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ANNUAL FINANCING AGREEMENT 2002

The Commission of the European Communities, hereinafter referred to as "the Commission", acting for and on behalf of the European Community, hereinafter referred to as "the Community"

of the one part, and

"the Republic of Latvia"

of the other part,

and together jointly referred to as "the Contracting Parties",

Whereas:

(1) A Special Accession Programme for Agriculture and Rural Development (hereinafter referred to as "SAPARD") providing for a Community financial contribution has been established by Council Regulation (EC) No 1268/1999 on Community support for pre-accession measures for agriculture and rural development in the Applicant Countries of central and eastern Europe in the pre-accession period1;

(2) The plan submitted by the Republic of Latvia was approved as an Agriculture and Rural Development Programme by a Decision taken in accordance with Article 4 (5) of Council Regulation (EC) No 1268/1999 on 25 October 2000;

(3) The Multi-Annual Financing Agreement between the Commission of the European Communities acting on behalf of the European Community and the Republic of Latvia, hereinafter referred to as the Multi-Annual Financing Agreement between the Community and the Republic of Latvia, has been concluded on 4 July 2001 and provides in Article 2 that the financial commitment of the Community shall be set out in Annual Financing Agreements;

(4) It is necessary to set out the Community financial commitment for the year 2002 for the execution of the Agriculture and Rural Development Programme, and any amendments thereof, (hereinafter referred to as "the Programme"), in the Republic of Latvia, and to state the period of validity of that commitment. As enlargement of the Community may take place within the period of validity for payments of the 2002 financing commitment, the precaution is taken to limit the period for entering into new contracts by the SAPARD Agency to any beneficiary, in order to ensure a proper transition between the SAPARD instrument and any new form of assistance for rural development for the Republic of Latvia as a member of the European Union. This is done without prejudice of the outcome of any possible Act of Accession;

(5) Article 12(4) of Council Regulation No 2500/2001 of 17 December 2001 modified Council Regulation No 1268/1999 by extending to natural and legal persons from Cyprus, Malta and Turkey the right to participate in invitations to tender and contracts inter alia under SAPARD on the same terms that apply to all natural and legal persons from Member States and beneficiary countries. It is therefore necessary to extend to these countries that right and to allow them to enjoy the same origin provisions as granted to all Applicant Countries;

(6) In the light of the exceptional natural disasters causing flooding in August 2002, of experience gained and comments made since signature of the Multi-Annual Financing Agreement between the Community and the Republic of Latvia, it appears necessary to make certain other adjustments to that agreement. In particular it is appropriate to adjust the provisions concerning project selection for certain measures;

HAVE AGREED AS FOLLOWS:

Article 1

Objective

This Agreement sets out the Community financial commitment for the Republic of Latvia for the year 2002. It also modifies the Multi-annual Financing Agreement signed on 25.01.2001, as amended.

Article 2

Commitment

The financial contribution of the Community for the year 2002 is limited to 23.297.531 e. This commitment is valid only for execution of the Programme in conformity with the Multi-annual Financing Agreement between the Community and the Republic of Latvia.

Article 3

Period of commitment

The Commission shall automatically decommit any part of the commitment referred to in Article 2 which has not been settled by a payment on account, or for which it has not received an acceptable payment application, by 31 December 2004 at the latest.

Without prejudice to provisions which may be laid down in an Act of Accession for the Republic of Latvia, no contract involving Community funds relating to this Agreement shall be entered into by the SAPARD Agency with any beneficiary later than the date for this country to enter into contracts involving a form of assistance for Rural Development for the Republic of Latvia as a member of the European Union.

