In recital 9 in the preamble to the contested decision the Commission listed ten irregularities within the meaning of Article
         24(2) of Regulation No 4253/88, as amended. 
         Procedure and forms of order sought
         
         35
            
          By application lodged at the Court Registry on 20 August 2001 the applicant brought the present proceedings. 
         
         
         36
            
          By separate document lodged at the Court Registry on 3 September 2001 the applicant also lodged, under Articles 242 EC and
         243 EC, an application for the suspension of the contested decision.  By order of 18 October 2001 in Case T-196/01 R  
         Aristoteleio Panepistimio Thessalonikis v  
         Commission [2001] ECR II-3107, the President of the Court of First Instance dismissed the application for interim relief. 
         
         
         37
            
          Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Third Chamber) decided to open the oral procedure
         and, as a measure of organisation of procedure under Article 64 of the Rules of Procedure of the Court of First Instance,
         requested the parties to reply to written questions and to produce certain documents.  The parties complied with those requests.
         
         
         
         38
            
          The parties presented oral argument and their replies to the questions from the Court at the hearing on 1 July 2003. 
         
         
         39
            
          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. 
         
         
         
         
         40
            
          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
         
         41
            
          The applicant relies on three pleas.  The first plea alleges infringement of Article 24(2) of Regulation No 4253/88, as amended,
         in that the Commission only complained that there were various irregularities in the way the project had been managed and
         failed to take into account the way the project had actually been carried out.  The second plea, comprising two limbs, alleges
         both a further infringement of Article 24(2) of Regulation No 4253/88, as amended, and breach of the principle of proportionality.
          The third plea alleges errors of assessment by the Commission in respect of the ten irregularities it established in the
         contested decision.  The applicant submits its complaints regarding those ten irregularities in eight limbs.  The applicant
         also claims that there was a breach of the obligation to provide a statement of reasons in respect of the first and eighth
         irregularities. The Court considers it appropriate to deal first with the third plea. 
         
         
         
         I ─
          The third plea, alleging errors of assessment by the Commission in respect of the various irregularities it established and,
         in the case of certain parts of that plea, breach of the obligation to provide a statement of reasons
         
         
         
         A ─
          Preliminary considerations
         
         
         42
            
          The applicant contends in essence that the Commission did not conduct an appropriate examination of the way the project was
         being carried out before adopting the contested decision and that it made errors of assessment in considering that that examination
         had confirmed the existence of irregularities within the meaning of Article 24(2) of Regulation No 4253/88, as amended, in
         the management of that project.  Moreover, with regard to some of the irregularities raised by the Commission in the contested
         decision, the applicant considers that the Commission failed to provide an adequate statement of reasons.
         
         
         43
            
          Before considering the merits of the applicant's arguments with regard to each of the irregularities raised by the Commission
         in the contested decision, the Court considers it necessary to set out some preliminary considerations regarding the legal
         background to the contested decision. 
         
         
         44
            
          First, it should be pointed out that under Article 24(2) of Regulation No 4253/88, as amended, the Commission may, following
         a suitable examination of the case, within the meaning of Article 24(1), decide to adopt measures for repayment of the financial
         assistance if that  
         examination reveals an irregularity and in particular a significant change affecting the nature or conditions of the operation
         or measure for which the Commission's approval has not been sought. 
         
         
         45
            
          Article 24(2) of Regulation No 4253/88, as amended, thus makes express reference to irregularities concerning the conditions
         under which the project being financed has been implemented.  Such conditions include the way it has been managed, so that
         generally the Commission may, as in the present case, rely on irregularities in the way the project has been managed in order
         to take steps to withdraw the assistance granted. 
         
         
         46
            
          Second, the validity of the contested decision should be assessed on the basis of the provisions contained in the award decision
         and, in particular, the annexes to that decision, which included both a detailed description of the approved project (Annex
         1) and the financial conditions under which the assistance was awarded (Annex 2) (see paragraphs 14 and 15 above). 
         
         
         47
            
          Third, regarding the burden of proof, it is important to note that whilst the Commission is required, as part of the procedure
         laid down in Article 24 of Regulation No 4253/88, as amended, to demonstrate, following a suitable examination of the project,
         that there are irregularities in the way the project has been carried out which justify withdrawal of the assistance, it is
         none the less up to the beneficiary to carry out the project as approved and to ensure full compliance with the conditions
         under which the assistance has been awarded, as set out in the award decision and in the annexes thereto.  Consequently, if
         during its examination the Commission discovers evidence of such irregularities the beneficiary of the assistance must be
         capable of showing that the project has been carried out in full compliance with the relevant provisions and, in particular,
         with the award decision. In particular, it is up to the beneficiary to show that expenditure has actually been incurred, that
         it relates directly to the various operations provided for under the project and that that expenditure is appropriate in the
         light of the objectives of the project.
         
         
         48
            
          In that context, the letter initiating the procedure plays a vital role.  At that stage of the administrative procedure the
         Commission must, following its investigation, set down the various complaints regarding the way in which the project has been
         carried out in a manner that is sufficiently precise to enable the beneficiary to adduce the evidence described above. 
         
         
         49
            
          For that purpose, in accordance with its duty to act in good faith, which stems from the obligation to carry out the project
         in a spirit of partnership and mutual trust, the beneficiary must provide the Commission with all the supporting documents
         and explanations which, in view of the special features of the project and the financial conditions laid down in the annexes
         to the award decision, may appear to it to be required in order to dispel the doubts the Commission has expressed.  As has
         already been held in this context (Case T-216/96  
         Conserve Italia v  
         Commission [1999] ECR II-3139, paragraph 71, and Case T-180/00  
         Astipesca v  
         Commission [2002] ECR II-3985, paragraph 93), it is essential for the effective functioning of the system of inspection and evidence
         introduced in order to verify whether the conditions for granting assistance are met that applicants for, and beneficiaries
         of, such assistance submit to the Commission reliable information which is not liable to mislead it. 
         
         
         50
            
          It is also appropriate, therefore, in the context of an examination of the validity of the contested decision, to assess whether
         the beneficiary of the assistance has fulfilled its obligation to provide the Commission with all the supporting documents
         and explanations which, in view of the special features of the project and the financial conditions laid down in the annexes
         to the award decision, may appear to it to be required in order to ensure that the project has been carried out properly.
         
         
         
         51
            
          Fourth, although the project in question was co-financed by national resources and is therefore subject to national rules,
         the legal context of the contested decision is that determined by Community law, that is to say, in particular, Article 24(2)
         of Regulation No 4253/88, as amended, and the award decision.  The beneficiary cannot therefore claim before the Commission
         merely that it carried out the approved project in accordance with the national rules. 
         
         
         52
            
          Fifth, as regards the applicant's complaint that the Commission failed to provide adequate reasons in the contested decision
         concerning certain irregularities, it should be pointed out that under Article 253 EC the reasons stated for a measure must
         disclose clearly and unequivocally the reasoning of the Community authority which adopted it, so as to make the persons concerned
         aware of the reasons for the measure and thus enable them to defend their rights, and so as to enable the Court to exercise
         its power of review.  The extent of the obligation to state reasons depends on the nature of the measure in question and the
         context in which it was adopted, and on all the legal rules governing the matter in question (Case C-350/88  
         Delacre and Others v  
         Commission [1990] ECR I-395, paragraphs 15 and 16, and Case T-126/97  
         Sonasa v  
         Commission  [1999] ECR II-2793, paragraph 64). 
         
         
         53
            
          In particular, since a decision to reduce Community financial assistance entails serious consequences for the beneficiary
         of that assistance, the statement of the reasons for that decision must clearly show the grounds justifying a reduction in
         the amount of aid initially authorised (Case T-182/96  
         Partex v  
         Commission  [1999] ECR II-2673, paragraph 74, and  
         Sonasa   v  
         Commission, cited above, paragraph 65). 
         
         
         
         B ─
          The first and second irregularities, concerning Mr Panetsos's additional remuneration and the expenses charged in respect
         of some of his activities
          1. The contested decision
         
         
         54
            
          In the first indent of recital 9 in the preamble to the contested decision the defendant noted the following: A monthly sum of GRD 450 000 was charged to the project for the services of Mr Panetsos, who was in charge of the project,
         for the period from September 1996 to August 1997, which represents a total of GRD 5 400 000.  Since, Mr Panetsos continued
         to receive his salary of GRD 689 000/month throughout that period, the sum of GRD 450 000/month is a bonus and not an actual
         cost of the project.  No supporting document or clarification has been submitted by the beneficiary to justify charging that
         additional salary paid to Mr Panetsos to the project, such as, in particular, a copy of Mr Panetsos's contract, documents
         substantiating the payment or documents showing why that expense was charged to the project. (First irregularity.)
         
         
         55
            
          The second indent of recital 9 in the preamble to the contested decision reads as follows: During the first four months of the project, from September to December 1996, the only expenses submitted were the monthly
         payments of GRD 450 000 to Mr Panetsos.  The operations scheduled for those four months in the award decision involved travel
         to the various project sites and the use of cars.  However, no other expenses by way of duty travel, consumables, or salaries
         of other persons involved in the project were declared.  Consequently, the sums charged during that period do not relate to
         any activity connected with the project.  The beneficiary has not submitted any documents to prove that that expenditure was
         related to the objectives of the project. (Second irregularity.)
          2. Arguments of the parties
         
         
         56
            
          The applicant considers, on the one hand, that the defendant's claims in respect of those two irregularities are wrong in
         law and in fact. 
         
         
         57
            
          It considers that Mr Panetsos's additional remuneration was paid in accordance with the award decision.  It points out that
         Mr Panetsos was the principal expert and the scientist in charge of the project and that he performed his tasks accordingly.
          It draws attention to the fact that the Committee approved, by decision of 11 December 1996, the Commission's choice to grant
         financing for the project under Mr Panetsos's responsibility.  The latter's role in the implementation of the project was
         also clear from the interim technical report and the detailed activity report sent to the Commission on 12 May 1999. 
         
         
         58
            
          There was therefore no valid reason to request production of a special report on Mr Panetsos's activities before the first
         phase of the project.  The only way in which doubt could have been cast on the propriety of the remuneration received by Mr
         Panetsos would have been to prove either that the project had not been carried out or that Mr Panetsos had not taken part
         in it, no evidence of which was revealed during the on-the-spot inspection. 
         
         
         59
            
          The applicant states that it had no reason to dispute the amount of remuneration paid to Mr Panetsos.  First, that remuneration
         had been approved in the award decision, second, it was in accordance with the national legislation governing the remuneration
         of university researchers in charge of research programmes and, third, it was appropriate, since it was for services provided
         by an expert of the quality of the person concerned who, moreover, was well known to Commission officials because he had already
         taken part in several projects in the area of agricultural policy.  Moreover, the applicant seeks to draw attention to the
         fact that, under national legislation, there are significant institutional safeguards with regard to the management of expenditure
         incurred by universities. 
         
         
         60
            
          The applicant also asserts that, since the on-the-spot inspection did not show that the project had not been carried out or
         that Mr Panetsos had not taken part in it, the defendant was required to state in detail in the contested decision the reasons
         why Mr Panetsos's remuneration was not paid in conformity with the award decision.  It should also have indicated the sum
         which it considered Mr Panetsos should have received. 
         
