C-331/00

A — Preliminary remarks I - 9094

B — Corrections due to shortcomings in the administration and control of aid in

the arable crops sector I - 9096

1. Relevant legislation I - 9096

2. Commission observations and procedure I - 9100

3. Summary of the arguments of the parties I - 9104

4. Assessment I- 9114

D — The corrections due to failure to apply the IACS in the beef and veal sector . I- 9115

1. Relevant legislation I - 9115

2. Commission findings and procedure I - 9116

3. Summary of the arguments of the parties I - 9117

4. Assessment 1 - 9118 1 — Original language: Italian.

F — The corrections due to delay in executing the additional payments provided

for in Regulation (EC) No 1357/96 I- 9121

1. Relevant legislation I - 9121

2. Commission findings and procedure I - 9123

3. The correction of GRD 237 098 402 I- 9124

(a) Summary of the arguments of the parties I - 9124

G— The financial corrections due to the retentions made by the ACA I- 9131

1. Legal and factual background I- 9131

2. Analysis I- 9131

H— The financial corrections due to failure to comply with payment deadlines . . I- 9132

1. Applicable legislation I - 9132

2. Facts and arguments of the parties I- 9133

— GRD 26 482 863 795 paid by way of support in the arable crops sector, due to the shortcomings of the integrated administration and control system and — GRD 5 326 625 paid in the cereals the incorrect deduction of a portion of sector and excluded from Community the support (first, sixth and seventh grounds); 3 — Council Regulation (EC) No 1357/96 of 8 July 1996 providing for additional payments to be made in 1996 with the premiums referred to in Régulation (EEC) No 805/68 on the common organisation of the market in beef and veal and 2 — OJ 2000 L 180, p. 49. amending that Regulation (OJ 1996 1. 175, p. 9).

I - 9089

OPINION OF MR TIZZANO — CASE C-331/00

financing in respect of the larger sum of expenditure has not been effected accord- GRD 141 667 389 due to the delay in ing to Community rules. It provides in making the relevant payments (eighth particular that the Commission, after con- ground). sulting the Fund Committee:

'shall decide on the expenditure to be excluded from the Community financing I I — General legislative framework referred to in Articles 2 and 3 where it finds that expenditure has not been effected in compliance with Community rules.

GREECE v COMMISSION

particular to the degree of non-compliance The Member States shall inform the Com- found. The Commission shall take into mission of the measures taken for those account the nature and gravity of the purposes and in particular of the state of infringement and the financial loss suffered the administrative and judicial procedures. by the Community.

2. In the absence of total recovery, the ...'. financial consequences of irregularities or negligence shall be borne by the Commu- nity, with the exception of the con- sequences of irregularities or negligence attributable to administrative authorities or other bodies of the Member States. 5. Articles 8(1) and (2) of Regulation No 729/70, as amended by Regulation No 1287/95, provides that:

The sums recovered shall be paid to the accredited paying agencies and deducted by them from the expenditure financed by the Fund. The interest on sums recovered or ' 1 . Member States in accordance with paid late shall be paid into the Fund'. national provisions laid down by law, regulation or administrative action, shall take the measures necessary to:

6. With reference to Article 5(2)(c) of Regulation No 729/70 cited above, I would draw the Court's attention to Articles 8(1) — satisfy themselves that transactions and (2) of Regulation (EC) No 1663/95 6 financed by the Fund are actually which lays down detailed rules for the carried out and are executed correctly, application of the former. Pursuant to the latter provisions:

— prevent and deal with irregularities; '1. When, as a result of any enquiry, the Commission considers that expenditure

2 . The d e c i s i o n s r e f e r r e d to in Article 5(2)(c) of Regulation (EEC) No 729/70 shall be taken after an examin- ation of any report drawn up by the (b) to try to reconcile the divergent posi- Conciliation Body according to the provi- tions of the Commission and the sions laid down in Directive 94/442/EC'. Member State concerned, and

7. Article 1(1) of Decision 94/442/EC 7 lays down that: (c) at the end of its investigations, to draw up a report on the outcome of its efforts at reconciliation making any 7 — Commission Decision 94/442/EC of 1 July 1994 setting up a conciliation procedure in the context of the clearance of the remarks it deems useful should all or accounts of the European Agricultural Guidance and some of the points of the dispute Guarantee Fund (EAGGF) Guarantee Section (OJ 1994 L 182, p. 45). remain unresolved'.

I - 9092

GREECE v COMMISSION

8. Pursuant to Article 1(2)(a) of the 10. C o m m i s s i o n w o r k i n g d o c u m e n t decision: Vl/216/93 of 1 June 1993, later replaced by document VI/5330/97 of 23 December 1997, sets out the guidelines that the Commission intends to follow when apply- ing financial corrections in the context of the EAGGF clearance of accounts pro- cedure. According to those guidelines, 'the position of the [Conciliation] Body when it is not possible to determine the shall be without prejudice to the Commis- actual amount of the incorrect payments, sion's final decision on the clearance of the and hence to quantify the financial loss accounts...'. suffered by the Community, the Commis- sion applies lump-sum financial correc- tions, usually equal to 2 % , 5 % , 10% or 2 5 % of the declared expenditure, depend- ing on the extent of the impending loss.

...'.

12. On the basis of these guidelines, the Commission applies the various rates of lump-sum correction: 13. The guidelines do however provide for the application of a rate of 25% 'in the case of total non-compliance or serious short- comings on the part of a Member State in applying a system of checks, or of proven and frequent irregularities or negligence with respect to combating fraudulent or irregular practices'. '[w]hen one or more essential checks are not applied or are applied so defectively or sporadically as to be useless for the purpose of deciding on the eligibility of a claim or preventing irregularities, a correction of 14. In exceptional cases, larger corrections 10% is justified in that it is reasonable to made be made, up to 100%. assume that there is a high risk of serious financial loss for the Fund.

I I I— Analysis

When all the essential checks have been applied, but not in the number, or with the frequency or intensity required by law, a correction of 5% is justified in that it is A — Preliminary remarks reasonable to assume that insufficient guar- antees have been provided concerning the validity of the requests and that there is a significant risk of financial loss for the 15. Before examining the grounds adduced Fund. by the Greek Government, I think it would I - 9094

GREECE v COMMISSION

be useful first to recall various principles tion of particular supervisory measures. 9 which, according to the Court's consistent That provision, which is the expression, in case-law, should be adhered to when the context of the financing of the common assessing whether objections to decisions agricultural policy, of the obligation of to refuse Community financing for expen- reasonable cooperation enshrined in diture incurred by Member States are well Article 10 EC, defines, according to the founded. Court's case-law, the principles according to which the Community and the Member States are to ensure the implementation of intervention measures financed by the EAGGF and combat fraud and irregular- ities in relation to those operations. 10

I - 9095

OPINION OF MR TIZZANO — CASE C-331/00

that that there are irregularities in the data B — Corrections due to shortcomings in submitted by the latter, but to adduce the administration and control of aid in the evidence of serious and reasonable doubt arable crops sector on its part regarding such checks or data. 13

1. Relevant legislation

21. Regulation (EEC) No 3508/92 1 16estab- 19. The burden of proof lies thus because it lished an integrated system for the adminis- is the Member State that is best placed to tration and control, by the competent collect and verify the data required for the authorities of the Member States, of certain clearance of EAGGF accounts, and it must Community aid schemes for agricultural therefore adduce the most detailed and producers (IACS). Pursuant to Article 1(1) comprehensive evidence that it has made of that regulation, the IACS applies, in checks or that its figures are accurate and, particular, to the support system intro- if appropriate, that the Commission's duced, in the arable crops sector, by assertions are incorrect. 1 4 Inthis connec- Regulation (EEC) No 1765/92 1 7and, in tion, a Member State whose checks have the beef and veal sector, to the premium been deemed non-existent or inadequate by arrangements established by Articles 4(a) to the Commission cannot rebut the findings (h) of Regulation (EEC) No 805/68. 18 of the latter by mere assertions which are not substantiated by evidence of a reliable and operational supervisory system. 15

22. Within the meaning of Article 2 of Regulation No 3508/92, the IACS com- prises the following elements:

25. The integrated control system referred to in Article 7 of the regulation covers all (d) aid applications; aid applications submitted and is based in particular on administrative checks, on- the-spot checks and, if appropriate, verifi- cation by aerial or satellite remote sensing.

(e) an integrated control system.

26. In terms of checks, Article 8 of Regu- lation No 3508/92 lays clown that:

23. For the purpose of this case, it should be remembered that, under Article 3 of that regulation, the computerised data base must record, for each agricultural holding, the data obtained from the aid applications. ' 1 . Member States shall carry out adminis- The data base must, in particular, 'allow trative checks on aid applications. direct and immediate consultation, through the competent authorities of the Member State, of the data relating at least to the previous three consecutive calendar years and/or marketing years'. Decentralised data bases may be set up on condition that these, and the administrative procedures for 2. Administrative checks shall be supple- recording and accessing data 'are designed mented by on-the-spot checks covering a homogeneously throughout the territory of sample of agricultural holdings. For all the Member State and are compatible with these checks, Member States shall draw up one another'. a sampling plan.

I - 9097

OPINION OF MR TIZZANO — CASE C-331/00

19 — Council Regulation (EC) No 2466/96 of 17 December 20 — Commission Regulation (EEC) No 3887/92 of 1996 amending Regulation (EEC) No 3508/92 establishing 23 December 1992 laying down detailed rules for an integrated administration and control system for certain applying the integrated administration and control system Community aid schemes (OJ 1996 L 335, p. 1). for certain Community aid schemes.

I - 9098

GREECE v COMMISSION

— 5% of "area" aid applications.... — the findings of checks made in previous years;

Should on-the-spot checks reveal signifi- — other factors to be defined by the cant irregularities in a region or part of a Member State. region the competent authority shall make additional checks during the current year in that area and shall increase the percentage of applications to be checked in the follow- ing year. 5. On-the-spot checks shall be unan- nounced and cover all the agricultural parcels and animals covered by one or more applications. Advance warning limited to the strict minimum necessary may however be given, although as a 4. Applications subjected to on-the-spot general rule, this should not exceed 48 checking shall be selected by the competent hours. authority on the basis of a risk analysis and an element of representativeness of the aid applications submitted. The risk analysis shall take account of:

At least 50% of the minimal checks on animals shall be made during the retention period. Checks may be made outside that period only if the register provided for in — the amount of aid involved; A r t i c l e 4 of C o u n c i l D i r e c t i v e 92/102/EEC... is available'.

30. Pursuant to Article 12 of Regulation N o 3887/92: 32. Following inspections undertaken in Greece between 1996 and 1999, the Com- mission complained to the Greek auth- orities about a series of shortcomings in the administration and control of aid in the arable crops sector in respect of the '[e]very inspection visit must be the subject 1 9 9 5 - 1 9 9 7 h a r v e s t s (financial y e a r s of a report setting out, in particular, the 1996-1998), particularly with respect to reasons for the visit, the persons present, the following: 21 the number of parcels visited, those meas- ured, the measuring methods used, the number of animals of each species found and where and, where applicable, their identity numbers...'.

(a) the failure to implement the IACS fully. By the prescribed date of 1 January 1997, the alphanumeric identification system for agricultural parcels had not 31. Article 17(1) of Regulation N o 3887/92 been completed, nor had the data base provides that:

21 — These shortcomings are set out in detail in the inspection reports sent to the Greek authorities by letters No 36811 of 27 September 1996 and No 32539 of 24 August 1998 (defence, annexes 1 and 2). The results of the bilateral discussion between the Commission and the Greek auth- orities are set out in letter No 43741 of 23 September '[i]n cases where by virtue of Article 13 of 1999, whilst letter No 12764 of 17 May 2000 states the Commission's final position following the conciliation Regulation (EEC) N o 3508/92 certain fea- procedure (defence, annexes 6 and 7).

I - 9100

(c) the inaccuracies of the data on har- vests, payments and checks, supplied (a) in respect of the 1995 harvest (1996 financial year): 22 — It is worth noting that Regulation No 1663/95 allows the department or paying agencies of the Member State to delegate to other bodies the verification of aid applications and/or the authorisation of the relevant payments whilst requiring that the former exercise timely supervision of the latter [see in particular paragraph 4, subparagraphs (iv) and (v), of the Annex to the regulation, cued below in point 58]. 23 — See in this connection paragraph 6, subparagraphs (iii) and (iv) of the Annex to Regulation N o 1663/97 (cited below, (i) errors in preparing a risk analysis. point 58). The criteria used made it more

I - 9101

OPINION OF MR TIZZANO — CASE C-331/00

likely that aid applications show- (ii) the crop statistics laid down by ing a decrease in surface area by Regulation (EC) No 658/96 24 comparison with the previous year were sent in late and were incom- were more likely to be inspected plete; than those showing an increase;

(iii) failure to carry out cross-checks.

