SPECIAL ACCESSION PROGRAMME FOR AGRICULTURE AND RURAL DEVELOPMENT IN THE SLOVAK REPUBLIC

ANNUAL FINANCING AGREEMENT 2002

between

THE COMMISSION OF THE EUROPEAN COMMUNITIES ON BEHALF OF THE 
EUROPEAN COMMUNITY

and

THE SLOVAK REPUBLIC

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 Government of the Slovak Republic acting for and on behalf of the Slovak Republic, hereinafter referred to as “the Slovak Republic”

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 period;

(2)	The plan submitted by the Slovak Republic 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 17 November 2000;

(3)	The Multi-Annual Financing Agreement between the Commission of the European Communities acting on behalf of the European Community and the Slovak Republic, hereinafter referred to as the Multi-Annual Financing Agreement between the Community and the Slovak Republic, has been concluded on 16 May 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 Slovak Republic, 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 Slovak Republic 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 Slovak Republic, 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 Slovak Republic for the year 2002. It also modifies the Multi-annual Financing Agreement signed on 26.03.2001, as amended.

Article 2
Commitment

The financial contribution of the Community for the year 2002 is limited to 19.502.405 €. This commitment is valid only for execution of the Programme in conformity with the Multi-annual Financing Agreement between the Community and the Slovak Republic.

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 Slovak Republic, 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 Slovak Republic 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 Slovak Republic, 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 Slovak Republic:

Ministry of Agriculture of the Slovak Republic
Section of the European Integration
Structural Policy and Rural Development
Dobrovičova 12 – SK-812 66 Bratislava, Slovakia
Telephone:	00 421 2 5926 6510
Fax: 		00 421 2 5926 6499
E-Mail:	namerova@land.gov.sk

and

           Ministry of Finance of the Slovak Republic
     Department of the National Fund
     Štefanovičova 5 – SK-817 82 Bratislava 15, Slovakia
     Telephone: 	00 421 2 5958 2511 (12)
     Fax:	            00 421 2 5958 2594
     E-Mail:		mhrachovcova@mfsr.sk.

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 Slovak Republic:

Office of the Government of the Slovak Republic
Control Section - Central Contact Point of OLAF
Námestie slobody 1 – SK – 813 70 Bratislava, Slovakia
Telephone:	00 421 2 5729 5709
Fax:		00 421 2 5729 5752
E-Mail: 	olaf@vlada.gov.sk

Ministry of Agriculture of the Slovak Republic
Section of the European Integration
Structural Policy and Rural Development
Dobrovičova 12 – SK-812 66 Bratislava, Slovakia
Telephone:	00 421 2 5926 6510
Fax: 		00 421 2 5926 6499
E-Mail:	namerova@land.gov.sk

     and
 
           Ministry of Finance of the Slovak Republic
     Department of the National Fund
     Štefanovičova 5 – SK-817 82 Bratislava 15, Slovakia
     Telephone: 	00 421 2 5958 2511 (12)
     Fax:	     	00 421 2 5958 2594
     E-Mail:		mhrachovcova@mfsr.sk.”

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 Slovak Republic 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 Countries". 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 Slovak Republic, on the basis of a reasoned request by the Slovak Republic 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 Slovak Republic 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 Slovak Republic it may on the basis of a reasoned request by the Slovak Republic 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 Slovak Republic.”

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

“(v)	data to demonstrate that Community funds have not replaced funding available in the Slovak Republic.”

4.	In Section C the following Article is added:

“Article 8
Europe Agreements

The Slovak Republic 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 64 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 Slovak Republic 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 Slovak Republic 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 Slovakian, only the English text being authentic.

Done at Brussels, this …….... day of ..........in the year two thousand and............

