Dear European Court of Auditors,

Under the right of access to documents in the EU treaties, as developed in Regulation 1049/2001, I am requesting documents which contain the following information:

All requested documents drawn up by the Court concern on-the-spot audits of a private sector beneficiary (e.g. a company) and the 'measures' of the Court to protect and safeguard the information of third parties in relation to an auditee, in particular information that is subject to professional secrecy according to article 339 TFEU.

As a hypothetical example to illustrate the scope of the present application, consider the case where the Court inspects an agreement between an auditee and a third party regarding, inter alia,, some financial transaction under the scope of the audit. It is probable that the agreement has a wider scope that the audit itself, perhaps about other transactions that have nothing to do with the beneficiary's subsidies from the Union's budget. By consulting the agreement, staff of the Court may become aware of information that is commercially sensitive and is not related at all with the Court's audit of the beneficiary. Furthermore, it cannot be excluded that the staff refrain from requesting and obtaining copies of such agreements for inclusion in the audit file. Consequently, copies of such agreements might end up in the audit file held by the Court.

It is clarified that all requested documents are internal documents of the Court, in the sense that they are not published in the Court's web site. Therefore, the published Financial and Compliance Audit Manual of the Court is not within the scope of the present application. Similarly, International Audit Manuals according to which the Court conducts its audit work are not within the scope of the application. It is reiterated that the requested documents solely concern (a) the protection of information regarding private sector entities other that the auditee obtained/collected from a private sector beneficiary and definitely not information/documents obtained from audits of a Public Administration, and (b) the information comes into the knowledge of the Court's staff in an on-the-spot audit of a private sector entity in a Member State.

I would be grateful if the Court would release copies of the following documents:

1. Internal 'guidelines' (or equivalent) to its staff setting out some kind of a 'limit' as to what information they will make enquiries about in an on-the-spot audit.

2. Internal 'guidelines' (or equivalent) to its staff setting out some kind of a 'limit' as to what kind of documents of the auditee, or parts thereof, the Court's staff will copy for inclusion in the audit file.

3. For a single audit announced in 2011, (i) a redacted version of a Court's letter (drawn up in 2011) informing a private sector entity in a Member State about the conduct of an on-the-spot audit, including all annexes thereto, (ii) subsequent letters addressed to the auditee up to the conduct of the on-the-spot audit and annexes thereto, (iii) letters (notes) addressed to National Audit Bodies about that particular audit and annexes thereto, and (iv) letters (notes) addressed to the European Commission about that particular audit and annexes thereto. The letters (notes) under (iii) and (iv) are documents drawn up until the conduct of the on-the-spot audit.

4. For the same audit under (3) above, (i) a redacted version of the 'On-the-sport audit report', or equivalent, drawn up by the Court's staff after the completion of the on-the-spot audit, and (ii) the document(s) containing the list(s) of documents copied from the audit (or parts thereof) for inclusion in the audit file. The document(s) under (ii) may be considered as some kind of 'statement of contents' of the audit file, as of, say, a few months, after the conduct of the on-the-spot audit.

5. For the same audit under (3)above, a redacted version of the Court's main letter addressed to the auditee setting out the main findings of the audit.

6. For the same audit under (3) above and in case the Court notified the National Audit Body or the European Commission about its findings, a redacted version of the Court's letter (or note) addressed to the Body and the Commission setting out the main findings of the audit.

The requests under (3) to (6) above concern a single audit. It is left to the Court to select according to its own convenience any particular audit, provided that the audit was conducted (descending order of preference) in 1-Greece, 2-Cyprus, 3-U.K., 4. Ireland, 5-Malta, 6-France, 7-Belgium, 8-Italy, 9-Spain.

In my view, the redacted documents will be produced by expunging from the original documents the parts allowing to infer the identity of the auditee, third parties and natural persons.

The Court's Decision 12/2005 provides for several exceptions, but in my view none is applicable to the present requests. The provision of article 4(2) 'In accordance with the rules governing confidentiality laid down in Articles 143(2) and 144(1) of Council Regulation EC, Euratom) No 1605/2002' applies to the Court's observations addressed to an Institution and not to an auditee. In any case, none of the exemptions of the Decision 12/2005 is applicable to the documents requested under (1) to (3).

