A project or a project partner fails to comply with Programme requirements if it fails to fulfil conditions or requirements stipulated in this Programme Manual, the subsidy contract or the provisions they are based on (cf. the Programme’s legal framework and hierarchy of rules in chapter B.5 of this Programme Manual). For example:
Project:
The project has not been or cannot be implemented in due time;
The project significantly failed to reach the objectives, results and outputs planned in the latest version of the application;
It is impossible for the MA/JS to verify that a progress report is correct and that the project is eligible for co-financing from the Programme. For example, the project failed to submit required reports, or related proofs of implementation and eligibility of expenditure or necessary information within the set deadline(s);
The project partially or entirely misapplied the Programme co-financing for purposes other than those agreed with the Programme;
The lead partner or project partners wholly or partly sell, lease or let the project to a third party;
It impossible that the MA/JS pays the first reimbursement of a progress report within two years of the Monitoring Committee’s decision to select the project.
Project partner:
A lead partner or project partner has obtained the co-financing through false or incomplete statements or provides reports that do not reflect reality;
A lead partner or project partner has impeded or prevented controls, audits or evaluations;
A lead partner or project partner has been convicted of an offence concerning professional conduct by a judgement which has the force of res judicata or is guilty of grave professional misconduct proven by any justified means;
A lead partner or project partner is engaged in any act of fraud or corruption or is involved in a criminal organisation or any other illegal activity detrimental to the European Union’s financial interests;
A lead partner or project partner has not fulfilled obligations relating to the payment of social security contributions or the payment of taxes in accordance with the legal provisions of the country in which it is established;
A lead partner or project partner is bankrupt or being wound up, is having its affairs administered by the courts, has entered into an arrangement with creditors, has suspended its business activities, is the subject of proceedings concerning those matters or is in any analogous situation arising from a similar procedure provided for in national legislation or regulations;
A lead partner or project partner is an undertaking in difficulty.
Information flow
The lead partner has to inform the MA/JS immediately of all cases of failure to comply with the Programme requirements.
Where the issue is severe, e.g. in case of projects that cannot be implemented in due time, the MA/JS will inform the respective MC members and national authorities accordingly before taking non-reversible action. The respective MC members may decide to involve the entire MC.
The participating country on whose territory the project partner concerned is located will support the MA/JS to clarify the particular case. This might also include the involvement of other programme bodies, such as the Audit Authority, or third parties, such as lawyers. It is therefore possible that different programme bodies or third parties approach such a project partner and/or its lead partner to clarify the case.
Case-by-case evaluation
The MA/JS will evaluate each case individually. It will assess its impact on the project and on the Programme, including whether the co-financed activities or purchased items pose
a financial risk to the Programme funds. It will also examine under which conditions the project can continue implementation.
Follow-up measures
As a result of the case evaluation, the MA/JS will decide on follow-up measures, for example:
Financial action such as withdrawal/reduction of the reimbursement, interruption/suspension of payments, recovery of amounts unduly paid to the final beneficiaries/project partners, in accordance with the procedures described in the next chapter on irregularities,
Systemic change/update in accounting of the project expenditures (incl. retrospective change),
Termination or partial termination of the project’s subsidy contract.
For any measures going beyond the rules stipulated in the Programme Manual, the MC will be involved.