         
         61
            
          The defendant rejects the applicant's arguments. 
          3. Findings of the Court
         (a) First irregularity: Mr Panetsos's additional remuneration
          The error of assessment
         
         
         62
            
          The project made provision in respect of each operation, on the one hand, for expenses relating to services to be provided
         by experts and, on the other hand, for expenses relating to administrative staff.  The defendant does not deny that it is
         clear both from the project approved by the Commission and from the various reports and additional information that the applicant
         submitted to it during the administrative procedure that Mr Panetsos, in his capacity as the Director of the Laboratory, was
         both the person in charge of managing the project and the principal scientific expert responsible for carrying it out. 
         
         
         63
            
          Contrary to what the applicant appears to assert, the complaint made by the Commission in the contested decision does not
         therefore, in principle, concern the charging to the project Mr Panetsos's remuneration as such ─ which, it is agreed, was
         provided for in the project ─ or the amount of that remuneration.  Moreover, the defendant has not denied before the Court
         that Mr Panetsos's remuneration was provided for in the budget for the project. 
         
         
         64
            
          However, in the context of that first irregularity, the defendant is complaining that during the administrative procedure
         the applicant did not provide it with documents enabling it to establish that that remuneration corresponded to activities
         which Mr Panetsos engaged in specifically in connection with the implementation of the project and for which he was not already
         being paid through his salary as the Director of the Laboratory. 
         
         
         65
            
          In that connection, it should be pointed out that the Commission stated in Annex 2, points 2 and 5, to the award decision,
         on the one hand, that staffing costs should be directly related to the implementation of the operation and, on the other hand,
         that it was entitled to ask to see any original, or a certified true copy, of any supporting documents in order to check the
         financial reports relating to the various payments. 
         
         
         66
            
          On the basis of those provisions of the award decision and in view of the relevant provisions of the applicable legislation
         and the duty to act in good faith (see paragraph 49 above), the applicant should have known that it was required to be in
         a position to submit to the Commission documents that would show that the expenses incurred were genuine, that they were directly
         connected with implementation of the various operations provided for under the project, and that the amount of those expenses
         was appropriate. 
         
         
         67
            
          It follows therefore that, contrary to what the applicant contends, the Commission was entitled to ask it to establish, on
         the basis of documents such as those mentioned in the first indent of recital 9 in the preamble to the contested decision,
         that Mr Panetsos's remuneration was paid in respect of activities specifically connected with implementation of the project
         and for which he was not already being paid through his salary as the Director of the Laboratory. 
         
         
         68
            
          The applicant does not deny that, as the Commission stated in the first indent of recital 9 in the preamble to the contested
         decision, it did not provide the Commission with either the contract of employment relating to the services which Mr Panetsos
         was to provide in connection with the project, or any other documents that could substantiate Mr Panetsos's remuneration,
         or documents proving that the additional remuneration had actually been paid. 
         
         
         69
            
          Also, although it is true that in its letter of 12 May 1999 and in its observations on the letter initiating the procedure
         the applicant provided the Commission with details of Mr Panetsos's activities in connection with the project, it failed to
         provide any explanation, despite being asked to do so by the Commission in the letter initiating the procedure, of how it
         was possible to check that the remuneration charged to the project corresponded to activities Mr Panetsos had undertaken specifically
         in connection with implementation of the project and for which he was not already being paid through his salary as the Director
         of the Laboratory. 
         
         
         70
            
          The Commission did not therefore make an error of assessment in concluding in the contested decision that the applicant had
         not submitted to it any valid supporting document or clarification in that regard. 
         
         
         71
            
          That conclusion cannot be undermined by the applicant's argument that, in essence, in order to cast doubt on the propriety
         of Mr Panetsos's remuneration the Commission should have shown either that the project had not been carried out or that Mr
         Panetsos had not taken part in it.  First of all, the applicant's argument fails to take into account the fact that it is
         for the beneficiary of the assistance to show that the project in question has been carried out in full compliance with the
         relevant provisions and, in particular, with the award decision (see paragraph 47 above).  Second, since the term  
         irregularity within the meaning of Article 24 of Regulation No 4253/88, as amended, includes irregularities affecting the management of
         the project (see paragraph 45 above), the applicant cannot validly contend that the sanctions provided for in that provision
         should only apply where the operation being financed has not been carried out in full or in part.  It is not sufficient for
         the applicant to show that the project approved by the Commission in the award decision has actually been properly carried
         out.  The applicant must also be in a position to prove that every item of the Community contribution corresponds to an actual
         service that was essential for the implementation of the project. 
         
         
         72
            
          Nor can the applicant merely rely on the fact that it acted in accordance with national law and that the expenses incurred
         were subjected to a very strict system of verification at national level.  First, save where there is a specific provision
         of Community law in that regard, it is only in relation to Community law, in particular in relation to Article 24 of Regulation
         No 4253/88, as amended, and the award decision together with its annexes, that the propriety of the applicant's conduct with
         regard to the award of Community assistance should be measured (see paragraph 51 above).  Second, it should be remembered
         (see paragraph 65 above) that the financial provisions in the award decision make clear that in order for the financial reports
         relating to the various payments to be checked the applicant was required to be in a position to submit to the Commission
         documents that would show that the expenses incurred were genuine, that they were directly connected with implementation of
         the various operations provided for under the project, and that the amount of those expenses was appropriate.  Although the
         Commission may consider it appropriate to take into account verification procedures at national level, the fact remains that,
         at the current stage of Community legislation and on the basis of the financial provisions in the award decision, the Commission
         was entitled to ask the applicant to produce supporting documents enabling it to conduct its own checks on the expenditure
         charged to the project. 
         
         
         73
            
          In the light of the above, it must be concluded that the Commission did not make an error of assessment in respect of the
         first irregularity raised in the contested decision. 
          Breach of the obligation to state reasons
         
         
         74
            
          As regards the applicant's complaint that the defendant did not set out in detail the reasons for which it considered that
         Mr Panetsos's remuneration had not been paid in compliance with the award decision, it should be noted that in the first indent
         of recital 9 in the preamble to the contested decision the Commission stated that Mr Panetsos had received, in addition to
         his normal salary, remuneration for his duties as the person in charge of the project, which could not be regarded as a genuine
         cost of the project, since the applicant had not supplied any supporting document or clarification to justify charging that
         additional salary to the project. Therefore, in the light of the context of the administrative procedure that preceded the
         adoption of the contested decision, the Commission set out sufficiently clearly in that decision why it considered that Mr
         Panetsos's additional remuneration did not constitute a genuine cost of the project and could therefore not be charged to
         the project. 
         
         
         75
            
          As regards the applicant's complaint that the defendant did not state the sum that Mr Panetsos should have received, it should
         be noted first of all (see paragraph 47 above) that it was for the applicant to prove that there was a direct link between
         Mr Panetsos's specific activities in connection with the project and the expenses charged in that regard.  Contrary to what
         the applicant contends, it was not incumbent upon the Commission to provide such proof since, clearly, it did not have the
         information needed in order to make the calculations suggested by the applicant.  It should also be observed that the Commission
         did not cast doubt on Mr Panetsos's participation in the project or the amount of his remuneration as such, but it complained
         that there was no evidence that that remuneration was for activities which Mr Panetsos engaged in that were directly connected
         to specific aspects of the project for which he was not already receiving remuneration through his salary as the Director
         of the Laboratory, a point which, in the light of the context of the administrative procedure, is adequately explained in
         the contested decision (see preceding paragraph).  There cannot therefore be any complaint, as the applicant suggests, that
         the Commission did not mention the sum Mr Panetsos should have received. 
         
         
         76
            
          Consequently, the Commission provided adequate reasons in the contested decision on that point. 
         (b) Second irregularity: expenses relating to some of Mr Panetsos's activities
         
         
         77
            
          As stated in points 4 and 7 of Annex 1 to the award decision, the project consisted of nine different operations.  Implementation
         of five of those operations was to start during the first three months of the project.  As part of the first operation areas
         of burnt forest were to be selected for the purposes of regeneration of forests devastated by fire.  In order to carry out
         that operation, which was scheduled to take place during the first four months of the project, the award decision provided
         for the expenses of experts, administrative and technical staff, and travel expenses.  As part of the second operation, which
         was scheduled to take place between the second and thirteenth months of the project and during which, in particular, work
         in preparation for carrying out the project of forest regeneration as such was due to take place, the project made provision
         for expenditure on the construction of fences and the creation of fire breaks and access routes, in addition to the costs
         of experts, administrative and technical staff and travel expenses.  Lastly, as part of the third to the fifth operations,
         which were scheduled to take place during the third and fourteenth months of the project and during which the first part of
         the project as such was due to be carried out, in addition to the costs of experts, administrative and technical staff and
         travel expenses, the project provided for various expenses in connection with forestry work. 
         
         
         78
            
          It is agreed between the parties that, contrary to what was thus provided in the award decision, during the first four months
         of implementation of the project, namely between September and December 1999, only Mr Panetsos's monthly remuneration of GRD 450
         000 was charged to the project. 
         
         
         79
            
          Faced with those facts in the letter initiating the procedure, the applicant explained in essence in its observations on that
         letter that it had not been possible to start the project until later than scheduled and that therefore Mr Panetsos had had
         to undertake additional work in preparation for implementation of the project.  In that connection, it should be observed
         that, even if that argument were well founded, under paragraph 1 of Annex 2 to the award decision the Commission was to be
         informed in advance of any amendment to the project, including extension of the project's various operations, and that such
         amendments could be made only after the Commission had given its agreement.  The applicant does not even argue that it informed
         the Commission of such an amendment to the implementation of the project. 
         
         
         80
            
          The Commission was therefore entitled to conclude in the contested decision that the project had not been carried out during
         the first four months according to the conditions laid down in the award decision, and that the applicant had not shown that
         Mr Panetsos's remuneration in respect of those four months was for activities directly connected with the implementation of
         the project. 
         
         
         81
            
          Consequently, the Commission did not make an error of assessment in respect of the second irregularity raised in the contested
         decision. 
         
         
         
         C ─
          The third and sixth irregularities: Mrs Babaliti's remuneration and travel expenses
          1. The contested decision 
         
         
         82
            
          In the third indent of recital 9 in the preamble to the contested decision, the Commission noted the following: A sum of GRD 250 000 a month was charged to the project for the period from March 1997 to February 1998, plus extras for April
         and December 1997, totalling GRD 3 356 780, in respect of the services of Mrs Babaliti.  No activity report substantiating
         Mrs Babaliti's services was submitted to the Commission's inspectors during the on-the-spot inspection.  The additional information
         sent by the beneficiary does not substantiate the sum declared in relation to the objectives of the project. (Third irregularity.)
         