(ii) the advance warning to farmers in the case of on-the-spot checks. In the province of Salónica, it was found that farmers were warned of an imminent check, several days in advance, contrary to Article 6 of (c) in respect of the 1997 harvest (1998 Regulation No 3887/92 which financial year): allows a maximum of 48 hours' advance notice.

(ii) failure, at local level, to comply ticular, the administrative checks had been with the instructions given by carried out regularly as had the cross- DIDAGEP regarding the checks to checks and on-the-spot checks. The delays be carried out following the risk had not in fact undermined the efficacy of analysis. The Commission found, the checks: even after harvesting, fields in fact, that the regional Director- contained traces of the crop grown and, in ate of Agriculture for Pyrgos had any case, farmers were required to main- carried out checks on the basis of tain a sample of the crops grown precisely different criteria from those stipu- in order to allow inspections to be carried lated by the central authorities. out. In the light of the arguments adduced by the Greek authorities, and unsure as to whether the 5% correction should be applied as proposed by the Commission, the Conciliation Body, in its final report of 16 March 2000, asked the Commission to reconsider its opinions regarding the con- trol system applied in Greece and hence to 34. On the basis of these findings, the review the amount of the proposed correc- Commission proposed to apply two lump- tions. 26 sum corrections to the expenditure declared by Greece in the arable crops sector for the 1996-1998 financial years, one of 5% in respect of aid applications subject to nor- mal on-the-spot checks and the other of 2% for applications checked by remote sensing, together totalling GRD 26 482 863 795. 25

not even completed the IACS by the supplied by the topographical service of the 1 January 1997 deadline. Therefore, Ministry of Agriculture. Contrary to the according to the Commission, the proposed Commission's assertions, this complies corrections are more than justified in view with Article 4 of Regulation No 3508/92, of the seriousness of the shortcomings which in fact refers to the use of land found. registry maps and documents and other cartographic references or of aerial photo- graphs or satellite pictures. As regards data bases, the Greek Government does not deny that it failed to create them by the prescribed deadline, its only justification 37. The disputed decision embodied that being delays in the tendering procedure for finding and applied the corrections at the the supply of the required computer pro- proposed rates of 5% and 2%. gramme.

3. Summary of the arguments of the parties 40. Secondly, the Greek Government does not dispute the discrepancies found in the statistical data forwarded to the Commis- sion, and merely invokes by way of justifi- cation the absence of a network connection 38. According to the Greek Government, to the local Ministry of Agriculture auth- the corrections are based on a misinter- orities. On the other hand, as regards the pretation of Article 4 of Regulation late communication of the crop statistics No 3508/92 and an incorrect assessment referred to in Article 8 of Regulation of the facts. Furthermore, the corrections No 658/96, the Greek Government main- imposed infringe the principle of propor- tains that it is impossible to comply with tionality. the time-limit laid down in that provision due to the large number of checks to be made and the crop types involved.

tendering procedures used to appoint the cross-checks have always been carried out, bodies to undertake those checks. It claims albeit manually, and that, as from the that the 2% correction with respect to the 1998/1999 marketing year, they were car- checks conducted by remote sensing is ried out before aid was disbursed. incorrect, on the one hand because the Greek authorities have observed the detailed rules for performing those checks as laid down by the Commission; on the other hand because, as the Commission itself says, in relation to the remote sensing checks, the requirements relating to on-the- spot checks — which are a key element — 43. Fourthly, with respect to supervision of were generally respected. 27 According to the ACA, the Greek Government claims the applicant, the 5% correction with that local Ministry of Agriculture direc- respect to on-the-spot checks is therefore torates are cooperating with the ACA at all disproportionate. stages of the checks; those directorates have direct access to the ACA's data bases and supervise the activities of the latter on an ongoing basis. The same applies to the activities of PASEGES (union of agricul- tural cooperatives), a body responsible for the introduction of computerised struc- tures. Furthermore, according to the appli- cant, it is the local authorities that under- take the checking and clearance of expen- diture. As from the 1998/1999 harvesting year, the fact that the local authorities conducted checks was attested on the verification check-lists and payment orders 42. Still on the subject of checks, the Greek were only issued after a further cross-check Government disputes some of the con- had been carried out by the data processing clusions reached by the Commission fol- department of the Ministry of Agriculture. lowing its inspections in Greece. Most Contrary to the Commission's assertions, importantly, the situation found in the the conditions laid down in Regulation province of Salonica was a special case No 1663/95 have in fact been respected. and not representative of the country as a whole, where producers were only given a 48-hour advance warning in the case of on-the-spot checks, as laid down in Article 6 of Regulation No 3887/92. Moreover, the improved statistics on checks, achieved by using a new computer programme, shows that the minimum percentage of checks was 44. The Greek Government therefore con- achieved for the 1997/1998 marketing tends that the significant progress that it year. Finally, the applicant stresses that claims to have made in implementing the IACS, and also the minor nature of the shortcomings in relation to the complexity 27 — The Greek Government refers here to letter No 43741 or of the system itself, do not justify the 23 September 1999, cited above (point 5). imposition of corrections in the amount

46. In the Commission's view, the fact remains that the inspections in Greece 4. Assessment showed that, under the system of checks applied by the Greek authorities, parcels could not be located precisely nor was it possible to verify whether the terms for the grant of aid had been fulfilled. With regard to the supervision of the ACA by the 49. For my part, I consider that the argu- regional agriculture directorates, the Com- ments of the Greek Government are unac- I - 9106