Arguably, an overriding public interest concerns the requested documents, because the subject matter of the application is the Court's observance of article 339 TFEU. A refusal of the Court to release, fully or partially as the case may be, any of the requested document may, rightly, be interpreted as the Court's refusal to subject itself to public scrutiny about its strict observance of article 339 TFEU regarding third parties (not an auditee) in the framework of its own on-the-spot audits of private sector beneficiaries.

Should the Court find that the application is not sufficiently precise, please advise me.

Yours faithfully,

Kostas VITSOS

Dear European Court of Auditors,

First of all, the Court's prompt acknowledgement and registration of the initial application is highly appreciated.

The Court's reply refers to 'data protection policies'. I would like to take the opportunity to clarify the following points:

1. The request concerns 'professional secrecy' obligations according to article 339 TFEU, which is substantially broader than 'personal data'. For instance, 'business secrets' fall within the scope of 'professional secrecy' but they are not, typically, related to 'personal data'.

2. For the purposes of clarifying the meaning of 'professional secrecy' of the request, it is respectfully suggested that the Court refers to Opinion of the Advocate General in the case C-53/85 Akzo v Commission, where it was stated, inter alia '
However, the range of information covered by the obligation of professional secrecy goes beyond the business secrets of undertakings. All information acquired by officials and other servants of the Commission in the exercise of their duties is covered by the obligation of professional secrecy, regardless of whether they obtained it in the course of a formal investigation or merely informally. That does not apply, however, to any information available to the general public'. This Opinion was frequently relied on by the Court in subsequent Judgments.

3. While documents setting out 'policies' fall within the scope of the application, other documents, if any, concerning 'operational measures', such as a hypothetical document entitled 'Guidelines for the conduct of an on-the-spot audits', also fall within the scope of the application.

4. It is worth recalling that in other areas of on-the-spot 'interventions' of an Institution pursuant to Union law, there are documents setting out in detail the conduct of the Institution's staff in such an 'intervention'. A prime example is Regulation No 2185/96, and the OLAF's Manual of Operations (2009 and 2011 editions and annexes thereto) and the OLAF Guide to inspections pursuant to Regulation No 2185/96. Since OLAF had drawn up such documents, one would reasonably expect that the Court would have drawn up documents along those lines. In addition, since OLAF did so in the face of a substantial body of EU legislation, it is all the more reasonable to expect that the Court would have done something similar (i.e. draw up internal guides) since there a considerably smaller body of secondary legislation about its on-the-spot audits. In the absence of the requested 'Guidelines', the scope of arbitrary and discriminatory treatment of auditees would be substantially great. This line of reasoning, essentially, argues that the Court should had drawn such documents.

In sum, the Court is not to interpret my application as confined to 'personal data', but instead, interpret it as covering all aspects of 'professional secrecy'. It also goes beyond mere 'policies' and extends to 'operational' matters.

Yours faithfully,

Kostas VITSOS

Dear European Court of Auditors,

Thank you for your reply to the initial application dated 22 July 2013 over email.

The present is a request for reconsideration according to article 7 of the Court’s Decision 12/2005.

The extensive provision of information about the Court’s audit methods is appreciated.

The released prior notification of article 25 of Regulation No 45/2001 dated 13/08/2012 has in my view of host of 'open issues'. It can by no means construed as relating to the requests #1 and #2.

I. OBSERVATIONS ON THE INITIAL REPLY ON REQUESTS #1 AND #2

I have interpreted the Court’s initial reply to requests #1 and #2 as the Court having carried out a search for relevant documents, being confident that no further consultations with the applicant was necessary, and finally concluding that no document matched the applicant’s request for documents.

According to the Court’s email of 9 July 2013, the application related to a very large number of documents “Because your application relates to a very large number of documents, we are extending the time limit by 15 days”. The reply of 22/7/2012 (21 work-days after the application registration) is not necessarily fully in line with that statement, since out of a very large number of documents the Court finally concluded that no documents related to requests #1 and #2 and that other four requests were imprecise. Yet the Court neither did it find useful to consult with the applicant about his very large number of document nor did it provide any information about the internal documents.