         
         83
            
          In the sixth indent of recital 9 in the recital to the contested decision the Commission noted the following: The beneficiary declared a sum of GRD 437 578 in respect of Mrs Babaliti's duty travel expenses.  Since her tasks as set out
         in her contract were to analyse data and produce graphics, the need for her to visit the project sites has not been substantiated.
          The beneficiary has not submitted any documents to justify such duty travel in relation to the objectives of the project. (Sixth irregularity.)
          2. Arguments of the parties
         
         
         84
            
          As regards the third irregularity, the applicant refers to Mrs Babaliti's contracts of employment dated 26 February, 22 May
         and 17 December 1997 and the detailed report on Mrs Babaliti's activities, attached to the letter of 12 May 1999, and to the
         explanations contained in its observations on the letter initiating the procedure, and contends that Mrs Babaliti's duty travel
         was described in detail in those documents. It states, in particular, that it is clear from the detailed report on Mrs Babaliti's
         activities that her work had been to help process data using statistical methods, to set up a database and to analyse data.
          During the on-the-spot inspection the Commission's inspectors found that all the data, analyses, plans and the text of the
         technical report had been computerised.  That shows that Mrs Babaliti did actually carry out those tasks and that the remuneration
         paid to her was justified.  In addition, it is clear from the detailed report on Mrs Babaliti's activities that she had subsequently
         been entrusted with the tasks of drawing up and sending to the Committee all the documents to support the project expenditure.
         
         
         
         85
            
          As for the sixth irregularity, the applicant refers to the travel expenses forms and the detailed report on Mrs Babaliti's
         activities that were annexed to the letter of 12 May 1999, and to the explanations contained in its observations on the letter
         initiating the procedure.  In its opinion, it is clear from these that Mrs Babaliti was required to travel to the project
         sites in connection with her activities as a forestry expert, in particular in order to view the pilot areas, to check data
         and to collect more data to be recorded and analysed. 
         
         
         86
            
          The defendant contends, as regards the third irregularity concerning Mrs Babaliti's remuneration, that her contracts of employment
         did not stipulate sufficiently precisely the duties that she was to perform in connection with the project.  The applicant's
         arguments cannot be accepted, in the Commission's opinion, since they would preclude checks on whether services were needed
         in order to carry out the project, on whether each member of the staff recruited actually provided any services and, hence,
         on whether the expenditure declared was directly related to the specific requirements of the project.  In those circumstances
         the defendant considers that no report and no evidence of Mrs Babaliti's services were submitted. 
         
         
         87
            
          As regards the sixth irregularity, concerning Mrs Babaliti's travel expenses, the defendant denies in its defence that it
         received any documentary evidence of these whatsoever.  Following a written question from the Court, the defendant admitted,
         however, that it had been mistaken and that it did receive the travel expenses forms referred to by the applicant during the
         administrative procedure.  It considers, however, that due to their brief nature and since they were not accompanied by reports
         describing the precise nature of the tasks performed, the documents did not prove that Mrs Babaliti did actually travel for
         the purposes of the project.  Lastly, the defendant points out that there are no supporting documents relating to hotel expenses
         and subsistence. 
          3. Findings of the Court
         (a) Third irregularity: Mrs Babaliti's remuneration
          Introduction
         
         
         88
            
          As already stated in paragraphs 65 and 66 above, on the basis of the provisions of the award decision the applicant should
         have known that it was required to be in a position to submit to the Commission supporting documents and explanations that
         would show that Mrs Babaliti's remuneration, as charged to the project, was directly connected with implementation of various
         operations provided for under the project, and that the amount of those expenses was appropriate in relation to the objectives
         of the project. 
         
         
         89
            
          It is in that context that consideration should be given to whether the Commission made an error of assessment in stating
         in the third indent of recital 9 in the preamble to the contested decision that Mrs Babaliti's remuneration could not be charged
         to the project since  
         no activity report substantiating Mrs Babaliti's services [had been] submitted to the Commission's inspectors during the on-the-spot
         inspection and that  
         the additional information sent by the beneficiary [did] not substantiate the sum declared in relation to the objectives of
         the project . 
         
         
         90
            
          In that connection, it is appropriate to summarise in detail the relevant facts as they appear from the file. 
          Detailed summary of the relevant facts
         
         
         91
            
          First of all, it is appropriate to note that in point 7 of Annex 1 to the award decision the project made provision, in respect
         of each operation, for staffing expenses for the recruitment of  
         assistants and  
         administrative staff. 
         
         
         92
            
          On 9 July 1998, when the Commission informed the applicant that it had initiated a general audit, including an audit of the
         applicant's project, it requested the applicant to send it inter alia a  
         list of all the supporting documents relating to the eligible expenditure [that had been] incurred in connection with [implementation
         of] the project, grouped according to the type of cost, together with a  
         certified true copy of each supporting document relating to the project.  In reply to that letter, the applicant submitted to the Commission on 29 July 1998 various tables relating to the expenses
         charged to the project.  The on-the-spot inspection took place from 9 to 12 November 1998. 
         
         
         93
            
          Subsequently, by letter of 21 April 1999 the Commission requested the applicant to produce inter alia a  
         list of all the supporting documents relating to [the] application for payment [of the second advance], classified according
         to each of the operations and sub-operations provided for in point 7 of Annex 1 to the contested decision, that list to be
         presented in such a way that direct links could be established with the statement of expenditure and the invoices ... sent
         previously,  
         a detailed report on the activities of all the people who had taken part in the project (duties, tasks completed, time taken
         ...), in order to justify the staffing costs charged to the project (salaries and social security contributions, contracts
         of employment, travel and accommodation expenses) and a  
         copy of the contracts of employment of all the people who had taken part in the work at the different project sites. 
         
         
         94
            
          In reply, by letter of 12 May 1999 the applicant submitted to the Commission first of all, with regard to Mrs Babaliti's remuneration,
         a table giving for the period from 1 September 1996 to 31 October 1998, operation by operation, the number of months for which
         Mrs Babaliti had received remuneration, together with the monthly amount and total remuneration.  The table also showed, under
          
         duties, that Mrs Babaliti was working as an  
         assistant. 
         
         
         95
            
          Second, the applicant submitted to the Commission a  
         detailed activity report in which the duties and tasks performed by Mrs Babaliti were described as follows: Babaliti Konstantina.  Forestry worker.  She took part in planning the sampling and recording of data, and in setting up a
         database on the computer of the central office.  She also carries out statistical analyses of all the data collected on site
         and helped to prepare the interim technical report.  She visits pilot areas, providing assistance in determining the impact
         of the various tasks and in collecting data.  She is engaged in the major task of preparing the supporting documents for each
         payment and expense, in accordance with the procedures and regulations [of the] Committee.
         
         
         96
            
          Third, the applicant sent to the Commission copies of Mrs Babaliti's contracts of employment, which mentioned in particular
         the project and, except for one of the contracts, gave the following description of her duties:  
         data processing and graphics. 
         
         
         97
            
          The Commission noted the following in the letter initiating the procedure: 
         
         2.1
          No activity report substantiating Mrs Babaliti's services was submitted to the Commission's inspectors during the on-the-spot
         inspection.  It is clear from her contract that she was recruited to carry out tasks relating to analysis of data and graphics
         work.  No other activity is provided for in the contract. 
         
         
         2.2
          The additional information sent by the beneficiary dated 12 [May] 1999 giving a brief description of the tasks carried out
         by Mrs Babaliti in connection with the project does not fully correspond to the description of the tasks set out in her contract
         and, moreover, does not substantiate the sum declared
         . 
         
         
         98
            
          In its observations on the letter initiating the procedure the applicant replied in essence that Mrs Babaliti had been recruited
         in accordance with the proper national legal procedure and that the relevant contracts had been made available to the inspectors
         at the time of the on-the-spot inspection.  The applicant explained that duties were always described succinctly in such contracts
         but that the person in charge of the project had the right and the duty, as stated in the contract, to use the staff allocated
         to the project in the most rational way, depending on their qualifications and according to need. 
         
         
         99
            
          The applicant also described in greater detail and more fully than in the letter of 12 May 1999 Mrs Babaliti's duties, her
         specialist training as a forestry engineer and her relevant professional experience, and the duties she had performed in connection
         with the project.  The applicant stated in particular in that context that from March 1997 to February 1998 Mrs Babaliti 
         
         [had] participated in delimiting the pilot areas, devising sampling procedures, drawing up instructions in preparation for
         receiving material, and in setting up a database for all the information obtained from the six pilot areas, covering a total
         of 36 hectares.  The applicant also explained that  
         Mrs Babaliti [had] processed all the data using statistical methods (measurements of thousands of plants for the six pilot
         areas), from which she [had] prepared the graphics shown in the interim report and that, in addition,  
         the data collected from the pilot areas [had been] analysed using various statistical methods in order to present them in
         the form of publications in reputable periodicals or at conferences.  The applicant explained that,  
         as she was the only assistant with training in forestry, Mrs Babaliti [had] taken part in checking various operations on the
         basis of samples, [and] in particular checking the results of the measurements recorded. 
         
         
         100
            
          Furthermore, also in its observations on the letter initiating the procedure, the applicant stated that Mrs Babaliti was responsible
         for  
         preparing all the supporting documents required in respect of staff travel, the delivery of consumables, the employment of
         workers in the pilot areas and the employment of specialists, that she had  
         taken part in the drawing up of contracts for work and other formal documents submitted to the Committee ... for approval and that she  
         [had] taken responsibility for providing documents supporting the way in which expenses approved by the Committee were incurred.  Lastly, the applicant stated that  
         it would have been impossible to carry out the project without a full-time assistant. 
         
         
         101
            
          Finally, in the contested decision the Commission adopted the view already cited in paragraph 82 above. 
          Analysis of the facts
         
         
         102
            
          First of all, it is clear from the above account of the facts that even though, on the basis of the information in the file,
         it is correct that, as the Commission stated in the third indent of recital 9 in the preamble to the contested decision, no
         report on Mrs Babaliti's activities was submitted to the Commission's inspectors  
         during the on-the-spot inspection, the applicant subsequently provided in its letter of 12 May 1999 a description of the duties which Mrs Babaliti had performed
         in connection with the project.  The fact that that report was not available during the on-the-spot inspection is not sufficient
         to prove that there was an irregularity, since later in the administrative procedure the applicant provided supporting documents
         and adequate explanations to substantiate those expenses. 
         
         
         103
            
          Next, in the letter initiating the procedure the Commission criticised the detailed activity report attached to the letter
         of 12 May 1999. It stated, first, that the report contained only a  
         brief description of the tasks carried out by Mrs Babaliti and, second, that the tasks  
         [did] not fully correspond to the description of the tasks set out in her contract.  The Commission repeated those complaints in the contested decision, stating, in respect of the first, that the additional
         information sent by the applicant did not substantiate the sum declared in relation to the objectives of the project.  The
         Commission did not deny, however, either that the services provided by Mrs Babaliti were genuine or the probative value as
         such of the documents provided by the applicant during the administrative procedure. 
         
         
         104
            
          It is therefore necessary to consider whether those two complaints made by the Commission with regard to Mrs Babaliti's remuneration
         were well founded. 
         ─ The first complaint, alleging that the applicant did not submit a sufficiently detailed report to the Commission concerning
         Mrs Babaliti's activities
         
         
         105
            
          In response to the letter initiating the procedure, the applicant described the tasks performed by Mrs Babaliti in substantially
         greater detail in its observations on that letter. 
         