GREECE v COMMISSION

51. As we have seen, the Greek Govern- ment does not even dispute the complaints made against it during the clearance of accounts procedure concerning the discrep- ancies found in the statistics forwarded to the Commission. Purely as regards the 50. As regards the completion of the IACS, statistical information required by Article 8 the Greek Government in fact admits that of Regulation No 658/96, and without- the data base referred to in Article 3 of denying the delays and shortcomings com- Regulation No 3508/92 was not created by plained of in this connection, the Greek the specified time-limit and was not oper- Government invokes the impossibility of ational in any of the financial years in complying with the 15 September deadline question. As we have seen, that government laid down in that provision. It does not maintains that it nevertheless carried out seem to me, however, that the grounds the alphanumeric identification of parcels adduced in support of that argument — required by Article 4 of the regulation, not by orthophotographic means, but by using other available cartographic data. In this 29 — See the report on the inspection undertaken in Greece from 30 March to 3 April 1998 (paragraph 2.1.2, pp. 3-4) which regard, without needing to determine was forwarded to the Greek authorities by letter No 32539 whether or not such identification fulfilled of 24 August 1998, cited above in footnote 21. 30 — If I have interpreted correctly the documents forwarded by the requirements of Community law, I the Greek autlioritics to the Commission on 13 December 1999 (see the communication at Annex 1 to the rejoinder), by that date — which is almost two years after the deadline for completing the IACS — 6.6% of existing parcels had not yet been identified, sometimes as many as 28 — Points 18-19. 45%, depending on the regional offices concerned.

53. I also note that the Greek Government does not even dispute the delays in carrying out on-the-spot checks. It merely maintains that the 5% correction in respect of expen- diture relating to aid applications subject to such checks is excessive and disproportion- ate, without makings any further sub- 52. With regard to delays in making checks missions on this matter. I should however using remote sensing techniques, I consider point out that this complaint is reiterated that the Greek Government has not only and developed in relation to a different, failed to produce any evidence to support specific ground of the application concern- its claim that the Commission's assessment ing the amount of the lump-sum correc- is incorrect, but it has actually misinter- tions applied by the contested decision. I preted the thrust of the latter's conclusions will therefore examine it when I consider and hence of the basis for the disputed that particular ground. correction. It is true that the justification for a more modest correction in respect of expenditure relating to applications checked by remote sensing lies in the fact that, despite the delays with on-the-spot checks, the earlier stages of checking, including examination of the pictures obtained, were carried out properly. How- ever, this does not alter the fact that these 54. Still with regard to checks, I would very delays — which the applicant does point out that, although the Greek Govern- not dispute — are the root cause of the ment disputes the accuracy of certain problems with identifying the crops grown specific findings of the Commission, it has on the various parcels, and hence of the not provided any evidence to the contrary. potential ineffectiveness of the checks, In particular, it has not shown that, highlighted by the Commission. In my contrary to what the Commission found opinion, therefore, the arguments adduced in the province of Salónica, the maximum

C — The correction due to shortcomings in the administration, control and super- 55. Likewise, with respect to the super- vision of aids for early retirement from vision of the ACA, I do not feel that the farming Greek Government has shown either that the Commission's findings were inaccurate or that, for each of the financial years in question, the competent authorities effec- tively supervised the activities of those associations. In particular, I would point out that, although the Greek Government 1. Relevant legislation claims that the regional directorates of the Ministry of Agriculture have direct access to the data bases of the ACA, it does not specifically state and does not prove that it- is possible to access these data bases via a 57. In the context of measures accompany- computerised link and not, as the Commis- ing the reform of support mechanisms for sion found, by going in person to the ACA agricultural markets undertaken in 1992, and using their computerised information. Regulation (EEC) No 2079/92 31 allows As for the alleged improvements to pro- Member States to institute an aid scheme cedures, introduced during the 1998 finan- for early retirement from farming, part- cial year, such as attestation that the financed by the Guarantee Section of the regional directorates have checked the payment proposals prepared by the ACA, I can only endorse the position adopted by 31 — Council Regulation (EEC) No 2079/92 of 30 June 1992 instituting a Community and scheme for early retirement the Commission during the clearance of from farming (OJ 1992 1. 215, p. 91).

(v) Where documents relating to the claims authorised and controls effected are retained by the other bodies, both these bodies and the (ii) The bodies dispose of effective agency shall set up procedures to systems for ensuring that they fulfil ensure that the location of all such I-9110

GREECE v COMMISSION

documents that are relevant to 6. The agency shall adopt the following specific payments made by the procedures or those offering equivalent agency is recorded, and that these guarantees: documents may be made available for inspection at the agency's office at the request of the persons and bodies who would normally have the right to inspect such docu- ments, which include:

— the agency's staff who deal with (ii) The division of duties shall be such the claim; that no official has responsibility for more than one of the responsi- bilities for authorising, paying or accounting for sums charged to EAGGF, and that no official per- forms one of those tasks without his work coming under the super- vision of a second official. — the agency's internal audit service;

The responsibilities of each official shall be defined in writing, includ- — the body that attests the agency's ing the setting of financial limits to annual declaration; his authority. Staff training shall be appropriate, and there shall be a policy for rotating staff in sensitive positions, or alternatively for increased supervision.

— mandated officials of the European Union.

(iv) A claim shall be authorised for p a y m e n t only after sufficient checks have been made to certify that it complies with Community regulations. These checks shall 2. Commission findings and procedure include those required by the regu- lation governing the specific meas- ures under which aid is claimed, and those required pursuant to Article 8 of Regulation (EEC) 60. During the course of a inspection No 729/70 to prevent and detect carried out in Greece between 3 and fraud and irregularity with par- 6 June 1997, EAGGF inspectors found a ticular regard to the risks pres- series of shortcomings concerning the ented. The checks to be undertaken administration and control of the early shall be specified in a check-list retirement aid scheme introduced in Greece and their performance shall be pursuant to Regulation N o 2079/92. As the attested for each claim, or for each relevant inspection report indicates, 3 3 the batch of claims. shortcomings found by the Fund inspectors relate, in particular, to the following:

(a) The annual number of sample checks performed by the Agricultural Bank of Greece (ATE), the agency responsible for administering the scheme, which is lower than required by the interminis- terial decision of 20 September 1994. It was found, in fact, at the offices of the

59. The detailed rules for implementing the 32 — Application, Annex 8. early retirement aid scheme provided for in 33 — See the annex to letter No 41854 of 5 November 1998 Regulation N o 2079/92 were laid down in (defence, Annex 3).

I - 9112

GREECE v COMMISSION

61. As the Commission did not consider, 34 — Letter No 41854 of 5 November 1998, cited in previous on the basis of those findings, that the footnote. 35 — Letter No 43741 of 23 September 1999, cited in footnote administration of early retirement aid or 21 (point 6.2. pp. 8 and 9). the control and supervision by the central 36 — Although the correction in question is charged to the 1996 authorities met the requirements laid down financial year in the annex to the distputed decision, it can be inferred from the aforementioned letter No 43741 of by Community regulations, they informed 23 September 1999 (page 9) that the correction actually relates to the 1997 financial year. The parties appear to me the Greek authorities accordingly and to be agreed on this.