Page 3 of the Court’s Audit Policies and Standards reads:
“Professional Ethics
In carrying out audits, auditors of the Court have regard to the obligations of officials and other servants of the European Union, as laid down in the Staff Regulation, and to the Code of good administrative conduct for staff of the European Court of Auditors. They conduct themselves in accordance with the INTOSAI Code of ethics. In particular, they ensure that audits are conducted in such a way as to protect and enhance the Court's independence, integrity, objectivity and professional standing, and to protect the confidentiality of information obtained in the audit process. ”

It is clear that the Court’s professional ethics refer to the ‘Code of good administrative conduct for staff of the European Court of Auditors’ in a context concerned inter alia with the protection of ‘the confidentiality of information obtained in the audit process’. Arguably, this document falls under the scope of requests #1 and #2. It is therefore suggested that the Court fully release this document.

II. OBSERVATIONS ON THE INITIAL REPLY ON REQUESTS #3 TO #6

Requests #3 to #6 concern the Court’s on-the-spot audits announced in 2011 to a beneficiary (i.e. recipient of Union funds) that is a private sector entity. There is nothing out of the ordinary for such on-the-spot audits. The Annex herein provides excerpts from the Court’s Annual Report of financial year 2011. It appears that for at least one of those audit findings the Court had audited on-the-spot a beneficiary. While it cannot be inferred with certainty that the beneficiaries were private sector entities, nonetheless it is probable that at least one was indeed such a legal or natural person.

Furthermore, the Court is not strange to applications for documents concerning its own on-the-spot audits to companies. One particular example is described in the following paragraph.

On 10/2/1997 the Court carried out an inspection of a beneficiary's head
office in Dublin, Ireland. On the basis of the results of the Court’s audit, the Commission services decided to conduct their own inspection of the beneficiary that ultimately led to the Commission Decision C(1999)1498 recovering the amounts unduly paid to the beneficiary. In late 2012 an application pursuant to Regulation No 1049/2001 (GestDem 2012/4960) requested from DG AGRI, inter alia, the release of the Court’s ‘audit report’. The Commission services consulted with the Court about releasing to the applicant the Court’s audit report; the Court notified to the services its objection to even partially releasing that report.

It is therefore suggested that the Court examines whether the following audits referred to 2011 Annual Report fall under the scope of requests #3 to #6. The order of preference in decreasing order is indicated by the serial number.

1. Example 6(1)(a)
2. Example 6(1)(b)
3. Example 6(1)(c)
4. Example 6(2)(a)
5. Example 4(5)
6. Example 4(2)
7. Example 4(1)

In the event that all seven above audits do not concern an on-the-spot audit of a private sector beneficiary, in the interests of procedural economy it is respectfully suggested that the Court inform me about a few other such audits announced in 2011.

As a last general remark, an applicant is not supposed to substitute the Court’s proper search for documents falling under the scope of an application for documents with its own search of the Court’s published documents in order to identify the Court’s documents conceivably falling under the application. If this is the implied intention of the Court, one would have then expected that the Court would have published on-line its register of documents.

III. AUDITOR’S DISCRETION REGARDING AUDIT EVIDENCE, REQUESTS #1 AND #2

This section argues that there is likely that a few lines were drawn up about the matters of requests #1 and #2.

Page 9 of the Court’s Audit Policies and Standards reads:

“AUDIT EVIDENCE
The auditor designs and performs audit procedures in such a way as to enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion”

It is manifestly evident that during an on-the-spot audit of a beneficiary, the auditors have certain discretion as to what evidence they will collect for inclusion in the audit file. Seen in conjunction with the policies of ‘Professional judgement’ and ‘The auditor plans and performs an audit with an attitude of professional scepticism recognising that circumstances may exist that cause the financial statements to be materially misstated’, it is patently obvious that the Court has a policy of granting auditors a substantial margin of discretion regarding the audit evidence and the contents of the audit file. In fact, the ‘riskier’ a beneficiary appears, the more evidence the auditors will be compelled to include in the audit file.

Not having drawn up a single paragraph with internal directions and instruction to the auditors will entail the risk of a non-uniform approach to the on-the-spot audits. The Court is not an ‘ordinary’ auditor. On the very contrary, it has been established by the Treaties and carries out on-the-sport audits to all Member States, where different legal frameworks govern the national audit organisations.