         
         106
            
          In that regard, it is clear from point 4 of Annex 1 to the award decision that the first five operations in connection with
         the project ─ operations that were to be carried out during the first fourteen months of its implementation ─ related mainly
         to the selection of areas of forest, development of those areas in terms of infrastructure (constructing fences and access
         routes), preparation of an inventory of the vegetation found on those areas, work in preparation for the reforestation of
         those areas (felling, removal of vegetation) and collecting statistics. 
         
         
         107
            
          It is apparent from the description of her tasks supplied to the Commission that Mrs Babaliti carried out a variety of work
         in direct relation to those objectives of the project.  It is clear in essence that Mrs Babaliti supervised the delimitation
         of the pilot areas, prepared and collected data with regard to information relating to the six pilot areas, processed those
         data using statistical methods, participated in checking various operations on the basis of samples and carried out various
         administrative tasks in connection with the actual implementation of the various operations in connection with the project
         by other members of staff and by outside contractors.  The applicant also stated that the tasks described related to the period
         between March 1997 and February 1998. Furthermore, annexed to its letter of 12 May 1999, the applicant submitted to the Commission
         with regard to Mrs Babaliti's remuneration a table giving, for the period from 1 September 1996 to 31 October 1998, operation
         by operation, the number of months for which Mrs Babaliti had received remuneration, together with the monthly amount and
         total of that remuneration. 
         
         
         108
            
          It was not for the Court to substitute its assessment for that of the Commission as to whether, by supplying a more detailed
         description of the tasks in its observations on the letter initiating the procedure, the applicant provided adequate evidence,
         as it was required to do (see paragraph 88 above), that there was a direct link between, on the one hand, the expenses relating
         to Mrs Babaliti's remuneration and, on the other hand, the various operations provided for under the project, and whether
         the amount of those expenses was appropriate in relation to the objectives of the project. 
         
         
         109
            
          It is clear, however, from the documents in the file, that the simple conclusion which the Commission drew from them in the
         contested decision, namely that the applicant had submitted  
         no activity report substantiating Mrs Babaliti's services and that the  
         additional information sent by the beneficiary [did] not substantiate the sum declared in relation to the objectives of the
         project, a conclusion which was not accompanied by any analysis of the information sent, cannot be upheld. 
         
         
         110
            
          By contrast, it is apparent from the above analysis that the applicant supplied detailed information to show, on the one hand,
         that there was a direct link between the expenses relating to Mrs Babaliti's remuneration and the various operations in connection
         with the project and, on the other hand, that the amount of those expenses was appropriate in relation to the objectives of
         the project. 
         
         
         111
            
          In reply to the Court's written questions as to what additional information the applicant should have supplied in that regard,
         the defendant stated that the applicant should have submitted  
         detailed reports showing on a monthly basis or for each period Mrs Babaliti's precise work and progress, in order for the
         remuneration paid to her to be checked and substantiated. 
         
         
         112
            
          The Commission is entitled to ask beneficiaries of Community assistance for such information if it considers that it is needed
         in order to establish that the project has been properly implemented.  It may indeed be necessary, in order to check that
         there is a direct link between the staffing expenses charged to the project and the various operations provided for under
         the project and whether the amount of those expenses is appropriate in view of the objectives of the project, to have reports
         containing, for each month or for any other specific period, detailed information on the progress achieved in connection with
         the project, which is being financed by Community resources. 
         
         
         113
            
          What is more, the beneficiary of the assistance, being responsible for the management of the project, is in the best position
         to know with what information it should supply the Commission in order to justify the expenses charged to the project (see
         to that effect Case T-81/95  
         Interhotel v  
         Commission [1997] ECR II-1265, paragraph 47). 
         
         
         114
            
          As regards the present case, however, it should be noted that in the only document in which the Commission did specify to
         some extent the content those reports should have, namely the letter of 21 April 1999 (see paragraph 93 above), it asked the
         applicant to supply a report stating the duties performed, tasks completed and time taken. In its letter of 12 May 1999 and
         in its observations on the letter initiating the procedure, the applicant plainly did provide detailed information on the
         duties being performed and the tasks completed by Mrs Babaliti, and the time taken. 
         
         
         115
            
          The applicant thus responded, in accordance with its duty to act in good faith, which stems from the obligation to carry out
         the project in a spirit of partnership and mutual trust, to the requests for information made by the Commission regarding
         Mrs Babaliti's activities.  Even though, as was stated in paragraph 112 above, the Commission was entitled to request more
         information, for example the information referred to in its replies to the Court's written questions, the applicant had already
         supplied detailed information in that respect and none of the documents in the file shows that the applicant was not in a
         position to meet such requests, or was not prepared to do so, had the requests been made to it at the appropriate time during
         the administrative procedure. 
         
         
         116
            
          If, in that particular situation, the Commission considered that in order to carry out a suitable examination of the project
         it needed more detailed information than that already provided, it should have given the beneficiary sufficiently precise
         indications to enable the latter to give it that information before the procedure was closed and the assistance withdrawn
         (see paragraphs 47 and 48 above).  It is for the beneficiary of the assistance to provide the Commission with evidence that
         the expenses incurred are justified in relation to the objectives of the project.  Also, as it was responsible for the management
         of the project, the applicant was, in principle, in the best position to know what information it should supply to the Commission
         (see paragraph 113 above).  However, as is apparent from paragraphs 105 to 107 above, in this particular case the applicant
         had replied in detail to the Commission's requests.  If in such a case the Commission considered none the less that it needed
         to obtain further information to check whether the project was being properly implemented, it should, unless it was to make
         the burden of proof on the applicant impossible, have given it sufficiently precise indications as to what information it
         still required and should not merely have rejected the information submitted as being inadequate. 
         
         
         117
            
          Consequently, because it had failed to give sufficiently precise indications, the Commission could not properly complain in
         the contested decision that the applicant had not submitted to it a report on Mrs Babaliti's activities which was sufficiently
         detailed to substantiate the charging of her remuneration to the project, nor could it complain that the additional information
         the applicant sent it during the administrative procedure did not substantiate the sum declared. 
         ─ The second complaint, alleging that the activities described in the letter of 12 May 1999 did not correspond to Mrs Babaliti's
         duties as set out in her contracts of employment
         
         
         118
            
          In its observations on the letter initiating the procedure the applicant gave inter alia the following two explanations: first,
         the applicant explained that as a rule contracts it concluded contained only a brief description of the duties of the employees
         concerned and that, under the contract, Mr Panetsos had the right and the obligation, on the basis of the contract, to specify
         those duties in greater detail so that the project would be carried out under optimum conditions; second, the applicant described
         Mrs Babaliti's duties fully and in detail, explaining that, contrary to what might appear at first sight from the brief description
         given in the contract, the person concerned was responsible for a large range of tasks in connection with the project (see
         paragraph 99 above). 
         
         
         119
            
          Consequently, during the administrative procedure the applicant did show the Commission that the contractual relationship
         with Mrs Babaliti was not limited to the duties set out in her contracts of employment. 
         
         
         120
            
          In such circumstances, the Commission could not, without inspecting the information submitted by the applicant during the
         administrative procedure, dismiss as inadequate proof all the information supplied by the applicant, in addition to that contained
         in her contracts of employment, with regard to the tasks Mrs Babaliti had carried out, adhering solely to the reasoning contained
         in the letter initiating the procedure. 
         
         
         121
            
          Consequently, the Commission was also wrong to hold against the applicant the fact that the activities described in the letter
         of 12 May 1999 did not correspond to Mrs Babaliti's duties as set out in her contracts of employment. 
         
         
         122
            
          In the light of the above, the Commission made an error of assessment in respect of the third irregularity raised in the contested
         decision. 
         (b) Sixth irregularity: Mrs Babaliti's duty travel expenses
         
         
         123
            
          In point 2 of Annex 2 to the award decision the Commission stated that  
         travel costs should relate directly to the implementation of the operation and the amount of such costs should be sufficient
         to cover the expenses for the operation. 
         
         
         124
            
          The applicant should therefore have known that it was required to be in a position to submit to the Commission documents that
         would show that there was a direct connection between Mrs Babaliti's duty travel expenses and the implementation of the various
         operations provided for under the project, and that the amount of those expenses was appropriate in relation to the objectives
         of the project. 
         
         
         125
            
          It is in that context that consideration should therefore be given to whether the Commission made an error of assessment when
         it stated in the contested decision that Mrs Babaliti's duty travel expenses could not be charged to the project because,
         in view of the description of her tasks given in her contracts of employment, there was no need for her to travel to project
         sites in connection with her duties, and in view of the failure of the applicant to submit any documents justifying such travel
         in the light of the objectives of the project. 
         
         
         126
            
          In that regard, it is apparent from the file that, in its letters of 9 July 1998 and 21 April 1999, the Commission asked the
         applicant to provide it inter alia with supporting documents relating to all the expenditure charged to the project (see paragraphs
         92 and 93 above) and also Mrs Babaliti's contracts of employment. Attached to its letter of 12 May 1999, in connection with
         Mrs Babaliti's duty travel expenses, the applicant submitted to the Commission, in addition to the detailed activity report
         and the contracts of employment mentioned in paragraphs 95 and 96 above, a table headed  
         Classification of travel expenses in respect of each operation. 
         
         
         127
            
          Subsequently, in the letter initiating the procedure the Commission noted the following with regard to Mrs Babaliti's duty
         travel expenses:  
         Since [Mrs Babaliti's] tasks were to analyse data and produce graphics, the need for her to visit the project sites does not
         appear to be demonstrated.
         
         
         128
            
          In its observations on the letter initiating the procedure, the applicant stated (see paragraph 99 above) that Mrs Babaliti's
         duties were those of a forestry engineer and set out the various tasks that had been entrusted to her in addition to those
         expressly mentioned in her contracts of employment.  The applicant considered on that basis that Mrs Babaliti's journeys were
         necessary for the purposes of implementing the project.  The applicant also sent the Commission by way of supporting documents
         the forms relating to Mrs Babaliti's travel, which were signed by Mr Panetsos and on which he had certified that the information
         supplied was correct. 
         
         
         129
            
          First of all, it is clear from the above that on the basis of the job description contained in Mrs Babaliti's contracts of
         employment on its own it was reasonable for the Commission to have doubts as to the need for Mrs Babaliti to travel to the
         various project sites.  As was stated in paragraph 96 above, those contracts merely stated that Mrs Babaliti was required
         to analyse data and produce graphics, tasks which at first sight do not require the person concerned to visit the various
         sites, and the applicant does not deny this. 
         
         
         130
            
          However, as was stated in paragraphs 95 and 103 above, in its letter of 12 May 1999 and in its observations on the letter
         initiating the procedure, the applicant provided the Commission with a full and detailed description of Mrs Babaliti's duties.
          The applicant thus demonstrated during the administrative procedure that the contractual relationship with Mrs Babaliti was
         not limited to the duties set out in the terms of her contracts of employment (see paragraph 119 above). 
         
