COMMISSION DECISION

of 19.10.2020

on the waiver of the recovery of the debt against IMED (ISTITUTO PER IL MEDITERRANEO ASSOCIAZIONE) for an amount of 342 486.99 EUR and 33 887.91 EUR, respectively

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union  1 , and in particular Article 101(2)(b) thereof,

Whereas:

Grant Agreement EIDHR/2010/214-901:

(1)On 5 October 2010, Grant Agreement EIDHR/2010/214-901 was signed between the Commission (‘Contracting Authority’) and ISTITUTO PER IL MEDITERRANEO ASSOCIAZIONE (‘IMED’ – ‘beneficiary’) in the framework of a project called ‘Women and Community Based Culture – WAYS’. The objective of the programme was to disseminate information on fundamental rights and freedoms among ordinary people in Syria, so that they could become agents of change within their communities and society at large. Women and children were the main target groups, but the Action also addressed intellectuals, youths, musicians and other artists. The activities foresaw the establishment of community based libraries, through which people involved should acquire knowledge of the main issues related among others to human rights and fundamental freedoms. In addition, it was envisaged that links between women rights and human rights would be strengthened. Music and support to female musicians was also used to develop a culture of human rights.

(2)The beneficiary IMED was a non-governmental organisation established in Italy as an association without legal personality or unrecognised association (associazione non riconosciuta).

(3)The total eligible cost of the action was EUR 709 000.00 with a maximum EU contribution of EUR 632 499.00.

(4)The initial duration of the contract was 24 months.

(5)The project implementation started in October 2010, but faced problems from the beginning due to the political situation in the Neighbourhood South Region. Consequently, three addenda to the contract had to be signed.

(6)By addendum No 1 of 5 October 2012, the duration of the contract was extended for an additional four months due to the worsening political situation in Syria.

(7)Once it was obvious that the situation would never permit carrying on implementation in Syria, a rider was proposed by IMED in order to reallocate activities within Syrian refugee camps inside Lebanon. Based on these arguments, addendum No 2 of 2 February 2013 was signed, for a new extension of one and a half months to assess the feasibility of the proposed action.

(8)Following a positive assessment, the final addendum No 3 was signed on 3 July 2013, granting a third extension of the contract for an additional six and a half months, in order to allow the full implementation of activities in Lebanon, in light of the difficult conditions in Syria. Therefore, following the amendments, the total duration of the contract would be 36 months, ending on 19 August 2014. With addendum No 3, the Contracting Authority also acknowledged that the activities had been suspended from 5 July 2012 until 20 May 2013.

(9)Two pre-financing payments were made respectively in 2010 and 2013 for a total amount of EUR 569 249.00. The General Conditions of the contract provide that where the beneficiary of a grant contract is a non-governmental organisation a financial guarantee is requested if the total sum of pre-financing paid under the contract reaches certain thresholds. Based on this provision the Commission did not request a financial guarantee from IMED.

(10)Due to the deteriorating political situation both in Syria and Lebanon, the Authorising Officer decided to terminate the contract and informed IMED accordingly by letter of 7 May 2014.

(11)By letter of 20 June 2014 IMED was asked to submit the final narrative and financial reports and the expenditure verification report according to the contractual conditions.

(12)The reports were not received despite several reminders and requests for clarification. As a result, on 11 September 2015 a pre-information letter was addressed to IMED announcing the intention to revocer the full pre-financing amount of EUR 569 249.00.

(13)In reaction to the pre-information letter IMED eventually sent the requested reports belatedly in February 2016. Upon assessment and revision, the amount to be recovered was fixed at EUR 342 486.99.

(14)On 14 October 2016, the Commission sent IMED a new pre-information letter announcing its intention to recover the amount of EUR 342 486.99.

(15)In the absence of a reply from IMED, the Commission issued debit note n° 3241617203 on 20 December 2016 and sent it to IMED on the same day.

(16)Despite the reminder letter of 2 March 2017 and the letter of formal notice of 4 April 2017 (acknowledgement of receipt of the debtor dated 10 April 2017) sent by the Commission, the debit note remained uncashed.

(17)On 16 June 2017 the case was referred to the Legal Service to start enforcement of recovery.

Grant Agreement EIDHR/2010/214-899:

(18)On 14 December 2010, Grant Agreement EIDHR/2010/214-899 was signed between the Commission, represented by the Delegation of the European Union to Tunisia (‘Contracting Authority’) and IMED (‘beneficiary’) in the framework of the project ‘DROUCE - Droits Sociaux et Citoyenneté’. The project aimed at promoting Civil Society Rights, respect of fundamental liberties, development of democracy in society and in public life, as well as the promotion of rule of law. This would be done principally by fostering social dialogue via the trade unions. The project partner was the Tunisian Trade Union UGTT – Union Générale Tunisienne du Travail.

(19)The total eligible cost of the action was EUR 667 630.19 with a maximum EU contribution of EUR 594 194.19.

(20)The initial project duration was 24 months.

(21)Four addenda requiring the signature of a new legal document were agreed upon.

(22)Addendum No 1 foresaw a financial audit by an external auditor.

(23)Addendum No 2 was necessary due to modifications in the budget within budget headings as well as extension by twelve months due to problems in the starting phase of the project.

(24)Addendum No 3 foresaw another extension by five months and some budget re-allocation within budget headings. The further extension was approved by the Delegation because it was due to the political situation in Tunisia and more notably the problems faced by the project partner UGTT. The trade union activists were in fact limited in their freedom and availability.

(25)Addendum No 4 corrected the erroneous Article 4 of the Special Conditions stipulating the conditions of pre-financing payment.