The INTOSAI standards primarily concern the auditing of Government accounts and not those of private sector entities that receive public funds. The Court is entitled to audit the recipients of payments from the Union budget by virtue of article 287(3) TFEU. Regulation No 1605/2002, as amended, has lots of provisions about the auditing of the Institutions by the Court, but it is totally silent about pursuant to Community law on-the-spot audits to private sector entities in receipt of payments from the budget. Regulation No 1906/2006 (FP7 rules of participation) does not provide, as a matter of Community law, for the Court’s on-the-spot audits to FP7 beneficiaries.

The above line of reasoning suggests that the Court’s on-the-spot audits of private sector entities are a sensitive issue, entirely outside the audits of Government accounts. Put differently, regarding the on-the-spot audits in question the Court ‘navigates partially chartered waters. It will be rather surprising if no single paragraph or a brief internal document was drawn up.

In view of the above considerations, it can be concluded that in case the Court has not drawn up a few lines falling under the scope of requests #1 and #2 the Court have run the risk of collecting too much audit evidence, which in some ‘risky’ cases may have reached the point of a heavy-handed audit.

IV. APPLICATION FOR RECONSIDERATION

An application for reconsideration is respectfully submitted. I am confident that the Court will dully take into full consideration the foregoing line of reasoning.

*********

ANNEX. EXTRACTS FROM THE COURT’S ANNUAL REPORT OF FINANCIAL YEAR 2011

Page 101
Example 4.1 — Non-respect of agri-environment commitments (example of eligibility error)
The beneficiary applied for support for two agri-environment schemes. For the first scheme, he had committed on 14 parcels to refrain from cultivating crops in a one metre buffer strip and to leave this area uncultivated, unploughed, unfertilised and unsprayed. The audit found that this requirement was not respected on any of the 14 parcels. For the second scheme, the farmer committed to carry out appropriate orchard management techniques and good agricultural practices, including pruning and thinning of fruit trees. The audit found that the trees were not pruned and that the parts of the parcels where the trees grew were covered with waste matter. According to the applicable national rules, this significant breach of requirements for the two schemes should result in a 100 % reduction of the payment.

Example 4.2 — Breach of public procurement rules (example of eligibility error)
The beneficiary of 5,1 million euro EU aid was the paying agency itself. The amount was paid for the measure ‘technical assistance’ and concerned a part of the larger operation of the paying agency's service and maintenance of the IT system. The Court found that the two contracts for this larger operation, with a value of around 58 million euro, were awarded to a company through negotiated procedures without notice. The paying agency did not provide the necessary analysis or required justification for awarding these contracts through such procedures, rather than through open or restricted procedures.

Page 105
Example 4.5 — Insufficient quality of Member State's administrative and on-the-spot checks
One of the Court's re-performance checks in Italy (Lombardia) was of a project to construct a two-storey building on a farm including a laboratory for the processing of fruit and other farm products, a storage area and a terrace for drying fruits. The paying agency approved the full amount of the final payment claim of 221 205 euro following both adminis- trative and on-the-spot checks. However, the Court found that the building had pre- dominantly the characteristics of a private residence and not of an agricultural building and that thus the related costs were not eligible. The fact that the national authorities accepted the full amount of expenditure declared indicates a material system weakness in the administrative and on-the- spot checks.

Pages 155-156
Example 6.1 — Ineligible costs
(a) Ineligible training participants: ESF funding was provided for training courses to increase the qualifications and knowledge of employees working in the electronics sector. The Court found that many of the participants were employed outside of the electronics sector and were therefore not eligible for such training. The cost declared for the ineligible participants was 29 % of the audited amount.

(b) Overcharging of staff costs: ESF funding was provided to a commercial association, as support for its activities, which included the provision of advice to small and medium-sized enterprises (SMEs). The costs of several staff members of the association were charged to the ESF project, although evidence supporting the charging of their time to the project could not be provided. The Court considers that the project staff costs have been overcharged by 60 %.

(c) Ineligible staff costs: for a professional training course, the expenditure declared by the beneficiary included payments received by staff working on the project as termination of employment benefits. However, the national eligibility rules specify that such payments are considered ineligible. Therefore, 2,5 % of the declared costs for the audited project is considered as being ineligible.