Article 4

Modification of the Multi-Annual Financing Agreement

The Multi-annual Financing Agreement concluded between the Commission and the Republic of Latvia, is modified as follows:

1. Article 8 is replaced by the following:

"Article 8

Contact Points

1. Correspondence relating to any matter, except information set out in Appendix I to Section F, falling within the scope of this Multi-Annual Financing Agreement, and/or the scope of the Annual Financing Agreements provided for in Article 2, where appropriate stating the Programme's number and title, shall be addressed to the following:

 

for the Community:

Commission of the European Communities

Directorate General Agriculture

SAPARD Unit

Rue de la Loi 130, B - 1049 Brussels

Telephone: 00 32 2 296 73 37

Fax: 00 32 2 295 17 46

E-MAIL: agri-sapard@cec.eu.int

 

for the Republic of Latvia:

National Authorising Officer

Ministry of Finance

Smilšu street 1, LV- 1919

Rīga, LATVIA

Telephone: 00 371 709 54 19

Fax: 00 371 709 55 03."

2. Correspondence relating to information set out in Appendix I to Section F, falling within the scope of this Multi-Annual Financing Agreement, and/or the scope of the Annual Financing Agreements provided for in Article 2, where appropriate stating the Programme's number and title, shall be addressed to the following:

 

for the Community:

European Commission

European Anti-Fraud Office (OLAF)

Directorate C

30, Rue Joseph II

B - 1049 Brussels

 

for the Republic of Latvia:

National Authorising Officer

Ministry of Finance

Smilšu street 1, LV- 1919

Rīga, LATVIA

Telephone: 00 371 709 54 19

Fax: 00 371 709 55 03."

2. In Section A

- Article 5 (7) is replaced by the following:

"7. In respect of investments in projects except those in infrastructure of a type not generating substantial net revenue, the SAPARD Agency shall ensure that for any project under the programme the cumulation of public aid granted from all sources does not exceed 50% of total eligible cost. Measures for training are considered to be human capital and not investment for the purposes of this paragraph."

- In Article 8 (1) the point (b) is replaced by the following:

"(b) based on declarations of expenditure incurred by the beneficiary evidenced by original receipted invoices or other relevant documents where, according to the Programme, aid is not a function of expenditure. Such declarations shall include only expenditure or, in the case where aid is not a function of expenditure, events occurring no earlier than the date the contract was concluded making the claimant a beneficiary under the Programme for the project concerned, except as regards that for feasibility and related studies and for the Technical Assistance measure. Except for actions under the Technical Assistance measure, expenditure shall in no case relate to projects selected, contracts concluded by or on behalf of the SAPARD Agency and beneficiaries, and expenditure paid earlier than the date(s) specified in the Commission Decision referred to in Article 3 (1) of this Section. Where original invoices or the other relevant documents referred to in this sub-paragraph are not retained by the SAPARD Agency following receipt, the SAPARD Agency shall ensure that copies shall be taken and arrangements made to ensure that the originals will be made available for audit and inspection purposes."

- In Article 10 (1) the point (b) is replaced by the following:

"(b) for overpayments by the SAPARD Agency and for debts not recovered by the SAPARD Agency, as well as debts that have not been collected within 2 years of their registration in the debtor's ledger, the rate on the last but one working day at the Commission in the month preceding the month during which the overpayment or the debt were first noted."

- In Article 14 the point 2.6. is replaced by the following:

"2.6. The rules for the procurement by public bodies of services, works and supplies in the Republic of Latvia shall be consistent with the rules set out in the Commission manual entitled "Service, Supply, and Work Contracts concluded within the Framework of Community Co-operation for the Third Countries2". However, the requirement for ex-ante approval by the Commission included therein shall not apply. The services, works, machinery and supplies procured shall originate in the Community or in the countries referred to in Item 8 of Section F."

