L 278)24 Official Journal of the European Union 10.10.2006 COMMISSION DECISION of 3 October 2006 on the financial treatment to be applied, in the context of clearance of expenditure financed by the European Agricultural Guidance and Guarantee Section, in certain cases of irregularity by operators (notified under document number C(2006) 4324) (Only the Spanish, German, English, French, Italian, Dutch and Portuguese texts are authentic) (2006/678EC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EEC) No 72970 of 21 April 1970 on the financing of the common agricultural policy (1), and in particular Article 8(2) thereof, After consulting the Fund Committee, Whereas: Article 8(1)(c) of Regulation (EEC) No 72970 provides () To date, the Commission has evaluated the recovery proceedings carried out by the Member States as regards irregularities communicated under Council Regu- lation (EEC) No 595/91 of 4 March 1991 concerning irregularities and the recovery of sums wrongly paid in connection with the financing of the common agri- cultural policy and the organisation of an information system in this field and repealing Regulation (EEC) No 28372 () before 1 January 1999 and involving amounts of more than EUR 500 000 in order to decide on the financial ~consequences of those irregularities in accordance with Article 8(2) of Regulation (EEC) No 729/70. In so doing, the Commission has followed the procedure set out in Article 5 of that Regulation and in Article 8 of Commission Regulation (EC) No 1663/95 of 7 July 1995 laying down detailed rules for the appli- cation of Council Regulation (EEC) No 729/70 regarding the procedure for the clearance of the accounts of the EAGGF Guarantee Section (7). for the Member States to take the measures necessary to (4)  The verifications and the bilateral discussions with the recover sums lost as a result of irregu]arities or Member States have shown that in certain cases the negligence. Pursuant to Article 8(2) of Regulation (EEC) Member States did not act with the necessary promptness No 729/70, in the absence of total recovery, the financial and diligence. Therefore, the financial consequences of consequences of irregularities or negligence are to be non-recovery should in such cases not be borne by the borne by the Community, with the exception of the Community budget. consequences of irregularities or negligence attributable to administrative authorities or other bodies of the Member States. (5)  In all other cases the financial consequences of the irre- gularities examined should be borne by the Community () In its judgments in Cases C-34/89, Italy v budget. Commission (%), C-54/95, Germany v Commission (?) and C-277/98 France v Commission (*), the Court of Justice has held that the Member States must take steps to rectify irregularities promptly. It follows in particular (6) Cases notified under Regulation (EEC) No 595/91 in from the judgment in Case C-34/89 that a Member State which undue payments have been recovered in full or cannot be inactive for a period of four years from the for which it has been found that no undue payment was moment of the first indication of an irregularity (°). made should be removed from the list of notifications Within that period the investigation should generally be provided for in Articles 3 and 5 of that Regulation. conducted and a decision be taken on the initiation of recovery procedure. In Case C-54/95 the Court indicated that, in principle, the Member States have to start the ?ecovery procedurel within one year .after the. all relevant (7 The Commission has informed the Member States in a acts are known with regard to the irregularity. summary report of the amounts to be excluded from the WS 4.1970, p. 13. Regulation as last amended by Regu- Comrr}unity financing ar}d of the grounds on which such lation (EC) No 1287/95 (O] L 125, 8.6.1995, p. 1). exclusion should be decided, (3 Judgment of 11.10.1990, ECR 1990, p. 1-3603. () Judgment of 21.1.1999, ECR 1999, p. I-35. () OJ L 67, 14.3.1991, p. 11. (*) Judgment of 13.11.2001, ECR 2001, p. -8453. (') OJ L 158, 8.7.1995, p. 6. Regulation as last amended by Regulation () Points 12 and 13. (EC) No 465/2005 (OJ L 77, 23.3.2005, p. 6).