Keywords
Summary

Keywords

++++

1. Agriculture ° EAGGF ° Clearance of accounts ° Right of the Commission to have inspections carried out on the spot by its officials

(Council Regulation No 729/70, Art. 5(2))

2. Agriculture ° EAGGF ° Clearance of accounts ° Refusal to fund expenditure resulting from irregularities in the application of the Community rules ° Alleged irregularity relating to the actual calculation of the amounts due to the EAGGF ° Contested by the Member State concerned ° Burden of proof

(Council Regulation No 729/70)

3. Agriculture ° Common agricultural policy ° EAGGF financing ° Conformity of expenditure with the Community rules ° Supervision ° Competence primarily vested in the Member States ° Intervention by the Commission on a complementary basis ° Limits

(EEC Treaty, Art. 5; Council Regulation No 729/70, Arts 8(1) and 9)

4. Agriculture ° Common agricultural policy ° EAGGF financing ° Principles ° Refusal to fund expenditure in the absence of controls on the part of the national authorities ° Contested on the ground that it was impossible to effect recovery in the absence of proven, serious irregularities ° No effect

(EEC Treaty, Art. 5; Council Regulation No 729/70, Art. 8)

5. Agriculture ° Common agricultural policy ° EAGGF financing ° Principles ° Obligation on the Commission to disallow irregular expenditure ° Irregularities tolerated in one financial year on grounds of fairness ° Strict application of the rules in the following financial year ° Infringement of the principles of legal certainty and protection of legitimate expectations ° None

6. Agriculture ° Common agricultural policy ° EAGGF financing ° Decision on clearance of accounts ° Time-limits ° Not complied with ° No liability on the part of the Commission in the absence of negligence

(Council Regulation No 729/70, Art. 5(2)(b))

Summary

1. The fact that, according to Article 5(2) of Regulation No 729/70 on the financing of the common agricultural policy, EAGGF accounts are to be cleared on the basis of the annual accounts, accompanied by the documents necessary in order to clear them, forwarded periodically by the Member States to the Commission, does not debar the Commission from satisfying itself by other means, such as inspections carried out on the spot by its officials in accordance with Article 9(2) of that regulation, that the data provided by the Member States are correct.

2. As far as the financing of the common agricultural policy by the EAGGF is concerned, where the Commission intends to disallow expenditure declared by a Member State, it is for the Commission to prove an infringement of the Community legislation. Once such an infringement has been established, the Member State concerned must then, if appropriate, demonstrate that the Commission committed an error as to the financial consequences to be attributed to that infringement.

In the specific case where a distinction cannot be drawn between the irregularity and its financial consequences, because the alleged infringement relates to the actual calculation of sums which the Member State had to collect and pay to the EAGGF, it is for the Member State concerned to prove that it complied with the Community rules, since it is apprised of the way in which the operation in question was conducted.

3. Under the system laid down by Regulation No 729/70 for checking that operations financed by the EAGGF were actually carried out and lawful, the Commission plays merely a role complementary to that of the Member States.

As regards taking and analysing samples as necessary, it follows from the supervisory system established by Article 9 of that regulation that this must in principle be done by the Member State either on its own initiative, pursuant to the responsibilities devolved upon it by Article 8(1) of the regulation, or at the request of the Commission, pursuant to the third subparagraph of Article 9(2) of the regulation. However, the Commission may, on the conditions laid down in the fourth subparagraph of Article 9(2), carry out certain other inspections or inquiries, including the taking of samples on the spot. In that event, the checks in question are subject to the prior agreement of the Member States and must take place in the presence of representatives of the national administrative authorities concerned. Article 9 does not empower the Commission to define procedures governing its intervention or to take samples in cases where it acts independently of the Member States. In addition, Article 5 of the Treaty requires it to act in agreement with the competent national administrative authorities.

4. A Member State cannot effectively contest the Commission' s decision to disallow EAGGF financing of part of the aid paid by that State in the absence of supervision under a system provided for by a common organization of the market on the grounds that the Commission has not proved the existence of serious irregularities in the grant of that aid and hence it is impossible in practice for the Member State to recover it from the recipients.

On the one hand, the absence of supervision, which the Community legislation requires Member States to exercise, is liable to result in major irregularities and therefore justifies disallowing some of the expenditure incurred and, on the other, Article 8 of Regulation No 729/70, which expresses, as regards the financing of the common agricultural policy, the duty of general diligence imposed by Article 5 of the Treaty, imposes on Member States an obligation to recover sums lost as a result of irregularities or negligence or, in the absence of total recovery, requires the national authorities to bear the financial consequences of the irregularities or negligence.

5. EAGGF financing of expenditure incurred by national authorities is governed by the rule that only expenditure incurred in conformity with the Community rules is to be charged to the Community budget. Consequently, once it discovers the existence of an infringement of Community provisions in payments effected by a Member State, the Commission is required to correct the accounts presented by that Member State. Where the Commission did not carry out the correction due 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.

6. In the absence of any sanction attaching to the failure by the Commission to comply with the time-limit laid down by Article 5(2)(b) of Regulation No 729/70 for taking a decision on the clearance of the accounts as regards expenditure financed by the EAGGF, that time-limit cannot be regarded as mandatory, provided that the interests of the Member State are not impaired and it is only in the case of negligence on the Commission' s part that it could incur liability for not having complied with it.