Example 6.2 — Incorrectly calculated costs
(a) Incorrect calculation of overhead costs: for a project consisting of training courses for unemployed persons, the overhead costs for the project were allocated using a ratio based on the proportion of the area of the building used by the project. The Court found that the ratio had been incorrectly calculated, leading to an overstatement of 2,4 % of the audited amount.

******** END OF ANNEX *******

Yours faithfully,

Kostas VITSOS

Dear European Court of Auditors,

I refer to the Court's email of 30/7/2013 acknowledging my application for reconsideration, and in which the Court undertook to provide me with its reply by the 6th of September.

Three weeks later on it appears that the Court has not at all informed the applicant about the time-frame of providing its reply.

I would therefore appreciate if the Court would inform me about the status of the application for reconsideration.

Yours faithfully,

Kostas VITSOS

Dear European Court of Auditors,

This is to remind the administrative department of the Court that it has not replied to my enquiries of 27 September about the status of replying to my application for reconsideration that was registered on 26 July 2013.

Under such particular circumstances, the conduct of the Court's administrative department(s) is borderline intolerable, since it contravenes both the principle of sound administration in the context of an administrative procedure pursuant to the Court's Decision 12/2005, and also that the Decision itself.

I would therefore kindly request that the Court's administrative department handling requests for documents promptly inform me about the status of the request for reconsideration.

Yours faithfully,

Kostas VITSOS

Dear European Court of Auditors,

The undersigned-applicant hereby protests about the disregard by the administrative department(s) of the Court of his reminders about the application for reconsideration pursuant to the Court’s Decision 12/2005.

The Court acknowledged the application for reconsideration on 26 of July, that is to say nearly four months ago. On 30 July the Court extended the time-limit of providing the response to the 6 September. The applicant made two enquiries about the Court’s response of the application for reconsideration on 27 September and 19 October, which have apparently fallen on deaf ears.

The application aims at releasing documents drawn up by the Court, with which the applicant, and presumably the public, will scrutinise the Court’s on-the-spot audits and whether there is some kind of checks and balances in what the auditors may request an auditee.

There are strong indications that the Court has disregarded Regulation 45/2001 in on-the-spot audits of FP5-FP6 contractors and FP7 beneficiaries.

Taking inspiration from another applicant, http://www.asktheeu.org/en/request/fp6_f..., the Court’s attention is drawn to the following:

An applicant cannot compel the Court’s administrative department(s) to provide an initial response an application pursuant to Decision 12/2005. However, an applicant can bring the attention of the Supreme Audit Institutions of the 27 Member States, the supervising authorities of Directive 95/46/EC, and of Members of the European Parliament to the present application, emphasizing the underlying doubts about the Court’s compliance with Regulation 45/2001 in so far the Court’s on-the-spot audits of of FP5-FP6 contractors and FP7 beneficiaries. Perhaps such an 'escalation' might persuade the Court’s administrative department(s) to provide even a rudimentary initial response to the present application.

Having regard to the above points, in the event the Court’s administrative department(s) does not provide an initial response within a week, the applicant will write to the President of the Court – notifying the third parties of the preceding paragraphs– requesting his kind intervention, such that the Court's administrative department(s) provide a response to the application for reconsideration.

Yours faithfully,

Kostas VITSOS

Dear European Court of Auditors,

Thank you for the response of 21 November to the application of reconsideration.

I respectfully submit that the response is wholly inadequate. In my view the Court did not carry out a diligent search for documents. For this reason, the status of the final response will be designated as "refused".

For legal reasons, it is hereby kindly requested that the Court provide me with its response to the application for reconsideration as a document bearing the Court's emblem, a reference number and the handwritten signature of a duly authorised official .

In the event of a complaint to the European Ombudsman or legal action before the General Court, it will be inappropriate to to submit as evidence mere emails. This is even more so when the Court's administrative department(s) failed to respond to emails about applications in accordance to Decision 12/2005, and have advanced the 'excuse' of emails going to the wrong email folders.

I am looking forward to receive a formal document with the Court's response to the application for reconsideration.

Yours faithfully,

Kostas VITSOS