         
         131
            
          In the letter initiating the procedure and in the contested decision the Commission failed to take that information into account
         and merely reasserted that the duties set out in the contract did not correspond to the tasks carried out. 
         
         
         132
            
          It is true that if the duties set out in the contract of a person working on a project financed by Community resources do
         not correspond to the tasks which that person has actually carried out and for which expenses are charged this may provide
         evidence of the existence of an irregularity within the meaning of Article 24 of Regulation No 4253/88, as amended, if that
         discrepancy makes it impossible to verify whether such expenses need to be incurred for the purposes of carrying out the project.
          The Commission was therefore correct in principle to raise that matter during the administrative procedure in order to enable
         the applicant to provide the relevant explanations.  The Commission could also, for example, have stipulated in the conditions
         attached to award decisions, that a detailed description of the duties of the people working on the project ─ a description
         which beneficiaries are required to provide in any case (see paragraph 124 above) ─ must also appear in the contracts of employment
         themselves. 
         
         
         133
            
          However, in the present case, first, the award decision did not contain any stipulation to that effect.  Second, the applicant
         demonstrated during the administrative procedure that the contractual relationship with Mrs Babaliti was not limited to the
         duties set out in her contracts of employment.  Consequently, by basing its reasoning simply on the fact that the duties stated
         in Mrs Babaliti's contracts of employment did not correspond to the activities described, the Commission did not conduct a
         suitable examination of the implementation of the project, within the meaning of Article 24 of Regulation No 4253/88, as amended,
         (see paragraph 47 above) before closing the procedure, since it failed to take into account the explanations supplied by the
         applicant during the administrative procedure. 
         
         
         134
            
          In addition, as regards the forms relating to Mrs Babaliti's travel which, as the defendant acknowledged in response to a
         written question from the Court, the applicant did indeed send it during the administrative procedure, those supporting documents
         gave the names of the project and of Mrs Babaliti, the dates and the number of days of her journeys, the sites visited and,
         apart from two of those forms, a description of the purposes of the journeys concerned.  Thus it was stated on those forms
         that at those sites Mrs Babaliti had undertaken the  
         selection of plantations in the regions devastated by fire, the  
         delimitation of the pilot areas, the  
         supervision of felling or the  
         supervision of the construction of fences. 
         
         
         135
            
          In the defence and following oral questions from the Court at the hearing, the Commission asserted that those documents were
         not accompanied by reports describing the precise nature of the tasks Mrs Babaliti had performed in the course of her travel
         and could not therefore be accepted as supporting documents. 
         
         
         136
            
          For the reasons already given in paragraph 112 above, the Commission is entitled to ask beneficiaries of Community assistance
         for more detailed information if it considers that such information is needed in order to establish that the project has been
         properly implemented.  It may indeed, in specific circumstances, be necessary, in order to check that there is a direct link
         between the duty travel expenses charged to the project and the various operations provided for under the project and whether
         the amount of those expenses is appropriate in view of the objectives of the project, to have available special reports for
         each particular journey. 
         
         
         137
            
          Although it is not for the Court to substitute its own assessment of those documents for that of the Commission, the fact
         remains that in the present case the supporting documents supplied by the applicant during the administrative procedure should
         not have been dismissed as lacking any probative value, so that the Commission should not, without asking the applicant to
         send more detailed information, have concluded from them that there were irregularities within the meaning of Article 24 of
         Regulation No 4253/88, as amended, in the implementation of the project and decided to withdraw the assistance.  By so doing
         the Commission deprived the applicant of the opportunity of providing information which, according to the Commission, was
         needed in order to prove whether the expenses incurred were justified in relation to the objectives of the project. 
         
         
         138
            
          Therefore, because it did not give more precise indications as to what supporting documents and what additional explanations
         the applicant should have provided, the Commission could not validly complain in the contested decision that the applicant
         had not submitted to it the documents that would enable it to justify Mrs Babaliti's duty travel expenses in relation to the
         objectives of the project. 
         
         
         139
            
          Although the defendant stated in the defence that the applicant had also failed to submit to it during the administrative
         procedure any supporting documents relating to hotel and subsistence expenses incurred in respect of Mrs Babalati's journeys,
         the Commission did not raise that complaint in the contested decision.  There it merely complained that the applicant had
         failed to demonstrate that there was a direct link between the expenses charged and the operations carried out and that those
         expenses were limited to what was necessary in order to implement the project.  Therefore, the absence of supporting documents
         relating to hotel and subsistence expenses incurred in respect of Mrs Babalati's journeys, even if it were established, cannot
         properly be relied on in the context of consideration of the validity of the contested decision. 
         
         
         140
            
          Consequently, the Commission made an error of assessment as regards the sixth irregularity. 
         
         
         
         D ─
          The fourth irregularity: the daily allowance paid to Mr Panetsos
          1. The contested decision
         
         
         141
            
          The fourth indent of recital 9 in the preamble to the contested decision reads as follows: The daily allowance charged to the project, which was received by Mr Panetsos as a refund for his duty travel expenses, was
         GRD 33 000.  The other people involved in the project received an allowance of GRD 12 000.  Consequently, the amount charged
         in respect of Mr Panetsos's duty travel expenses is excessive and unjustified.  The beneficiary did not submit any document
         to the Commission to justify that extra amount in the case of Mr Panetsos.
          2. Arguments of the parties
         
         
         142
            
          The applicant contends that in its observations on the letter initiating the procedure it had already stated that, apart from
         Mr Panetsos, all the other people involved in the project received their hotel expenses, which were paid by the Committee
         on submission of supporting documents, separately from the daily allowance of GRD 12 000.  However, it points out that Mr
         Panetsos received a daily allowance of GRD 33 000, which was exactly the amount provided for in the budget for the project,
         as approved.  That allowance included the expenses for his bed and board and in the end amounted to a figure that was almost
         identical to the amount received by the other people involved in the project.  The applicant produces several travel schedules
         and invoices to show this. 
         
         
         143
            
          The defendant rejects the applicant's arguments. 
          3. Findings of the Court
         
         
         144
            
          As was held in paragraphs 123 and 124 above, under the provisions of the award decision the applicant should have known that
         it was required to be in a position to submit to the Commission documents that would show that the duty travel expenses had
         actually been incurred and that they were directly connected with the implementation of the various operations provided for
         under the project, and that the amount of those expenses was appropriate in relation to the objectives of the project. 
         
         
         145
            
          The breakdown of the budget estimate for the project, as given in point 7 of Annex 1 to the award decision, referred to  
         travel and subsistence expenses in respect of seven of the nine operations.  In addition, details of how those expenses were to be calculated were given
         in connection with the budget for the first operation.  The number of days' travel was to be multiplied by a flat-rate sum
         of ECU 109 (GRD 33 000).  The same calculation, although not so clearly stated, was to be found also in the breakdown of the
         other operations concerned. 
         
         
         146
            
          The applicant is therefore right to rely on the fact that the project provided for a flat-rate sum of GRD 33 000 in respect
         of certain travel expenses. 
         
         
         147
            
          However, in the contested decision the Commission did not question those sums as such.  On the contrary, it stated that it
         had discovered during the verification of the project that there was an inconsistency concerning travel expenses, in that
         GRD GRD 33 000 was charged to the project for journeys made by Mr Panetsos whilst the allowance in respect of journeys by
         other members of staff was only GRD 12 000.  It therefore pointed out in the letter initiating the procedure the fact that
         duty travel expenses in respect of journeys by Mr Panetsos appeared to be excessive in relation to those of the other people
         working on the project, and that those expenses therefore seemed to be unjustified.  In its observations on the letter initiating
         the procedure the applicant replied that the difference was due to the fact that the duty travel allowance for Mr Panetsos
         included bed and board, whereas a specific allowance was given to the other members of staff to cover hotel expenses. 
         
         
         148
            
          It was therefore reasonable for the Commission to conclude from those explanations that the travel allowance paid to Mr Panetsos
         was not justified in comparison with the travel allowance paid to the other members of staff. 
         
         
         149
            
          Since that allowance was paid to Mr Panetsos irrespective of whether he had actually incurred hotel and subsistence expenses
         during his travel, that method of calculating the travel allowance made it impossible for the Commission to check whether
         such expenses had actually been incurred and whether they were appropriate.  The applicant did not submit any supporting documents
         to the Commission, such as hotel or restaurant bills, so that it could check in respect of each of those journeys whether
         the expenses represented the actual costs incurred and whether the amount of the flat-rate allowance was appropriate, although,
         according to the complaint made in the letter initiating the procedure, the applicant should have known that it was required
         to supply such supporting documents. 
         
         
         150
            
          The Commission did not therefore make an error of assessment in respect of the fourth irregularity raised in the contested
         decision. 
         
         
         
         E ─
          The fifth irregularity, concerning Mr Panetsos's travel expenses
          1. The contested decision
         
         
         151
            
          The fifth indent of recital 9 in the preamble to the contested decision reads as follows: Travel expenses incurred by Mr Panetsos were charged on the basis of a mileage allowance.  Since those journeys were made
         in a car financed by the project those expenses are not justified.  Furthermore, no document justifying those journeys in
         relation to the objectives of the project has been submitted to the Commission.
          2. Arguments of the parties
         
         
         152
            
          The applicant maintains that it has already raised in its observations on the letter initiating the procedure the fact that
         the budget for the project (award decision, Annex 1, point 7.1.1,  
         Equipment), approved by the Commission, provided for a car to be made available to Mr Panetsos for the purposes of his activities in
         connection with the project.  That vehicle was placed at his disposal under a leasing arrangement, which did not cover running
         and insurance costs.  Therefore, according to the applicant, the mileage allowance, as provided for in the budget for the
         project, constituted a separate expense from that relating to the use of the car and was not made redundant by the leasing
         arrangement. 
         
         
         153
            
          The defendant rejects the applicant's argument. 
          3. Findings of the Court
         
         
         154
            
          Bearing in mind what has already been held in paragraphs 123 and 124 above, it is necessary to consider whether the Commission
         made an error of assessment in considering that the mileage allowance for Mr Panetsos's journeys was not justified in relation
         to the objectives of the project. 
         
         
         155
            
          The applicant does not deny that Mr Panetsos made the journeys concerned in a car that had been placed at his disposal, as
         a cost to the project, under a leasing arrangement and that therefore Mr Panetsos was not personally liable for the depreciation
         costs for that car. During the verification procedure the Commission established that the fuel costs for the number of miles
         Mr Panetsos had driven in order to carry out the project amounted to only half the mileage allowance charged to the project.
         
         
         
         156
            
          When the Court confronted him with this calculation the applicant explained that the mileage allowance also covered an insurance
         excess which Mr Panetsos would have had to pay in the event of an accident with that car.  However, such expenses are clearly
         purely speculative and not genuine, and the Commission was therefore justified in refusing to allow them to be charged to
         the project. 
         
         
         157
            
          The Commission did not therefore make an error of assessment in respect of the fifth irregularity raised in the contested
         decision. 
         
         
         
         F ─
          The seventh irregularity: the remuneration and travel costs of the people who were working on the project
          1. The contested decision
         
         
         158
            
          The seventh indent of recital 9 in the preamble to the contested decision reads as follows: The amount of GRD 3 098 317 was declared under the headings  
         travel and accommodation expenses in respect of the work carried out by fourteen people on the various project sites.  Also, an amount of GRD 10 650 000 was
         declared under the heading  
         contracts for service in respect of the work carried out by eighteen people at three of the six project sites.  No document was submitted in respect
         of those expenses to justify those costs in relation to the objectives of the project.
          2. Arguments of the parties
         
         
         159
            
          The applicant maintains that in connection with its observations on the letter initiating the procedure it has already sent
         the Commission all the supporting documents covering the expenses mentioned in the seventh indent of recital 9 in the preamble
         to the contested decision.  Those documents, which were also annexed to the application, concern the remuneration and travel
         costs of the people who were working on the project and they provide adequate substantiation for each journey and the amount
         of the expenses incurred. 
         
         
         160
            
          The defendant contends that the documents relied on by the applicant, which had already been sent to it during the administrative
         procedure, do not provide evidence that the services charged to the project were genuine.  They are merely lists giving the
         date of the journey, the mode of transport, the beneficiary and the amount, and a brief description of the purpose of the
         duty travel.  Those documents were not accompanied by supporting documents such as mission reports describing the services
         provided and the duration of the work.  Moreover, only a few of them were accompanied by documents to support subsistence
         expenses such as hotel expenses. 
         
         
         161
            
          As regards the contracts for services, the defendant states that those contracts provided for flat-rate remuneration and did
         not give a clear description of the tasks assigned or the work expected.  Hence, in its view, they did not provide evidence
         showing to what extent those people had been recruited and employed for the purposes of the project.  It also states that
         during the on-the-spot inspection the Commission's inspectors were not given any documents to substantiate the work carried
         out or the periods of time those people worked on the project. 
          3. Findings of the Court
         
         
         162
            
          Taking into account what was held in paragraphs 65, 123 and 124 above, on the basis of the conditions laid down in the award
         decision the applicant should have known that it was required to be in a position to submit to the Commission supporting documents
         and explanations that would show that there was a direct connection between, on the one hand, the remuneration of the people
         who worked on the project and the various travel expenses in connection with such work and, on the other hand, the expenses
         charged to the project and whether those expenses were appropriate in relation to the objective of the project. 
         
         
         163
            
          It is in that context that it is appropriate to consider whether the Commission made an error of assessment in considering
         that as regards the remuneration and travel costs of the people who had worked on the project,  
         no document [had been] submitted in respect of those expenses to justify those costs in relation to the objectives of the
         project. 
         
         
         164
            
          In response to the Commission's letter of 21 April 1999 (see paragraph 93 above), the applicant submitted to the Commission
         by letter of 12 May 1999 a table headed  
         Duties of the various workers and time spent [by them on the project].  In that table it gave the names of the people concerned, the period during which the work had been carried out by the various
         workers, the operations in connection with which the work had taken place and a brief description of one or more of the following
         tasks carried out during that work:  
         creating fire breaks,  
         felling,  
         removing vegetation,  
         assistance in mapping and  
         assistance in drawing maps.  It also submitted two other tables to the Commission, showing the amount of remuneration paid to each of the workers, specifying
         both the various operations in connection with the project and the sites on which the work took place. 
         
         
         165
            
          The applicant also submitted to the Commission, in respect of each of the people concerned, a contract of employment indicating
         inter alia the name of the project and, except for one of the contracts, a brief description of the tasks corresponding in
         essence to those given in the table mentioned in the preceding paragraph.  At the same time, it stated that in view of the
         nature of the work carried out it was not possible to specify more precisely what work had actually been done and by which
         workers. 
         
         
         166
            
          In the letter initiating the procedure, despite the special significance that letter has in the context of such a procedure
         (see paragraph 48 above), the Commission merely observed with regard to those documents that  
         the information supplied by the beneficiary dated 12 [May] 1999 was insufficient to substantiate the staffing costs declared
         under those headings, without however giving the applicant any indication as to the information it should have supplied in order to substantiate
         those costs.  Nor did it express any reservations regarding the probative value as such of the documents provided by the applicant.
         
         
         
         167
            
          In its observations on the letter initiating the procedure, the applicant also submitted to the Commission the travel expenses
         forms of the various workers, on which Mr Panetsos had certified that the information supplied was correct.  Those supporting
         documents contained, in addition to the names of the project and of the various workers, the dates and the number of days
         of the journeys, the sites visited and a description of the tasks undertaken at the time of the journeys concerned, which
         corresponded essentially to the description given in the tables and contracts mentioned in paragraphs 164 and 165 above. 
         Lastly, as regards the flat-rate amounts paid to those workers, the applicant explained that the workers had been recruited
         in accordance with the special national rules governing the employment of unemployed persons. 
         
         
         168
            
          In the seventh indent of recital 9 in the preamble to the contested decision the Commission merely repeated the complaint
         already made in the letter initiating the procedure, noting simply that the applicant had failed to submit to it  
         any document to justify those costs in relation to the objectives of the project. 
         
         
         169
            
          It is apparent from paragraphs 164 to 167 above that, on the basis of the documents supplied by the applicant during the administrative
         procedure, it was possible to check during what period which worker had carried out what type of work on which of the project
         sites and in connection with what operations provided for under the project. 
         
         
         170
            
          In addition, despite the fact that the description of the tasks carried out was brief, it was clear from it that those workers
         had done work which was directly related to the objectives of the project.  The project, as stated in paragraph 106 above,
         made provision for work to develop selected areas in terms of infrastructure (constructing fences and access routes) and work
         in preparation for the reforestation of those areas (felling, removal of vegetation). 
         
         
         171
            
          Moreover, even though, as the Commission pointed out for the first time in the statement in defence, the applicant did not
         produce supporting documents such as hotel expenses for all the journeys, the supporting documents which were supplied by
         the applicant should not have been dismissed so comprehensively as lacking in any probative value; on the contrary, they provided
         the information needed in order to prove whether the expenditure incurred was justified in relation to the objectives of the
         project. 
         
         
         172
            
          Although it is not for the Court to substitute its own assessment of those documents for that of the Commission, the fact
         remains that on the basis of the documents in the file it cannot be argued, as the Commission did so comprehensively in the
         contested decision, that  
         no document was submitted to justify those costs in relation to the objectives of the project. 
         
         
         173
            
          When questioned at the hearing as to what type of information the applicant could have supplied in addition in order to justify
         those expenses, the defendant stated in essence that the applicant should have supplied more detailed information about the
         activities of the various workers.  In particular, it stated by way of example that the applicant should have indicated, with
         regard to felling work, the number of square metres of trees felled at the various sites by the various workers so that it
         would be possible to check whether the expenses charged to the project were appropriate in relation to the objective of the
         project. 
         
         
         174
            
          For the reasons stated in paragraph 112 above, the Commission is entitled to ask beneficiaries of Community assistance for
         more detailed information if it considers that such information is needed in order to establish that the project has been
         properly implemented.  It may indeed, in specific circumstances, be needed in order to check that there is a direct link between
         the duty travel expenses charged to the project and the various operations provided for under the project, and whether the
         amount of those expenses is appropriate in view of the objectives of the project, to have reports describing in detail the
         work carried out at each of the project sites. 
         
         
         175
            
          None the less, it is clear that, in the absence of any request from the Commission to supply more detailed information, it
         was reasonable for the applicant to consider that, in view of the nature of the work in question, the supporting documents
         and information it had supplied during the administrative procedure were sufficient to show that there was a direct connection
         between, on the one hand, the remuneration of the people who had worked on the project and the various travel expenses in
         respect of such work and, on the other hand, the expenses charged to the project and whether those expenses were appropriate
         in relation to the objective of the project.  It might at first sight appear to be unnecessary to describe in greater detail
         in reports what precisely constituted the manual work, such as felling work or construction of fences, carried out by those
         workers. 
         
         
         176
            
          The Commission could not therefore, without asking the applicant to send more detailed information, close the procedure and
         thereby deprive the applicant of the opportunity of providing information which, according to the Commission, was needed in
         order to prove whether the expenditure incurred was justified in relation to the objectives of the project. 
         
         
         177
            
          The Commission therefore made an error of assessment with regard to the seventh irregularity in respect of the project. 
         
         
         
         G ─
          The eighth irregularity: the purchase of equipment
          1. The contested decision
         
         
         178
            
          In the eighth indent of recital 9 in the preamble to the contested decision the defendant noted the following: A sum of GRD 1 145 324 was charged under the heading  
         purchase of equipment for the purchase of a laptop PC and a control unit with a printer.  The Commission's inspectors found that the PC was being
         used for other projects.  The price [should therefore have been] charged pro rata to its use for the present project.  The
         reason why it was charged in full, and a relevant supporting document, were not submitted to the Commission.
          2. Arguments of the parties
         
         
         179
            
          The applicant has submitted to the Court the invoices relating to the purchase of the computer equipment concerned and contends
         that the defendant should not have taken into account the fact that one of those computers was used for other projects.  At
         any event, the reasons put forward by the defendant with regard to that irregularity were too vague and only concerned one
         of the computers and hence only approximately half of the relevant expenditure. 
         
         
         180
            
          The defendant's response is that the laptop computer was not shown to the Commission's inspectors during the on-the-spot inspection,
         nor did the applicant supply any evidence of the purchase of that laptop or of its use for the project.  The applicant acknowledged
         that the laptop computer had not been used during the first phase of the project but stated that it would provide evidence
         of its subsequent use. 
         
         
         181
            
          As regards the other computer, the defendant contends that the applicant acknowledged that it had also used it for other projects.
          In such circumstances, the expenditure charged to the project should be reduced pro rata to the use of the computer for the
         contested project. 
          3. Findings of the Court
         
         
         182
            
          First of all, it should be noted that in the letter initiating the procedure the Commission expressed doubt as to whether
         the GRD 1 145 324 recorded under the heading  
         purchase of equipment for the purchase of a laptop computer and of a control unit with a printer could be charged to the project.  As regards the
         laptop computer, the Commission has pointed out that the inspectors had not been able to establish that the computer concerned
         had actually been bought and used for the purposes of the project.  As regards the control unit with a printer, the Commission
         raised the fact that its inspectors had found that that computer equipment had also been used for other projects and that
         therefore the purchase price of that equipment should be charged pro rata to its use for the present project. 
         
         
         183
            
          In the contested decision the Commission's only complaint concerned the control unit with a printer, the complaint being that
         that equipment had also been used for other projects.  Even though in the eighth indent of recital 9 in the preamble to the
         contested decision the Commission made a general reference in that regard to the  
         PC, it is clear from the context described in the preceding paragraph that that complaint did not concern the laptop computer
         but the control unit with a printer. 
         
         
         184
            
          However, in the contested decision it did not make any complaint with regard to charging the cost of purchasing the laptop
         computer to the project.  None the less, the Commission stated in the contested decision that it was improper to charge the
         sum of GRD 1 145 324 to the project, a sum which, as was shown above, included both the control unit with a printer and the
         laptop computer. 
         
         
         185
            
          In reply to a written question from the Court, the Commission merely repeated the arguments already made in its statements
         and gave no explanation of why the total amount of the computer equipment was ineligible. 
         
         
         186
            
          The Commission therefore made an error of assessment in respect of the eighth irregularity raised in the contested decision.
         
         
         
         
         H ─
          The ninth irregularity: overheads
          1. The contested decision
         
         
         187
            
          The ninth indent in recital 9 in the preamble to the contested decision reads as follows: A sum of GRD 6 738 822 was charged under the budget heading  
         overheads; the Commission's inspectors found that there were no documents to support those expenses or, failing that, no rational criterion
         which had been applied in order to determine the amount of overheads arising from the project. When making its reply, the
         beneficiary failed to send any documents to support the charging of that sum in relation to the objectives of the project.
          2. Arguments of the parties
         
         
         188
            
          The applicant is of the opinion that the documents sent to the Commission with its observations on the letter initiating the
         procedure were sufficient to substantiate the overheads charged to the project, which were connected with research and the
         Committee's overhead costs.  The applicant also submitted to the Court a note dated 14 August 2001, drafted by the head of
         the Committee's secretariat, concerning those overheads. 
         
         
         189
            
          The defendant rejects the applicant's arguments. 
          3. Findings of the Court
         
         
         190
            
          First of all, the note of 14 August 2001 from the head of the Committee's secretariat concerning overheads was not written
         until after the contested decision had been adopted and cannot therefore be taken into account in assessing whether that decision
         is well founded. 
         
         
         191
            
          Second, in order to justify the overheads, the applicant submitted to the Commission as an annex to its observations to the
         letter initiating the procedure a list of its overheads for the years 1996 and 1997.  The applicant's overheads were shown
         on that list as a total amount, without any indication of which of the expenses related specifically to implementation of
         the project at issue.  Nor did the applicant state, in its observations on the letter initiating the procedure, which of those
         expenses were directly connected with the project, or explain what objective method could be used to calculate the expenses
         specifically connected with the project from the total given in that list. 
         
         
         192
            
          The Commission therefore made no error of assessment in respect of the ninth irregularity raised in the contested decision.
         
          I ─The tenth irregularity: costs connected with the use of office space
          1. The contested decision
         
         
         193
            
          In the tenth indent of recital 9 in the preamble to the contested decision the defendant noted the following: A sum of GRD 8 100 000 was charged in respect of the costs incurred by the beneficiary for the use of 100 m
         2 of office space.  No supporting document was submitted to substantiate that expense.  The beneficiary did not send any document
         with its written reply to justify charging that expense to the project in accordance with the objectives of that project.
          2. Arguments of the parties
         
         
         194
            
          The applicant is of the opinion that the documents sent to the Commission with its observations on the letter initiating the
         procedure, which were also mentioned in paragraph 13 of that letter, were sufficient to substantiate the costs charged to
         the project connected with the use of the office space.  The applicant also submits to the Court a note dated 16 August 2001
         from the head of the Committee's secretariat concerning the costs connected with the use of office space. 
         
         
         195
            
          The defendant rejects the applicant's arguments. 
          3. Findings of the Court
         
         
         196
            
          First of all, for the reasons already given in paragraph 190 above, the note of 16 August 2001 drafted by the head of the
         Committee's secretariat concerning the costs connected with the use of office space cannot be taken into account in assessing
         the merits of the contested decision. 
         
         
         197
            
          Next, in order to substantiate those expenses the applicant produced a letter sent to Commission officials on 1 July 1998,
         accompanied by a table setting out its overheads.  In that letter the applicant confirmed that the sum of GRD 8 100 000 in
         respect of the costs incurred by the beneficiary represented the cost of using 100 m
         2 of office space. 
         
         
         198
            
          Even assuming that those overheads could be charged to the project, it is clear that neither in that letter nor in the table
         annexed to it did the applicant set out the objective criteria by which the amount of those costs relating specifically to
         the implementation of the project at issue was to be calculated. 
         
         
         199
            
          The Commission did not therefore make an error of assessment in respect of the tenth irregularity raised in the contested
         decision. 
         
         
         
         J ─
          Result as regards the third plea, alleging various irregularities
         
         
         200
            
          The outcome of the preceding analysis is that the contested decision contains errors of assessment with regard to the third,
         sixth, seventh and eighth irregularities.  The plea relied upon by the applicant must therefore be accepted to that extent
         and rejected as to the remainder.
         
         
         
         II ─
          The first plea, alleging infringement of Article 24(2) of Regulation No 4253/88, as amended, in that the Commission complained
         only that there were various irregularities in the way the project had been managed
         
         
         
         A ─
          Arguments of the parties
         
         
         201
            
          The applicant observes that in the contested decision the Commission complained only that there were various irregularities
         in the way the project had been managed. It did not point to either irregularities in the way the project had actually been
         carried out or a significant change in the substance of the project within the meaning of Article 24(2) of Regulation No 4253/88,
         as amended, which might be considered to affect the nature of the project or the conditions under which it had been carried
         out. 
         
         
         202
            
          According to the applicant, Article 23(2) and Article 24(2) of Regulation No 4253/88, as amended, should be interpreted as
         meaning that before the Commission withdraws financial assistance it is required to conduct an assessment of the findings
         made in connection with the on-the-spot inspection, concerning not only the way the project has been managed but also how
         it has actually been carried out. 
         
         
         203
            
          That interpretation of Article 23(2) and Article 24(2) of Regulation No 4253/88, as amended, was confirmed by the Court in
         Case T-143/99  
         Hortiplant v  
         Commission [2001] ECR II-1665, paragraphs 65 to 67).  The facts in the present case differ from those in  
         Hortiplant and there is no connection between Joined Cases T-551/93 and T-231/94 to T-234/94  
         Industrias Pesqueras Campos and Others v  
         Commission [1996] ECR II-247, cited in paragraph 65 of  
         Hortiplant, and the present case. 
         
         
         204
            
          The defendant points out that in  
         Hortiplant and in  
         Conserve Italia v  
         Commission, cited in paragraph 49 above, the Court held that the administrative management of an operation financed by Community resources
         forms an integral part of the conditions for carrying out the operation and the conditions for awarding the assistance.  It
         follows that when the Commission finds management irregularities in the implementation of an operation it is no longer required
         to consider whether that operation has actually been carried out or not but may withdraw assistance solely on the basis of
         the management irregularities established. 
         
         
         
         B ─
          Findings of the Court
         
         
         205
            
          It is clear from Article 24 of Regulation No 4253/88, as amended, that the Commission may decide to adopt measures for repayment
         of the financial assistance if, according to Article 24(2),  
         the examination reveals an irregularity and in particular a significant change affecting the nature or conditions of the operation
         or measure for which the Commission's approval has not been sought. 
         
         
         206
            
          That provision thus refers expressly to irregularities concerning the conditions under which the operation being financed
         has been implemented, which includes irregularities in the way it has been managed. 
         
         
         207
            
          It cannot therefore be argued, as the applicant does in essence, that the penalties provided for in Article 24 of Regulation
         No 4253/88, as amended, are applicable only where the operation financed by the Community has not been carried out in full
         or in part (
         Hortiplant, cited in paragraph 203 above, paragraphs 63 and 64). 
         
         
         208
            
          Therefore, contrary to what the applicant contends, Article 24 of Regulation No 4253/88, as amended, cannot be interpreted
         as meaning that when the Commission finds significant irregularities in the management of a project it is required, before
         it withdraws assistance, to consider in every case whether an operation has actually been carried out or not. 
         
         
         209
            
          The applicant also errs in seeking to rely in this context on paragraphs 65 to 67 of  
         Hortiplant.  Those paragraphs do not relate to the point of law raised by the applicant in connection with the present plea but concern
         rather the various obligations incumbent upon the beneficiary of financial assistance under the Community regulations. 
         
         
         210
            
          Therefore, the first plea, alleging that the Commission complained only that there were various irregularities in the way
         the project has been managed, must be rejected. 
         
         
         
         III ─
          The second plea, alleging infringement of Article 24(2) of Regulation No 4253/88, as amended, and of the principle of proportionality
         
         
         
         A ─
          Arguments of the parties
         
         
         211
            
          The applicant argues that the contested decision, withdrawing all of the financial assistance in question, infringes Article
         24(2) of Regulation No 4253/88, as amended, and the principle of proportionality.  The plea is in two parts. 
         
         
         212
            
          In the first, the applicant contends that under Article 24(2) of Regulation No 4253/88, as amended, withdrawal or reduction
         of assistance is justified only where there are irregularities so serious that they affect the nature or conditions under
         which the project is implemented. 
         
         
         213
            
          According to the applicant, those conditions were not met in the present case. Even if the various allegations of irregularity
         raised by the defendant were well founded, the irregularities would represent only about three sevenths of the Community financing
         already paid.  In such circumstances, it considers that withdrawal of all the assistance is unreasonable. 
         
         
         214
            
          In the second part, the applicant points out that the contested decision was adopted on 8 June 2001, which was more than three
         years after the applicant submitted the interim technical report to the defendant (5 June 1998) and about two and a half years
         after the on-the-spot inspection (from 9 to 12 November 1998).  Taking into account the actual nature of the project, which
         according to the applicant required that the project be implemented without a break according to the fixed schedule, the project
         was in fact suspended during that period.  The applicant considers that the Commission could not withdraw the assistance after
         such a long period, during which the financing was suspended, without infringing Article 24 of Regulation No 4253/88, as amended,
         and without infringing the principle of proportionality. 
         
         
         215
            
          The defendant states, with regard to the first part of that plea, that the applicant charged to the project expenses which
         it had been unable to prove had any direct connection with the said project.  It therefore committed a serious infringement
         of a requirement essential for the effective functioning of the Community system of financing.  In such cases the assistance
         granted must be withdrawn. 
         
         
         216
            
          With regard to the second part of that plea, the defendant points out that the length of the suspension, as regards continued
         financing of the assistance, shows on the contrary, on the one hand, that it entertained significant doubts regarding the
         propriety of the expenses declared, and on the other that it was carefully weighing up the consequences of the various possible
         outcomes. 
         
         
         
         B ─
          Findings of the Court
          1. The first part of the plea, alleging that withdrawal of the full amount of the assistance is disproportionate
         
         
         217
            
          The principle of proportionality requires that the measures adopted by Community institutions must not exceed what is appropriate
         and necessary for attaining the objective pursued (see in particular Case 15/83  
         Denkavit Nederland [1984] ECR 2171, paragraph 25, and Case T-260/94  
         Air Inter v  
         Commission [1997] ECR II-997, paragraph 144). 
         
         
         218
            
          According to settled case-law, the infringement of obligations whose observance is of fundamental importance to the proper
         functioning of a Community system may be penalised by forfeiture of a right conferred by Community legislation, such as entitlement
         to aid (Case C-104/94  
         Cereol Italia [1995] ECR I-2983, paragraph 24 and the case-law cited therein). 
         