I - 9113

OPINION OF MR TIZZANO — CASE C-331/00

checks carried out in 1996 and 1997 was 4. Assessment much higher than the minimum threshold of 5% laid down by the interministerial decree of 20 September 1994. The inspec- tion reports, and indeed all the files relating to aid applications are kept at the branches of the ATE and are available for further inspection. The Commission was made suitably aware of this during the bilateral discussions that preceded the adoption of 65. I personally do not consider that the the contested decision. Greek Government has adduced any grounds that cast doubt on the validity of the disputed correction. As I have already said, it is for the Greek Government to provide detailed and exhaustive evidence to show that the findings on which this correction is based are incorrect.

I-9114

GREECE v COMMISSION

that the checks were carried out in the applicant adduced any evidence to demon- number and with the regularity required by strate that the administration, control and the interministerial decree in question. supervision of such aid is in fact reliable and effective.

I-9115

OPINION OF MR TIZZANO — CASE C-331/00

70. I have just outlined the data base tion and registration of animals must be requirements prescribed by Article 3 of applied from 1 January 1993. Regulation N o 3508/92. With respect to the alphanumeric system for the identifica- tion and registration of animals, Article 5 of that regulation provides that it should be set up in accordance with the requirements of Directive 92/102/EEC. 41 In particular, the latter requires the keeping of up-to-date records of animals on fattening holdings to which the competent authorities must have access. Furthermore, each animal must bear 2. Commission findings and procedure an identification mark which, for bovine animals, consists of an eartag bearing an alphanumeric code which is to be worn during the lifetime of the animal. 42 As from 1 July 1997, those requirements were combined, for bovine animals, with those of Regulation (EC) N o 820/97 of 21 April 72. Following inspections, the Commission 1997 establishing a system for the identifi- complained to the Greek authorities that cation and registration of bovine animals neither of the two features on which the and regarding the labelling of beef and beef application of the IACS in the beef and veal products, 43 which provides, inter alia, for sector depends, namely the system for the use of new eartags bearing a uniform individual identification of livestock and code laid down by the Community and the the computerised data base, had been introduction of a computerised data base to completed by 1 January 1997 or was even store data on animals, holdings and animal operational halfway through 1998. Due to movements. 4 4 the seriousness of these deficiencies, and to the resultant threat to the Community budget, the Commission therefore pro- posed to apply a lump-sum correction of 1 0 % to the expenditure declared by Greece in the sector concerned for the marketing year 1997 (1998 financial year). 45

by systematically subjecting all aid appli- for premiums had actually been checked. cations to on-the-spot checks. Secondly, it Finally, those authorities had not even maintained that the control of livestock indicated the exact number of claims movements was made in the context of rejected due to failure to identify animals, veterinary inspections. Thirdly, it stressed which appeared to be very low. Given the that cattle not bearing an identification tag likelihood that the payment of premiums in had been excluded from the premium. The respect of unidentified or unrecorded ani- same penalty had been applied where mals was widespread, a 10% correction animal records had not been properly kept was appropriate. 4 7 or were absent altogether. Although the Conciliation Body found that the IACS had not been completed in Greece by the deadline imposed, it harboured doubts about the size of the proposed correction. In its view, the correction could be reduced to 5 % if a further inspection showed that the controls applied by the Greek auth- 7 5 . T h e contested decision therefore orities had nevertheless been sufficiently applied the corrections at the proposed effective to ensure that, in general terms, rate. the premiums had been paid only in respect of properly identified animals. The Con- ciliation Body therefore asked the Commis- sion department to give its opinion on this matter. 46

3. Summary of the arguments of the parties

4. Assessment

79. I note that the Greek Government does 77. The Commission obviously takes the not dispute either the failure to set up a opposite view and regards these corrections data bank as required by Article 3 of as entirely justified, given the failure to Regulation No 3508/92 or the incomplete apply the animal identification system, the implementation of the system for identifi- failure to create the data base and the cation and recording of animals, although shortcomings of the national adminis- on the latter point it is trying to limit the tration and control system. In this con- extent of this phenomenon by maintaining nection, it points out that it was not even that all bovine animals have been equipped possible to identify animals in Greece on with eartags, but that in a number of cases the basis of existing records since the latter these came off. The main focus of the did not comply with the requirements of Greek Government's defence is the appli- Directive 92/102. cation, in the 1997 marketing year, of a system of controls which, although differ- ing from the system laid down by Commu- nity law, nevertheless made it possible to verify equally effectively that payments had been properly made.

78. The Commission also emphasises that there is no evidence to show that the Greek authorities had actually checked all aid 80. I have to confess that, on this point, I applications. At any rate, even if they had, share the doubts expressed by the Com- this would not constitute an effective and mission as to the possibility of exercising reliable system of controls. Unless all effective control over aid applications with- animals are identified and there is a central out being able to rely on comprehensive I-9118

48 — Regarding the essential features of the system of controls, as borne out. as far as identification of livestock is 1. Summary of the arguments of the parties c o n c e r n e d , by the e i g h t h recital of R e g u l a t i o n N o 3508/92, which expressly states that, 'in thelivcstock sector, effective control requires that animals be identified and recorded'. 49 — See the second indent of Article 7(1) of Commission Regulation (EEC) N o 3886/92 of 23 December 1992 laying down detailed rules for the application of the premium schemes provided for in Council Regulation 83. As I mentioned earlier, the Greek (EEC) N o 805/68 on the common organisation of the Government goes on to dispute in a dif- m a r k e t in beef and repealing R e g u l a t i o n s (EEC) No 1244/82 and (EEC) N o 714/89 (OJ 1992 L 391, p. 20), which provides that for the grant of premium account shall be taken only of animals 'duly identified in accordance with the relevant national and Community 50 — See above, point 74. provisions'. 51 — Points 18-19.