(26)Three pre-financing payments and one final payment were executed, for a total amount of EUR 594 194.19. The General Conditions of the contract provide that where the beneficiary of a grant contract is a non-governmental organisation a financial guarantee is requested if the total sum of pre-financing paid under the contract reaches certain thresholds. Based on this provision the Commission did not request a financial guarantee from IMED.

(27)On basis of a financial audit carried out by an external firm under the Commission’s instructions, several financial irregularities were detected (insufficient supporting documents, accounting errors, expenses that were unnecessary for the implementation of the action and unjustified VAT paid by the partner). These facts resulted in the issuance of debit note n° 3241804812 on 30 March 2018 for ineligible expenditure amounting to EUR 33 887.91.

(28)This second debit note was notified to IMED on 3 April 2018. A reminder was sent on 29 May 2018, followed by the letter of formal notice of 04 July 2018, with an acknowledgement of receipt by the debtor of 16 July 2018.

Recovery Procedure:

(29)By letter of 15 May 2018, the Commission attempted to find an amicable settlement with the debtor (IMED) regarding recovery order n° 3241617203, in accordance with Article 13.2 of the General Conditions 2 .

(30)IMED replied by letter of 6 July 2018 that the association was not able to pay the amount due recovery order n° 3241617203.

(31)As IMED was an Italian non-profit association and appeared as “inactive” on the basis of an Orbis report of 19 April 2018), the Commission’s’ Legal Service engaged in parallel a lawyer in Italy in order to evaluate: 1) possible negotiations with the debtor; 2) the possibility of recovery after a judicial procedure before the Brussels courts.

(32)The conclusions of this search were that (i) IMED had been struck off the register of the Chamber of Commerce of Rome in 2015 and was not registered in the Lazio Region’s public registry of associations ‘Albo e Registro per il Terzo Settore della Regione Lazio’; (ii) the premises where IMED’s last address was located are currently occupied by the Italian General Confederation of Labour.

(33)The Italian lawyer attempted to achieve an amicable settlement with IMED. This constituted the second attempt relating to recovery order n° 3241617203 and the first concerning recovery order n° 3241804812. However, the result of this attempt for amicable settlement was that during a meeting on 26 February 2019 between IMED’s legal representative and the lawyer representing the Commission, IMED declared that they were insolvent, and no agreement could be found in order to settle the claim.

(34)The Legal Service therefore suggested that the external lawyer verify whether a Commission action against IMED’s former director was possible. According to the lawyer, Italian law establishes that in the case of an “assoziazione non riconsciuta” the directors may be personally and jointly liable for the debts of the association, but only in case they personally intervened in the origin of the claim. However, this responsibility is subject to a tight limitation period of 6 months and the case law is very strict when interpreting this personal and joint liability of directors.

(35)In the case of the Commission’s claims, it was unclear whether this limitation period runs from the day the debit notes were issued, in December 2016 and March 2018 respectively, or if it should be counted from the day the amicable settlement procedure provided for in Article 13.2 of the General Conditions of the grant agreements was concluded. It appeared that, in the more optimistic scenario, the claim of the first RO n° 3241617203 (EUR 342 486.99) would have already expired, whereas the claim of the second RO n° 3241804812 (EUR 33 887.91) would have expired on 26.8.2019.

(36)Therefore, on 9.8.2019, the Legal Service consulted the Authorising Officer and the Accountant Service on the way to proceed, considering that there were serious doubts about the success of taking legal action against the association’s former director, and taking into account also the cost of the procedure before the Italian courts (at least EUR 10 000) and the lack of certainty regarding the former directors’ solvency, the available information being very limited for physical persons.

(37)Given these elements, both the Accounting Officer and the Authorising Officer agreed not to take any legal action against the former director of IMED.

(38)In the given circumstances and after the legal analysis of the case and relevant Italian law and procedure, the Commission established that it has exhausted its realistic possibilities to recover the claims from IMED.

(39)On 29th November 2019, the Legal Service recommended the Authorising Officer to waive the outstanding claims, pursuant to Article 101(2)(b) of the Financial Regulation.

HAS DECIDED AS FOLLOWS:

Article 1

The recovery of the entitlement for the outstanding amount of EUR 342 486.99 (three hundred forty-two thousand four hundred eighty-six euro and ninety-nine cents) established as being receivable from ISTITUTO PER IL MEDITERRANEO ASSOCIAZIONE and registered in the Commission's central accounting system under recovery order n° 3241617203, is waived.

Article 2

The recovery of the entitlement for the outstanding amount of EUR 33 887.91 (thirty-three thousand eight hundred eighty-seven euro and ninety-one cents) established as being receivable from ISTITUTO PER IL MEDITERRANEO ASSOCIAZIONE and registered in the Commission's central accounting system under recovery order n° 3241804812, is waived.

Article 3

The Authorising Officer by delegation, the Director-General of the Directorate-General for Neighbourhood and Enlargement Negotiations, is authorised to issue the negative recovery order for the waiver in the Commission’s central accounting system.

Article 4

This decision shall be without prejudice to the conduct of an investigation by the European Anti-Fraud Office concerning ISTITUTO PER IL MEDITERRANEO ASSOCIAZIONE or persons legally liable for the acts of that company about suspicions of fraud, corruption and any other illegal activity affecting the financial interests of the European Union, and without prejudice to the appropriate judicial, administrative and/or financial action that may need to be taken in accordance with recommendations issued by the European Anti-Fraud Office as a result of its investigation.

Done at Brussels, 19.10.2020

(1)    OJ L 193, 30.7.2018, p.1

(2)    The Article is the same for both Grant Agreements.