- The following Article is added:

"Article 16

Exceptional natural disasters

1. Provided Council Regulation No 1268/1999 has been modified accordingly, the Commission may, in the event that it determines that an exceptional natural disaster has affected the Republic of Latvia, on the basis of a reasoned request by the Republic of Latvia authorise, for relevant projects in the region affected and for a specified period, rates of Community co-financing to total public aid above those specified in the Programme but within the ceiling of 85%. Moreover, the Commission may authorise derogations from the following provisions of this Section of the Agreement:

a) provided Council Regulation No 1268/1999 has been modified accordingly, the 50% thresholds as provided for in Article 5 (6) and (7) may be replaced by thresholds of up to 75%;

b) in Article 7 (5) second sub paragraph, requests for additional payments on account may also be based on estimates of needs flowing from the expected impact of the exceptional natural disaster;

c) in Article 8 (1) (b):

- the requirement for declarations of expenditure incurred by the beneficiary to be evidenced by receipted invoices may be replaced by a formal decision by the SAPARD Agency to support the project. The criteria for such decisions shall be specified in the reasoned request submitted by the Republic of Latvia and approved by the Commission. The beneficiary must undertake within a period not exceeding one year to provide declarations of expenditure actually incurred as provided for in Article 8 (1) (b). No payment to any beneficiary pursuant to this derogation may exceed 20% of the total cost of the investment approved by the SAPARD Agency and any such payment shall be the subject of appropriate guarantees;

- the provision limiting expenditure declarations to events occurring no earlier than the date the contract was concluded making the claimant a beneficiary shall be replaced by a limit of no earlier than the date the exceptional natural disaster occurred;

d) in Article 14 point 2.6, the obligation for procurement by public bodies of services, works and supplies to be consistent with the Commission manual may be replaced by less onerous provisions including those permitting negotiated procedures whereby authorities consult providers of their choice and negotiate the terms of the contract with one or more of them."

3. In Section B

- In Article 4 the following paragraph is added:

"6. In the event that the Commission determines that an exceptional natural disaster has affected the Republic of Latvia it may on the basis of a reasoned request by the Republic of Latvia authorise, for relevant projects in the region affected and for a specified period, derogations from provisions of paragraphs 2 (e), 3 (b) and 3 (c), and 4 above."

- Article 6 (2) is replaced by the following:

"2. Monitoring shall be carried out by reference to relevant physical, environmental and financial indicators. These monitoring indicators, concerning the inputs and the outputs of the Programme, shall relate to the specific character of the assistance concerned, its objectives and the socio-economic, structural and environmental situation of the Republic of Latvia."

- In Article 8 (5) (c) the following indent is added:

"(v) data to demonstrate that Community funds have not replaced funding available in the Republic of Latvia."

4. In Section C the following Article is added:

"Article 8

Europe Agreements

The Republic of Latvia shall ensure that for any public aid which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods granted under SAPARD, which concern products other than those referred to in Title III, Chapters II and III of the Europe Agreement, Article 643 of the Europe Agreement are respected."

5. In Section D the Table A1 (attached as Annex III) is annexed to the Form D-1.

6. In Section F

- The list of countries set out in item n° 8 column (e) is replaced by the following:

"Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Cyprus, Malta and Turkey."

- The provisions in sub-item 7.3. under 7.3.1. column (e) are replaced by the following:

"7.3.1. During the two months following the end of each quarter, the Republic of Latvia shall report to the Commission any irregularities, which have been the subject of initial administrative or judicial investigations. This report shall be presented in accordance with the form in Appendix I to this Section."

- The provisions in sub-item 7.5 under 7.5.1. column (e) are replaced by the following:

"7.5.1. During the two months following the end of each quarter, the Republic of Latvia shall inform the Commission, using the form in Appendix I to this Section and with reference to any previous report made under sub-item 7.3, of the procedures instituted following all irregularities previously notified and of important changes resulting therefrom."

- The annex I to this Annual Financing Agreement is attached as Appendix I to Section F of the Multi-Annual Financing Agreement.

 

Article 5

Entry into Force

This Agreement shall enter into force on the date when both Contracting Parties have notified each other of the completion of all necessary formalities for its conclusion.

Article 6

Signature

This Agreement shall be drawn up in duplicate in English and in Latvian, only the English text being authentic.

Done at Brussels, this fourth day of February in the in the year two thousand and three.