I-9119

OPINION OF MR TIZZANO — CASE C-331/00

86. The Commission counters this argu- ment by invoking the Court's pertinent case-law, 53 maintaining that it is for the Greek Government to provide evidence of the alleged error committed by the Com- mission in calculating the financial con- sequences of the irregularities found. In this 85. N o w , these conditions do not obtain in case, however, the applicant has merely either of the sectors in question. In the complained about the arbitrary nature of arable crops sector, the Commission did the criteria adopted by the Commission, not find any shortcomings that were suffi- without providing evidence to support this ciently serious as to constitute clear assertion. infringements of Community provisions

53 — The Commission refers, in particular, to the judgment in 52 — Set out, as seen earlier, in working document VI/5330/97 Case C-50/94 Greece v Commission [1996] ECR I-3331, (see above, points 10 et seq.). paragraphs 26 and 27.

I - 9120

GREECE v COMMISSION

2. Assessment shortcomings in the checks and the degree of risk to the EAGGF, it is for the Member State to show that those criteria are arbit- rary and unfair. 56

87. For my part, I would point out that the Greek Government has not managed to demonstrate either the inaccuracy of the 89. So, I have no problem in finding that Commission's findings or the existence of a the Greek Government has not provided reliable and operational system of super- that evidence. I thus propose that this visory and control measures. The doubts in ground should also be rejected. this connection expressed by the Commis- sion therefore justify the application of lump-sum corrections to the expenditure declared in the sectors in question. 5 4

2. Where a producer does not make an application for premiums under Regulation (EEC) N o 805/68 in respect of the 1996 92. Article 1(3) of the regulation provided calendar year or where the premiums to in this regard that: which he is entitled are insufficient to make the set-off referred to in paragraph 1, he shall be required to repay the additional payments made under Article 1 to which he was not entitled'. '[t]he extent to which a producer is entitled to each of the additional payments referred to in paragraphs 1 and 2 and received in respect of the 1995 calendar year shall depend upon the number of animals for which he establishes entitlement to a pre- 94. Moreover, pursuant to Article 3 of the mium in the 1996 calendar year.' regulation:

93. Within the meaning of Articles 2(1) and (2) of the regulation: ' [ p r o d u c e r s whose entitlement to pre- miums in respect of the calendar year 1996 relates to more animals than their entitle- ment in respect of the calendar year 1995 shall be eligible for further additional payments. Such payments shall only be made: ' 1 . Where the number of animals for which entitlement to premiums is established in relation to the 1996 calendar year is less than that for which a producer received additional payments under Article 1, the

— to the extent that additional payments 58 — Which at the material time governed the common organi- made to producers w h o were not sation of the markets in the beef and veal sector (see above, footnote 18). eligible for t h e m are r e p a i d or

I - 9122

GREECE v COMMISSION

98. Following inspections, the Commission found that Greece had made additional payments within the meaning of Regulation No 1357/96 after the deadline of 15 October 1996. It appears from the 96. It should also be noted that Article 5 of relevant summary report 59 that the com- Regulation No 1357/96 gave the Member plaints against the Greek authorities related States the power to replace the measures to: laid down in Articles 1 and 4(a) by a single payment, by granting to producers of bovine animals according to objective criteria the total amount of aid that would have resulted from the application of those measures. As is evident from the fifth recital of the regulation, the purpose of (a) on the one hand, payments made after the measure in Article 15 was not only to 15 October 1996, amounting to GRD answer the needs associated with the dif- 311 006 387; ferent structures of production in the various Member States but also to allow all payments to be completed by 15 October 59 — Document AGRI/117758/2000 of 15 May 2000 (appli- cation. Annex 14; see especially paragraph 4.3.2 sub (a), 1996. pp. 63-64).

I - 9123

OPINION OF MR TIZZANO — CASE C-331/00

(b) on the other hand, payments arranged meantime by the Greek authorities. 6 1 The by the Greek authorities in relation to corrections in question were later applied the agricultural cooperative associ- by means of the contested decision. ations (ACA) prior to 15 October 1996 but only paid out to eligible producers after that date and amounting to GRD 350 000 000. 100. In its application, the Greek Govern- ment disputes those corrections on two different grounds which therefore need to be examined separately.

I - 9124

GREECE v COMMISSION

tlie suckler cow premium in respect of out towards the end of the period during 1996, as a result of the checks carried out, which animals arc 'kept' on the holding related to more animals than their entitle- concerned, which, in this case, could be ment in respect of 1995. By using numeri- well after the deadline of 15 October 1996. cal data in support of its argument, the This period thus clearly infringes the applicant government is therefore trying to requirements of the IACS in terms of show that the sum of GRD 311 006 387, checks relating to premium schemes in the later reduced to GRD 237 098 402, exactly beef and veal sector. equals the algebraic sum of the increased amounts due to producers in respect of 1996 for the increased number of animals for which entitlement to premium was established and the amounts recovered from producers whose entitlement to pre- mium in respect of 1996 related to fewer animals than in 1 9 9 5 . 6 2

104. The Greek Government therefore con- siders that the correction in question is not only based on a false legal premiss, but also infringes the principle of proportionality by disregarding the purpose of Regulation No 1357/96, which, in its view, is to compensate producers for losses suffered due to market crises caused by BSE and not- just to ensure rapid disbursement of the additional payments.

GRD 237 098 402, the Greek authorities 107. Furthermore, although the date of had not at any stage prior to the adoption 15 October 1996 is dictated essentially by of the contested decision informed it about budget requirements, 65the imposition of a any other régularisation such as could short timescale for making the payments justify charging the latter amount to equal- laid down in Regulation No 1357/96 isation payments. The Commission does should nevertheless be seen in the light of not openly take up a position on the other the regulation's objective, which is to points raised by the Greek Government in mitigate, by rapid payment of additional the second head of complaint. aid, the effects on the income of beef and veal producers of the collapse in market prices due to the spread of BSE.66 The mechanism for paying out that aid laid down in Articles 1 to 3 of the regulation answers the same need. Articles 1(1) and (2) in fact provided that the aid in question should generally be granted in the form of payments in addition to certain premiums 'per animal' (the special premium for (b) Assessment bovine animals and the suckler cow pre- mium) in the context of the c.o.m. for beef and veal in the 1995 calendar year, pre- cisely because, in July 1996, the data needed in order to pay the latter should already have been available, thereby also enabling the special aid to be paid. 67 106. I should like to draw attention, firstly, to various aspects of the aid scheme intro- duced by Regulation No 1357/96 which appear to be important for an analysis of the complaints made by the Greek Govern- ment. I should point out, first and fore- most, that, as the Commission rightly says, Article 7 of Regulation No 1357/96 explicitly places a limit to the time during which expenditure incurred by the Member States under Articles 1 and 4(a) of the regulation may be charged to the EAGGF. Such expenditure will only be financed by the Community if the relevant payments were made 'by 15 October 1996 at the 65 — Because financial cover for Regulation No 1357/96 was guaranteed by the 1996 budget (see EU Bulletin 6-1996, latest'. Within the meaning of Article 3(1) paragraph 1.3.179) and the relevant EAGGF year ended of Regulation No 729/70, the Commission on 15 October 1996. 66 — See the second recital in the preamble to Regulation is therefore entitled to refuse Community No 1357/96. The general context of the 1996 BSE crisis, in financing in respect of expenditure incurred which this regulation should be viewed, is well known to the Court owing to the case-law that has developed subsequently. 64 concerning the protection measures adopted at the time by the Commission (see, for example, Case C-157/96 National Farmers' Union and Others [1998] ECR I-2211, especially paragraphs 3-4). 67 — See, once more, the second recital in the preamble to the 64 — See above, point 16 and footnote 8. regulation.

111. In fact, the only element adduced by 109. Having made this point, I shall now the Greek Government in support of its go on to examine in detail the two heads of argument, either before the Court or, as far- complaint against the correction in ques- as we know, during the clearance of tion. accounts procedure, is the calculation allegedly showing that the amount of GRD 311 006 387 exactly equals the total of the additional payments that Greece could lawfully pay to producers under the provision cited above. 68Now, it seems to me that the figures given by the Greek Government, which are not disputed by the (i) The allegedly incorrect assessment of the Commission, actually demonstrate that this disputed amount as 'late payment' argument is without grounds. It seems to me, that is, that by producing this calcu- lation, the Greek Government loses sight of

68 — Sec p. 46 of the application and p. 25 of the reply, also 110. As has been seen, the Greek Govern- letter No 203541 of 25 October 1999 from the Greek ment in its first head of complaint basically Ministry of Agriculture to the Conciliation Body (appli- cation, annex 26, p. 1, last paragraph). I refer to the sum of disputes the fact that the Commission GRD 311 006 387, i.e. the financial correction originally proposed by the Commission since this is the amount on assessed the contested amount as 'late which the Greek calculation is based.

I - 9127

OPINION OF MR TIZZANO — CASE C-331/00

115. Even irrespective of the foregoing, I should stress that examination of this complaint does not lead me to any other conclusion, because the complaint is clearly without grounds. As I have already pointed out, the Member States were certainly not 113. In the light of the above consider- ations, I consider that the head of com- 69 — See Case 92/78 Simmenthal [1979] ECR 777, paragraph plaint in question cannot be upheld. 39, containing further references.

I - 9128

GREECE v COMMISSION

required, for the purpose of granting the 118. Thus, I propose that the ground con- aid provided for in Article 1 of Regulation cerning the financial correction of GRD No 1357/96, to complete the checks relat- 237 098 402 should be rejected in its ing to entitlement to premiums 'per animal' entirety. for the 1996 calendar year. Rather, they were required to pay aid in addition to the 'per animal' premiums for 1995. Greece has never denied having the information available to pay those premiums, so I fail to see why it should not have to comply with the time-limit of 15 October 1996. The results of the checks carried out for 1996 were important, however, for determining 4. The correction of GRD 350 000 000 any sums incorrectly paid, but clearly that has nothing to do with observing the time-limit imposed.

(a) Summary of the arguments of the parties

120. Clearly, the Commission takes the allowing payment to be made well after opposite view, maintaining that the date 15 October 1996. of 15 October 1996 must be regarded as the date by which the aid must be paid to producers, that is to those claimants entitled to the additional payment within the meaning of Regulation No 1357/96. In support of its argument, the Commission refers to the annex to Regulation No 1663/95, which states that 'execution' of a payment consists of instructing a bank or government payments office to pay the 122. Moreover, it also seems relevant to authorised amount to the claimant. 70 me, for the purpose of refuting the Greek Government's argument, to refer to para- graphs 2(ii) and 6(v) of the annex to Regulation No 1663/95, which sets out, inter alia, the procedures to be followed by the paying agencies of the Member States when making Community disbursements financed by the EAGGF. Those provisions also indicate that the execution of a pay- ment consists in instructing a bank or a government payments office to pay the authorised amount to the claimant. Thus, (b) Assessment to execute a payment means to pay the claimant. I see no reason to attribute a different meaning to the terms used in the second paragraph of Article 7 of Regu- lation No 1357/96, nor — and I would stress this fact — does the Greek Govern- ment explain why this should be done.

127. The Greek Government maintains that the contested correction is based on 1. Legal and factual background an incorrect assessment of the nature of the retentions in question — which were alleg- edly voluntary and not compulsory — and invokes arguments which, in my view, are identical to those already rejected by the Court in its judgments of 11 January 2001, 125. By means of the contested decision, in connection with the clearance of the Commission imposed, inter alia, a accounts for the 1994 financial year, 72 series of financial corrections amounting and 6 December 2001, in connection with to 2% of the expenditure declared by the following year 1995. 73 Greece in the arable crops sector (1996, 1997, 1998 financial years) and in the beef and veal sector (1996 and 1997 financial years) as a result of the retentions made by the ACA from the amount of aid paid to claimants. 128. Contrary to what the applicant seems to be saying, I do not in fact consider that any significant new elements are added to this case either by the amendment made to Article 2 of Greek Law No 1409/83 — authorising application of the retentions — 126. As the documents before the Court show, these corrections followed the same rationale as the similar corrections applied 71 — Sec the final reports of the Conciliation Hotly in Case to the previous financial years, 1994 and 99/GR/134, cited in footnote 46 (point II), and Case 99/GR/151, cited in footnote 26 (point 7). 1995. The Conciliation Body, to which the 72 — Judgment cited in footnote 11 (paragraphs 18-19 and 32). Greek Government referred the matter, 73 — Judgment cited in footnote 9 (paragraphs 36-39).