         
         219
            
          As regards the present case, it should be made clear that Regulation No 2052/88 and Regulations Nos 4253/88 and 4256/88 implementing
         Regulation No 2052/88 are intended to promote, through the EAGGF, as part of the support for economic and social cohesion
         and with a view to the reform of the common agricultural policy, the adaptation of agricultural structures and the development
         of rural areas.  In that context, the legislature, as stated in the 20th recital in the preamble to Regulation No 4253/88
         and Article 23 of that regulation, sought to introduce an effective control procedure to ensure that beneficiaries comply
         with the conditions laid down at the time assistance is awarded from the Fund in order to achieve the abovementioned objectives
         in an effective manner. 
         
         
         220
            
          It is also necessary to observe that in  
         Hortiplant, cited in paragraph 203 above, paragraph 65, and  
         Industrias Pesqueras Campos, cited in paragraph 203 above (paragraph 160), the Court ruled that, in view of the very nature of the assistance granted
         by the Community, the obligation to comply with the financial obligations laid down in the award decision constitutes, as
         does the obligation actually to carry out the project concerned, one of the beneficiary's essential undertakings, and so the
         granting of Community assistance is dependent upon compliance with it. 
         
         
         221
            
          Lastly, the provision of sufficiently detailed information by applicants for, and beneficiaries of, Community assistance is
         essential for the proper operation of the system of inspection and evidence introduced in order to verify whether the conditions
         for granting assistance are met. 
         
         
         222
            
          In the present case, it is clear from what has been stated in connection with the third plea, alleging that the various irregularities
         raised by the Commission in the contested decision are unfounded, that with regard to some of those irregularities the applicant
         has not managed to show that the Commission made errors of assessment, or failed to provide adequate reasons, in the contested
         decision.  In connection with those irregularities the Commission established in the contested decision that the applicant
         charged certain expenses to the project but failed to show that they were directly connected with the project or that they
         were appropriate. 
         
         
         223
            
          In principle such failures to fulfil obligations allow the Commission to withdraw the assistance granted.  Indeed, the Court
         has already ruled that in such circumstances it is reasonable for the Commission to consider that any penalty other than total
         withdrawal of the assistance and repayment of sums paid by the Fund might constitute an invitation to commit fraud, since
         potential beneficiaries would be tempted either to inflate artificially the amount of the expenses charged to the project
         in order to evade their obligation to provide co-financing and obtain the maximum contribution from the Fund provided for
         in the award decision, or to supply incorrect information or conceal certain information in order to obtain assistance or
         to increase the amount of assistance sought, with the only deterrent that the assistance might be reduced to the level it
         should have been in the light of the actual expenses incurred by the beneficiary and/or the accuracy of the information supplied
         by it to the Commission (see to that effect Case C-500/99 P  
         Conserve Italia v  
         Commission [2002] ECR I-867, paragraph 101, and  
         Industrias Pesqueras Campos, cited in paragraph 203 above, paragraph 163). 
         
         
         224
            
          In the present case, however, the Court has held in paragraph 200 that the contested decision contains errors of assessment
         with regard to the third, sixth, seventh and eighth irregularities. 
         
         
         225
            
          In such a situation it is necessary none the less to annul the decision in its entirety. Since the Commission based its decision
         to withdraw the assistance in full on a finding of ten irregularities, four of which have not been established to the requisite
         legal standard, it is not for the Court to substitute its own assessment for that of the Commission and to decide what conclusions
         the latter should draw as regards the financing of the project. 
         
         
         226
            
          Under Article 233 EC, it is for the Commission, in the light of the ruling in respect of those irregularities, to decide,
         according to the principle of proportionality, whether the assistance should still be withdrawn or another measure be adopted
         with regard to the project. 
          2. The second part of the plea, alleging infringement of the principle of reasonable duration
         
         
         227
            
          In the context of the second part of the plea, the applicant contends in essence that in view of the excessive length of the
         administrative procedure before the Commission the latter could not withdraw the assistance granted without infringing Article
         24 of Regulation No 4253/88, as amended, and the principle of proportionality, and that therefore the contested decision should
         be annulled in its entirety. 
         
         
         228
            
          In that regard, it should be observed first of all that the relevant legislation, in particular Article 24 of Regulation No
         4253/88, as amended, does not lay down any specific time-limits with which the Commission should comply in the context of
         a procedure for the withdrawal of financial assistance. 
         
         
         229
            
          However, according to a general principle of Community law the Commission is required to act within a reasonable time in the
         context of its administrative procedures (Joined Cases T-213/95 and T-18/96  
         SCK and FNK v  
         Commission [1997] ECR II-1739, paragraph 56). 
         
         
         230
            
          In that regard, it is settled case-law that the question whether the duration of an administrative proceeding is reasonable
         must be determined in relation to the particular circumstances of each case and, in particular, the background to the case,
         the various procedural stages followed, the complexity of the case and its importance for the various parties involved (
         SCK and FNK, cited in paragraph 229 above, paragraph 57, and  
         Partex, cited in paragraph 53 above, paragraph 177). 
         
         
         231
            
          In the present case the applicant sent the interim technical report provided for in point 3 of Annex 2 to the award decision
         to the Commission on 5 June 1998, and requested payment of the second tranche.  On 9 July 1998 the Commission requested the
         applicant inter alia, in accordance with point 5 of that annex, to send a list of all the supporting documents relating to
         the expenditure incurred and certified true copies of those documents.  On 29 July 1998 the applicant submitted to the Commission
         inter alia a list of the expenditure incurred and stressed the need for rapid payment of the second advance.  Next, as provided
         for in point 5 of Annex 2, the Commission conducted an on-the-spot inspection at the applicant's premises from 9 to 12 November
         1998.  Subsequently, the applicant repeated its request for payment of the second advance on several occasions, by letters
         of 2 March, 4 May, 12 May and 13 October 1999, and pointed out that implementation of the project required that it be carried
         out without a break.  The Commission for its part requested by letter of 21 April 1999 that various documents should be sent,
         before initiating the procedure provided for in Article 24 of Regulation No 4253/88, as amended, by letter of 25 October 1999.
          After obtaining the applicant's observations on the letter initiating the procedure, which it received on 3 December 1999,
         the Commission requested an audit report from a firm of auditors, which analysed the answers the applicant supplied in its
         observations, and that firm submitted its report to the Commission on 7 July 2000.  Lastly, on 8 June 2001 the Commission
         closed the procedure by adopting the contested decision. 
         
         
         232
            
          It is clear from that series of events that the administrative procedure was unquestionably very long in the present case.
          This is all the more deplorable since the applicant repeatedly stressed to the Commission the need for the second advance
         to be paid quickly so that the project could be carried out as provided for in the award decision, and cited objective reasons
         linked to the specific nature of the project. 
         
         
         233
            
          It should be pointed out, however, first of all, that failure to comply with the principle that the Commission must act within
         a reasonable time, assuming it is established, does not justify automatic annulment of the contested decision (Joined Cases
         T-305/94 to T-307/94, T-313/94 to T-316/94, T-318/94, T-325/94, T-328/94, T-329/94 and T-335/94  
         Limburgse Vinyl Maatschappij and Others v  
         Commission  [1999] ECR II-931, paragraph 122, and Case T-197/00  
         Onidi   v  
         Commission [2002] ECR-SC I-A-69 and II-325, paragraph 96). 
         
         
         234
            
          Second, account should be taken of the fact that verification of the various documents and explanations submitted by the applicant
         during the administrative procedure required complex and thorough analysis.  In view of the complexity of the present case,
         the length of the various stages of the administrative procedure was not so unreasonable as to make the contested decision
         unlawful. 
         
         
         235
            
          Third, it is clear from what has been stated in connection with the consideration of the third plea, alleging that various
         irregularities raised by the Commission in the contested decision are unfounded, that with regard to some of those irregularities
         the applicant did not fully comply with all the Commission's requests to produce documents at the beginning of the administrative
         procedure. 
         
         
         236
            
          On 9 July 1998, in accordance with point 5 of Annex 2 to the award decision, the Commission requested the applicant to send
         it inter alia a list of all the supporting documents relating to the expenditure incurred, presented in such a way that it
         could establish a link between the various operations in connection with the project and the expenditure charged to it.  As
         was stated in connection with that plea in respect of several irregularities raised by the Commission, it was not possible
         to establish such a link on the basis of the documents submitted by the applicant. 
         
         
         237
            
          Moreover, even with regard to some of the irregularities in respect of which the Court did establish errors of assessment
         on the part of the defendant, the applicant supplied certain documents only in response to the letter initiating the procedure,
         which delayed the Commission's examination. 
         
         
         238
            
          In such circumstances, the Commission's delay in dealing with the present case must be attributed partly to the applicant
         itself, since it did not cooperate fully with Commission officials at all stages of the administrative procedure. 
         
         
         239
            
          The applicant cannot therefore rely on the principle of reasonable duration in order to show that the contested decision was
         adopted in breach of Article 24 of Regulation No 4253/88, as amended, and in breach of the principle of proportionality. 
         
         
         240
            
          The second part of the plea is therefore also unfounded, and the second plea must be rejected. 
         
         Costs
         241
            
          Under Article 87(3) of the Rules of Procedure, where each party succeeds on some and fails on other heads, or where the circumstances
         are exceptional, the Court of First Instance may order that the costs be shared or that each party bear its own costs. 
         
         
         242
            
          In the present case, it has been held with regard to the third plea that the contested decision did contain errors of assessment
         in respect of four of the ten irregularities, but that as regards the other six irregularities, the applicant has not demonstrated
         the existence of such errors or of an inadequate statement of reasons.  However, for the reasons stated in paragraphs 222
         to 226 above, the contested decision must be annulled in its entirety. 
         
         
         243
            
          Even though the defendant has failed in its submission that the contested decision should be annulled, parts of the third
         plea have been rejected as unfounded.  In those circumstances, each party must be ordered to bear its own costs. 
         
         On those grounds, 
         
         
         
            
            THE COURT OF FIRST INSTANCE (Third Chamber)
         
         
          hereby:  
         
            
            1.
             Annuls Commission Decision C (2001) 1284 of 8 June 2001 withdrawing the assistance granted to the Laboratory for Forest Genetics
            and Improvement of Ligneous Plant Species at Aristoteleio Panepistimio Thessalonikis (the Aristotle University of Thessaloniki)
            by Commission Decision C (96) 2542 of 25 September 1996 on the granting of assistance from the Guidance Section of the European
            Agricultural Guidance and Guarantee Fund under Council Regulation (EEC) No 4256/88 in the context of programme No 93.EL.06.023,
            entitled  
            Pilot project to accelerate the regeneration of forests devastated by fire in Greece; 
            
            
            2.
             Orders each party to bear its own costs, including those relating to the proceedings on the application for interim measures.
            
            
                  Lenaerts
               
               
                  Azizi 
               
               
                  Jaeger 
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
            
            
            
            
            
            
            
         
         
          Delivered in open court in Luxembourg on 30 September 2003. 
         
         
         
         
                  H. Jung 
               
               
                  K. Lenaerts  
               
            
         
         
         
                  Registrar
               
               
                  President
               
            
         
            
         
      
          1 –
            
             Language of the case: Greek.