Keywords
Summary

Keywords

1 Agriculture - Common agricultural policy - EAGGF financing - Member States' obligations - Adoption of measures to ensure the regularity of expenditure

(EC Treaty, Art. 5; Council Regulation No 729/70, Art. 8(1))

2 Agriculture - EAGGF - Clearance of accounts - Power of Commission to review regularity of expenditure - Where reasonable doubt arises - Burden of proof on the Member State

3 Agriculture - Common agricultural policy - EAGGF financing - Decision concerning the clearance of accounts - Purpose - Time-limits - Failure to comply therewith - Effect on the Commission's obligation to disallow expenditure not incurred in accordance with the Community rules - No effect

(Council Regulation No 729/70, Arts 3 and 5)

4 Agriculture - EAGGF - Clearance of accounts - Disallowance of expenditure incurred as a result of failure to apply the Community rules correctly - Financial correction - Assessment of the extent of the shortcomings and the degree of risk to the EAGGF - Where contested by the Member State concerned - Burden of proof

5 Agriculture - Common agricultural policy - EAGGF financing - Member States obliged to inform the Commission of any irregularities detected - Obligatory for irregularities to be communicated - Meaning - Attempts at fraud - Covered

(Council Regulation No 283/72, Arts 3 and 4)

Summary

1 Article 8(1) of Regulation No 729/70, which expressly lays down in the field of the financial management of the common agricultural policy the obligations imposed on Member States by Article 5 of the Treaty, defines the principles according to which the Community and the Member States must ensure the implementation of Community decisions on agricultural intervention financed by the EAGGF and combat fraud and irregularities in relation to those operations. It obliges the Member States to take the measures necessary to satisfy themselves that the transactions financed by the EAGGF are actually carried out and are executed correctly.

2 Where the Commission refuses to charge expenditure to the EAGGF on the ground that it was incurred as a result of breaches of Community rules for which a Member State can be held responsible, it is required not to demonstrate exhaustively that the checks carried out by the Member States are inadequate but to adduce evidence of serious and reasonable doubt on its part regarding the checks carried out by the national authorities. The reason for this mitigation of the burden of proof on the Commission is that it is the State which is best placed to collect and verify the data required for the clearance of EAGGF accounts, and that it is consequently for the State to adduce the most detailed and comprehensive evidence that it has made checks and, if appropriate, that the Commission's assertions or the financial consequences the Commission has drawn from its doubts are incorrect.

3 The purpose of the procedure for clearing the accounts is to ensure that the credits made available to the Member States have been used in accordance with the Community rules in force in the context of the common organisation of the markets. The Commission may only charge to the EAGGF sums paid in accordance with the rules laid down in the various sectors of agricultural production, leaving the Member States to bear any other sum paid, and in particular any amounts which the national authorities wrongly believed themselves authorised to pay in the context of the common organisation of the markets.

Consequently, until the accounts have been duly cleared, the Commission is obliged under Article 3 of Regulation No 729/70 to refuse to charge to the EAGGF intervention intended to stabilise the agricultural markets which has not been carried out in accordance with the Community rules. That obligation does not disappear merely because the accounts are cleared after the expiry of the period prescribed in Article 5 of that regulation.

4 If, in discharging its duty to effect clearance of the EAGGF accounts, the Commission finds that there is no adequate system of controls in the Member State concerned, it may disallow the entire expenditure incurred by that State, which accordingly cannot criticise it for having applied merely a flat-rate reduction of 10%. Moreover, where - instead of disallowing all the expenditure affected by the infringement - the Commission has endeavoured to establish rules under which irregularities are treated differently, depending on the extent of the shortcomings in the checks and the degree of risk to the EAGGF, it is for the Member State to show that those criteria are arbitrary and unfair.

5 It is clear from Articles 3 and 4 of Regulation No 283/72 concerning irregularities and the recovery of sums wrongly paid in connection with the financing of the common agricultural policy and the organisation of an information system in this field that, in order to prevent irregularities and increase cooperation between the Member States and the Commission, the competent national authorities must communicate to the Commission the irregularities which have been detected on their territory, including attempts at fraud.

A decision by the national body with competence for intervention checks refusing to accept a product for intervention or establishing an apparent attempt at fraud, constitutes a primary administrative finding within the meaning of the first paragraph of Article 3 of Regulation No 283/72, which requires the Member States to communicate to the Commission a list of irregularities which have been the subject of primary administrative or judicial findings of fact.