129. To start with the latter, I should point H — The financial corrections due to out that, whatever the value in law of failure to comply with payment deadlines sending out such information, it certainly does not show that the practice of making retentions ceased from March 1997 — especially as the amendment of Law No 1409/83, which authorised them, only entered into force on 1 December of that 1. Applicable legislation year — nor does it show that the reten- tions made prior to that date have been repaid to claimants. Nor, in my view, does the legislative amendment offer full proof of this. I note, in fact, that during the 131. It is well-known that the system of clearance of accounts procedure, the Com- financing introduced by Articles 4(5) and mission informed the Greek authorities 5(2)(a) of Regulation No 729/70, in the that, despite the amendment to Law v e r s i o n a m e n d e d by R e g u l a t i o n No 1409/83, it appeared from the printouts No 1287/95, makes provision for the relating to payments made by the ACA that financial resources required to cover the the latter were still making retentions. expenditure of the EAGGF to be mobilised Those authorities were therefore asked to by the Member States in accordance with produce documents to show, on the one the needs of their respective paying hand, that retentions were no longer being agencies and later reimbursed by the Com- made and, on the other hand, that the munity by means of monthly advances, calculated on the basis of expenditure

74 — The text of which can be found at annex 38 to the application. 76 — See telex No 24087 of 8 April 1999 (defence, annex 5, 75 — Document No 144903 of J March 1997 (application, pp. 5-6, paragraph 2.1.2) and letter No 43741 of annex 35). 23 September 1999, cited above (page 2, point 1.2).

effected. It is for the Commission, having 133. For the purpose of this case, it should consulted the Fund Committee, to decide also be remembered that, within the mean­ on the amount of the advances in question. ing of the third subparagraph of Article 4(2) of Regulation N o 296/96, which refers on this matter to Article 13 of Decision 79 94/729/EEC, reductions in monthly advances due to late payments on the part of Member States are decided by the Commission following a consultation pro­ cedure with the Member State concerned and after consulting the EAGGF Commit­ tee. Article 4(4) of the regulation provides that '[a]ny reductions... and particularly those resulting from overruns of deadlines shall be made without prejudice to the subsequent accounts clearance decision'. 8 0 132. The detailed rules for calculating and paying the monthly advances are governed by Regulation (EC) N o 296/96. 77 Within the meaning of Article 4(2) of that regu­ lation, expenditure effected after the dead­ lines laid down by Community law give rise, precisely because of its ineligibility, to a reduction of the advances in question. 7 8 That reduction is limited to expenditure effected after the deadlines which is more than 4 % of expenditure effected before the 2. Facts and arguments of the parties deadlines and is scaled according to the amount of delay, from a minimum of 1 0 % for a delay of one month to 100% for a delay of five months or more. However, the second subparagraph of Article 4(2) stipu­ lates that '... the Commission will apply a different timescale and/or lower reductions 134. By means of the contested decision, or none at all if exceptional management the Commission confirmed certain reduc­ conditions are encountered for certain tions in the monthly advances against measures, or if well-founded justifications agricultural expenditure granted to Greece are introduced by the Member States'. in connection with the 1998 financial year, totalling GRD 141 667 389. The reason for applying these corrections is that the Greek 7 7 — Commission Regulation (ĽC) N o 296/96 of 16 February authorities allegedly effected the expendi­ 1996 on data to be forwarded by the Member States and the monthly booking of expenditutc finanecd under the ture in question after the expiry of the Guarantee Section of the European Agricultural Guidance deadlines laid down in the relevant Com­ and Guarantee Fund (EAGGF) and repealing Regulation (EEC) No 2776/88 (OJ 1996 L 39, p. 5). munity regulations. 78 — As the fourth recital in the preamble to the regulation clearly states, namely that 'the common agticultural regulations include deadlines for payment of aids to beneficiaries by Member States;... all payments effected after those deadlines, and for which the delay in payment is 79 — Council Decision 94/729/EC of 31 October 1994 on unjustified, must be regarded as ineligible, and therefore budgetary discipline (OJ 1994 1. 291, p. 14). cannot, in principle be the subject of an advance tin the 80 — The third paragraph of Article 13(2) of Decision 94/729, booking...'. cited above, makes similar provision.

136. The applicant does not deny that the relevant expenditure was paid after the expiry of the deadlines; this should not however give rise to any reduction in advances because the Greek Government introduced 'well-founded justification', as 3. Assessment stipulated by the second subparagraph of Article 4(2) of Regulation No 296/96. To be specific, says the Greek Government, it is a question of payments made in four individual cases. The delay identified by the 138. Although I do not share the Commis- Commission was due, in one case, to the sion's view, I consider that the ground in existence of legal proceedings and, in the question is not well-founded for the follow- other three cases, to trying to protect the ing reasons. financial interests of the Community, because verifying the entitlement of bene- ficiaries to receive Community funds had necessitated special controls or adminis- trative checks. Thus, the reason for the delay was the need to fulfil the obligation 139. In the first place, I should point out to prevent irregularities in connection with that Article 4(2)(b) of Regulation EAGGF operations, imposed on Greece by No 296/96, which the Greek Government Article 8(1) of Regulation No 729/70. claims has been infringed, does not apply in When deciding on the disputed financial the context of the accounts clearance correction, the Commission therefore mis- procedure. I - 9134

GREECE v COMMISSION

142. It follows that the alleged infringe- ment of Article 4(2)(b) of Regulation No 296/96, if proven, could potentially have invalidated the decision adopted at the time against Greece to reduce the advances, but could certainly not have 81 — See above, point 16. undermined the validity of the decision 82 — See the judgments in Case C-342/89 Germany v Commis- contested here, which was adopted at the sion [1991] ECR I - 5 0 3 1 , paragraphs 18 and 19; and Case end of a different procedure, to which that C-346/89 Italy v Commission [1991] ECR I-5057, para- graphs 18 and 19. article clearly does not apply

I - 9135

OPINION OF MR TIZZANO — CASE C-331/00

I-9136

GREECE v COMMISSION

into consideration when assessing the law- IV — Costs fulness of the contested decision. The applicant says nothing at all regarding the extent of the overrun. 148. Within the meaning of Article 48(2) of the Rules of Procedure, the unsuccessful party must pay the costs if they have been applied for. Since I consider that the 147. Accordingly, I consider that this application should be dismissed in its ground should also be dismissed and with entirety, I propose that the Greek Govern- it the entire Greek application. ment should be ordered to pay the costs.

V — Conclusion

149. In the light of all the above considerations, I suggest that the Court should reject the application and order the Hellenic Republic to pay the costs.

I - 9137