 

For the Commission of the European Communities:

 

 

Franz FISCHLER

Member of the Commission

For the Republic of Latvia:

 

 

Inguna SUDRABA

Deputy State Secretary

Ministry of Finance

National Authorising Officer

1 OJ No. L 161, 26.6.1999, p. 87-93.

2 SEC 1999 1801/2.

3 OJ L 026, 02.2.1998, p. 0003-0255.

 

 

Annex I

CONFIDENTIAL Case No: MS/XX/XXX/S/X

QUARTERLY COMMUNICATION OF IRREGULARITIES IN CONNECTION WITH THE SPECIAL ACCESSION PROGRAMME FOR AGRICULTURE AND RURAL DEVELOPMENT (SAPARD) AS REQUIRED BY SECTIONS F - 7.3 AND F - 7.5 OF THE MULTI-ANNUAL FINANCING AGREEMENT

 

 

IDENTIFICATION OF COMMUNICATION

Applicant Country:

Case Number: XX/XX/XXX/S/04

Quarter: XX/XX5

Date Sent:

Administrative Department in Applicant Country:

Contact Point: Name: Phone:

Fax: E-mail:

4 With the exception of the last digit the case number remains the same and is composed of: candidate country's initials/year/three digit case number/S for SAPARD/0 for initial communication, 1 for first update, 2 for second update etc., eg PO/02/001/S/0

5 Two digits for the year and two digits for the quarter eg 0203, 0206, 0209, 0212

 

 

 

DETAILS OF IRREGULARITY

1. Description of Operation

1.1 Name of programme:

1.2 Commission Decision approving the programme:

1.3 Name of measure and title of project:

1.4 Applicant country's project number:

 

2. Provision Infringed

2.1 Community provision infringed:

2.2 National provision infringed:

 

3. Date of First Information Leading to Suspicion of Irregularity:

3.1 Source of first information leading to suspicion of irregularity:

 

4. Manner in which Irregularity was discovered:

5. Type of Irregularity

5.1 Practices employed in committing the irregularity:

5.2 Are these practices considered new? Yes ( ) No ( )

10. Name and Address of Natural and Legal Persons Involved

10.1 Natural Persons:

- Name:

- First Name:

- Address:

- Postal Code:

- City:

- Country:

- Function:

10.2 Legal Persons:

- Name:

- Registered Office:

- Postal Code:

- Country:

 

 

FINANCIAL ASPECTS

11. Total Amount and Distribution between Sources of Financing

11.1 Total amount of the operation:

11.2 Community financing:

11.3 Applicant country financing:

 

12. Nature and Amount of the Expenditure Found to be Irregular

12.1 Nature of the expenditure:

12.2 Total amount of the expenditure:

12.3 Community expenditure:

12.4 Applicant country expenditure:

14. Financial consequences

14.1 Amount of expenditure under 12.2 not yet paid:

Amount EU:

Amount of applicant country:

 

15. Possibility of Recovery:

16. Total Amount Recovered:

16.1 Community share:

16.2 Applicant country share:

 

17. Total Amount to be Recovered:

17.1 Community share:

17.2 Applicant country share:

STAGE OF PROCEDURES

19. Action by Applicant country:

19.1 Interim measures:

 

20. Administrative Proceedings:

21. Judicial Proceedings:

22. Reasons for any abandonment of recovery proceedings:

22.1 Was the Commission notified before the decision to abandon the recovery procedure was taken?

Yes ( ) Date and reference: No ( ) Not known ( )

 

23. Have criminal proceedings been abandoned?

Yes ( ) No ( ) Not known ( )

 

24. Termination of Procedures

24.1 Has the Commission been notified of administrative or judicial decisions or the main points thereof, concerning termination of proceedings in accordance with Section F - 7.5.1 of the Multi-Annual Financing Agreement:

Yes ( ) Date and reference: No ( ) Not known ( )

 

25. Penalties imposed (administrative and/or judicial):

26. Additional observations: