Hellenic Republic v Commission of the European Communities.
Date: 2001-12-06
5 The Belle Report of the Commission (Document No VI/216/93 of 1 June 1993) lays down the guidelines to be followed when financial corrections must be applied against a Member State.
6 In addition to three main calculation techniques, the Belle Report lays down three categories of flat-rate correction for difficult cases:
A. 2% of expenditure - where the deficiency is limited to parts of the control system of lesser importance, or to the operation of controls which are not essential to the assurance of the regularity of the expenditure, such that it can reasonably be concluded that the risk of loss to the EAGGF was minor.
B. 5% of expenditure - where the deficiency relates to important elements of the control system or to the operation of controls which play an important part in the assurance of the regularity of the expenditure, such that it can reasonably be concluded that the risk of loss to the EAGGF was significant.
C. 10% of expenditure - where the deficiency relates to the whole of or fundamental elements of the control system or to the operation of controls essential to assuring the regularity of the expenditure, such that it can reasonably be concluded that there was a high risk of widespread loss to the EAGGF.
7 The report also states that it is possible to refuse the whole of the expenditure and that, therefore, a higher rate of correction may be held appropriate in exceptional circumstances.
8 As the Court has held, only intervention undertaken in accordance with the Community rules within the framework of the common organisation of agricultural markets is to be financed by the EAGGF (see Case C-253/97 Italy v Commission [1999] ECR I-7529, paragraph 6).
9 Article 8(1) of Regulation (EEC) No 729/70 on the financing of the common agricultural policy (OJ, English Special Edition 1970 (I), p. 218), which defines the principles according to which the Community and the Member States are to ensure the implementation of Community decisions on agricultural intervention financed by the EAGGF and combat fraud and irregularities in relation to those operations, imposes on the Member States the obligation to take the measures necessary to satisfy themselves that the transactions financed by the EAGGF are actually carried out and are executed correctly, to prevent and deal with irregularities and to recover sums lost as a result of irregularities or negligence, even if the specific Community act does not expressly provide for the adoption of particular supervisory measures (see Joined Cases 146/81, 192/81 and 193/81 BayWa [1982] ECR 1503, paragraph 13, Case C-8/88 Germany v Commission [1990] ECR I-2321, paragraphs 16 and 17, and Case C-235/97 France v Commission [1998] ECR I-7555, paragraph 45).
10 It is for the Commission to prove an infringement of the rules on the common organisation of the agricultural markets. Accordingly, the Commission is obliged to give reasons for its decision finding an absence of, or defects in, inspection procedures operated by the Member State in question (see, in particular, Case C-247/98 Greece v Commission [2001] ECR I-1, paragraph 7, and the case-law cited there).
11 However, the Commission is not required to demonstrate exhaustively that the inspections carried out by the national authorities are insufficient, or that the data submitted by them are irregular, but to adduce evidence justifying serious and reasonable doubt on its part regarding those inspections or data (see Case C-54/95 Germany v Commission [1999] ECR I-35, paragraph 35, Case C-28/94 Netherlands v Commission [1999] ECR I-1973, paragraph 40, and Greece v Commission, cited above, paragraph 8).
12 The reason for this mitigation of the burden of proof on the Commission is that it is the Member State which is best placed to collect and verify the data required for the clearance of EAGGF accounts and, consequently, it is for that State to adduce the most detailed and comprehensive evidence that its inspections or figures are accurate and, if appropriate, that the Commission's statements are incorrect (Germany v Commission, cited above, paragraph 35, Netherlands v Commission, cited above, paragraph 41, and Greece v Commission, cited above, paragraph 9).
13 It should be borne in mind that, according to the case-law of the Court, a Member State whose controls carried out in the context of the application of the rules for the functioning of the guarantee section of the EAGGF have been considered by the Commission to be non-existent or insufficient cannot rebut the Commission's findings without supporting its own allegations by evidence of a reliable and operational supervisory system (Italy v Commission, cited above, paragraph 7).
The corrections in the arable crops sector
The deficiencies in the integrated management and monitoring system
Summary report
36 As regards the Greek Government's argument that the retentions are voluntary and that they are not applied to all producers, it should be noted, first, that the national legislation in force in the 1995 financial year authorised the making of the retentions referred to. As the Court found in paragraph 18 of its judgment in Greece v Commission, cited above, Article 2 of Law No 1409/83 was not repealed until 1 December 1997 by Law No 2538/97.
37 It should also be noted, second, that, as the Greek Government acknowledged at the hearing, the retentions referred to were also made on payment of aid to producers who were not members of the ACAs. Since those producers were not parties to the agreements made between the ACAs and their members, the retentions made in respect of them cannot have arisen from those agreements.
38 Consequently, that argument of the Greek Government cannot be accepted.
39 As regards the level of the financial correction, it is apparent from the minutes of the general meetings of the ACAs, annexed to the application, that the rate of retention used by those ACAs was never lower than 2%. In those circumstances, the Greek Government having failed to show that the rate of the retentions could be lower than the rate of the correction in issue, the second argument must also be rejected.
53 Under Article 13(2) of Regulation No 1035/72, Member States may grant recognition to the organisations concerned only on condition that there is sufficient evidence as regards the duration and effectiveness of their activities, in particular the tasks for the purpose of which they were constituted, and that, from the date of recognition, they keep specific accounts in respect of the activities for which recognition was sought. It follows that a Member State must refuse recognition to, or withdraw recognition from, any organisation of producers which, for example, does not have adequate technical facilities for presenting and marketing the products concerned (Greece v Commission, cited above, paragraph 44).
56 As regards the alleged difference in assessment by comparison with the financial corrections applied for the 1992 and 1993 financial years, it is clear from the case-law of the Court that where the Commission did not carry out the correction called for in respect of a previous year, but tolerated the irregularities on grounds of fairness, the Member State does not acquire any right to demand that the same position be taken with regard to the irregularities with respect to the following financial year by virtue of the principle of legal certainty or the principle of protection of legitimate expectations (see Case C-55/91 Italy v Commission [1993] ECR I-4813, paragraph 67). It was held in paragraph 46 of Greece v Commission, cited above, that the lifting by the Commission of its reservations concerning the expenditure by the Hellenic Republic during the 1992 and 1993 financial years does not in any way signify that the maintenance of the correction for the 1994 financial year is unjustified. On the contrary, the results of the Commission's inquiries into the producers' organisations, which have not otherwise been challenged by the Hellenic Republic, constitute sufficient justification in that respect.
58 As regards the question whether the inspections carried out by the Commission were sufficiently representative, it must be observed that, as the Commission has argued without being contradicted by the Greek Government, those inspections concerned, in relation to the peaches and nectarines sector in Greece, all the producers' organisations having their seat in the nomoi of Pella and Imathia, which account for 95% of production of peaches and nectarines on Greek territory and for 93.5% of the compensatory payments made in that respect. In the citrus fruits sector, the inspections concerned the nomoi of Argolida, Arta and Lefkada, the production of which gave rise to 74% of the compensatory payments. Having regard to those figures, the representative nature of the inspections made by the Commission and the extent of the irregularities cannot reasonably be cast in doubt (see Greece v Commission, cited above, paragraph 52).
59 Similarly, the mere fact that, on a second inspection in the nomos of Pella, the Commission inspected only organisations the recognition of which had already been challenged by the Greek authorities is in no way capable of invalidating the Commission's finding at the conclusion of that inspection, namely that 48% of the producers' organisations established in that nomos did not have technical facilities for the marketing of fruits (see Greece v Commission, cited above, paragraph 53).
60 Moreover, the adoption of directions addressed to officials responsible for the controls prior to the recognition of the producers' organisations and the creation of computerised files on the members of the producers' organisations afford no guarantee that the organisations recognised will in fact fulfil, at the time when recognition is granted to them or subsequently, all the criteria required for that recognition. Those arguments cannot therefore be accepted (Greece v Commission, cited above, paragraph 54).
61 It should next be noted, first, that the Commission did not confine itself to finding that a certain number of organisations did not have their own technical facilities but stated that a large number of producers' organisations did not have either their own or rented facilities and that, moreover, it did not observe that the compulsory intervention funds had insufficient revenue but pointed out that those funds were often non-existent (Greece v Commission, cited above, paragraph 55).
62 In the light of those considerations, it is apparent that the deficiencies found by the Commission concerned the execution of the essential controls designed to ensure the lawfulness of the expenditure in the area concerned, so that the Commission could reasonably conclude that in this case there was a risk of widespread losses for the EAGGF (Greece v Commission, cited above, paragraph 56).
80 In its judgment in Case C-278/98 Netherlands v Commission [2001] ECR I-1501, paragraph 82, the Court held that, in order to give a useful sense to Article 2(2) of Regulation No 1287/95, the correction procedure must be taken to apply to financial years subsequent to 16 October 1992 which were not the subject of a clearance decision prior to the entry into force of that regulation.