Hellenic Republic v Commission of the European Communities.
Date: 2003-01-09
15.  Second, with regard to the Commission's assessment of the facts, it must be observed that only intervention undertaken in accordance with the Community rules in the framework of the common organisation of agricultural markets is to be financed by the EAGGF (see Case C-278/98   Netherlands   v   Commission   [2001] ECR I-1501, paragraph 38).  In that context, it is for the Commission to prove that an infringement of the rules on the common organisation of the agricultural markets has occurred.  The Commission is therefore obliged to give reasons for its decision finding an absence of, or defects in, inspection procedures operated by the Member State in question (Netherlands   v   Commission  , cited above, paragraph 39).
16.  However, the Commission is required, not to demonstrate exhaustively that the checks carried out by the national authorities are inadequate, or that there are irregularities in the figures submitted by them, but to adduce evidence of serious and reasonable doubt on its part regarding those checks or figures (Netherlands   v   Commission  , cited above, paragraph 40).
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; consequently, it is for the State to adduce the most detailed and comprehensive evidence that it has made checks or that its figures are accurate and, if appropriate, that the Commission's assertions are incorrect (Netherlands   v   Commission  , cited above, paragraph 41).
18.  The Member State concerned, for its part, cannot rebut the Commission's findings by mere assertions which are not substantiated by evidence of a reliable and operational supervisory system.  If it is not able to show that they are inaccurate, the Commission's findings can give rise to serious doubts as to the existence of an adequate and effective series of supervisory measures and inspection procedures (Case C-253/97   Italy   v   Commission   [1999] ECR I-7529, paragraph 7).
28.  In support of its second plea, alleging infringement of Article 5(2)(c) of Regulation No 729/70 and breach of the principle of proportionality, the Greek Government argues that, having regard to Annex 2 to Commission Document No VI/5330/97 of 23 December 1997 relating to   "Guidelines for the calculation of financial consequences when preparing the decision regarding the clearance of the accounts of EAGGF Guarantee [Section]"   ( "Document No VI/5330/97"  ), a distinction must be made between the key checks, which are physical and administrative checks relating to the fundamental aspects of applications for export refunds, and the secondary checks, consisting of administrative operations essential for the proper processing of applications.  The Commission must not make a financial correction unless a check expressly provided for by the Community legislation or absolutely necessary to ensure the application thereof has not been properly carried out.  The fact that a checking procedure is not perfect does not in itself justify the application of a financial correction since all checking systems are capable of improvement.  In reality, the Commission must show that there is a significant deficiency in the application of the Community rules and that that deficiency exposes the EAGGF to a genuine risk of losses.  That interpretation is borne out by the wording of Article 5(2)(c) of Regulation No 729/70.
37.  It must be added that it is settled case-law that the Commission may refuse to charge to the EAGGF the whole of the expenditure in question if it finds that there are no adequate control procedures (see, in particular, Case C-242/97   Belgium   v   Commission   [2000] ECR I-3421, paragraph 122).  It follows that by imposing, in this case, a flat-rate correction amounting to only 5% of the expenditure declared by the Hellenic Republic in respect of the financing of export refunds, even though the checks carried out by the Greek authorities did not conform to the requirements of the Community legislation, the Commission did not act, in this case, in breach of the principle of proportionality.
38.  The second plea must therefore be rejected as unfounded.
The third plea
Arguments of the parties
44.  However, that legal basis is provided by the combined provisions of Article 5(2)(c) of Regulation No 729/70 and Articles 2 and 3 of the same regulation, under the terms of which refunds granted and intervention undertaken   "in accordance with the Community rules"   within the framework of the common organisation of agricultural markets are to be financed by the EAGGF.  By allowing the Commission to charge to the EAGGF only intervention carried out in accordance with Community provisions, those articles oblige the Commission to refuse financing of expenditure when it finds, as in this case, that irregularities have occurred (see, to that effect, Case 11/76   Netherlands   v   Commission   [1979] ECR 245, paragraph 8).
45.  It follows that, where irregularities justifying the application of a financial correction persist after the date of the written communication of the results of the checks, the Commission is entitled and even obliged to take account of that situation when it determines the period to which the financial correction in question is to relate.