For the Commission of the European Communities:

……………………………….
Franz FISCHLER
Member of the Commission

For the Slovak Republic:

…………………………...........
Pál CSÁKY
The Deputy Prime Minister for the European Integration, Human Rights and Minorities

...................................................                              	..................................................
Zsolt SIMON                                         		 Ivan MIKLOŠ
Minister for Soil Management        	Deputy Prime Minister and Minister for Finance

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/0
Quarter: XX/XX
Date Sent:
Administrative Department in Applicant Country:
Contact Point:	Name:				Phone:
Fax:				E-mail:

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 (   )

5.3	If yes, has notification been sent under Section F - 7.4 of the Multi-Annual Financing Agreement?

6.	Are other Countries involved?		Yes (   )		No (   )

6.1	If yes, has notification been sent under Section F - 7.4 of the Multi-Annual Financing Agreement?

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

7.	Period of Irregularity

7.1	Date on which, or dates between which, the irregularity was committed:

8.	Authorities or Bodies

8.1	Authorities or bodies which drew up the official report on the irregularity:

8.2	Authorities or bodies responsible for administrative or judicial follow-up:

9.	Date on which the Official Report on the Irregularity was drawn up:

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:

13.	Amount which would have been wrongly paid if the Irregularity had not been discovered:

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:

18.	Date of Special Report in accordance with Section F – 7.5.2 of the Multi-Annual Financing Agreement:

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:

ANNEX II

Form: D-1
European Commission –SAPARD - Declaration of expenditure and payment application
(to be sent to the European Commission, DG AGRI, Rue de la Loi 130 (SAPARD), B – 1049 Brussels)
Name of Programme: ..................................................
Commission Decision N° .............................. of .............................. (as last modified by Decision N° .............................. of ..............................)
Commission reference number ..............................
The undersigned, .................................................. as the National Authorising Officer representing the Slovak Republic as provided for in the Multi-annual Financing Agreement concluded between the Slovak Republic and the Commission, hereby declares that the total eligible expenditure in accordance with the programme, incurred from (...day/month/year... to …day/month/year...) amounts to .......... (national currency), .......... (euro, converted from national currency at the rate(s) indicated in the tables attached, as provided for in Article 10 of Section A, of the Annex to the Multi-annual Financing Agreement).
Details relating to this expenditure are set out in the Tables annexed hereto and form an integral part of this declaration.
I also declare that the measures are progressing at a satisfactory rate in accordance with the objectives laid down in the Programme, and that the supporting documents are, and will remain, available as provided for in Article 3 of the Multi-annual Agreement and Article 15 of Section A of the Annex to that Agreement.
I declare that:
1.	The listing of expenditure is exact. It is based on accounts at the level of individual projects and supported by documentary evidence. The listing and corresponding supporting documents are open to verification and will be remain available in accordance Article 3 of the Multi-annual Financing Agreement and Article 15 of Section A of the Annex thereto.
2.	Either The listing includes details of debts to be collected amounting to (.......... national currency) (.......... euro), of which total amounts per measure are attached, including the breakdown of national public and Community contribution; or There are no debts to be collected - (strike out as appropriate). The declaration also includes all debts since the previous declaration which have been registered for more than two years, and which are subtracted from this expenditure declaration.

3.	The volume of Community funds in the SAPARD euro account as at the date of the last debit at the end of the quarter to which this declaration refers (or in the case of a supplementary declaration, the date specified in that declaration) amounts to .......... euro. Of this amount .......... euro correspond to interest earned.

The payment should be made to the SAPARD euro account:

Beneficiary: |
Bank: |
Account number: |
Account holder (if different from beneficiary) |

This expenditure declaration contains …… numbered pages.

This declaration has been established by: ..................................................
(Date, stamp and signature of the Head of the SAPARD Agency).

The declaration has been established on the basis of financial amounts provided by me ..................................................
(Date and Signature of the Accountant of the SAPARD Agency).

Certified by ..................................................
(Date, stamp and signature of the National Authorising Officer on behalf of the Slovak Republic).

Done at ...................., ....................(date).

ANNEX III

Form D-1     Table A1	    STATEMENT OF ELIGIBLE EXPENDITURE ACTUALLY INCURRED IN THE CONTEXT OF THE EXCEPTIONAL NATURAL DISASTER ACKNOWLEDGED AS SUCH BY THE COMMISSION ON .................... UNDER THE PROVISIONS OF ARTICLE 16 § 1 (a) OF SECTION A:  SINCE START OF PROGRAMME IN THE CONTEXT OF THAT DISASTER
Name of Programme: ………………………….
Commission Decision N°…….... of …….... (as last modified by Decision n°…….... of ……....)
Commission reference to the exceptional natural disaster, document: ……………………….
Declaration n° .......... covering the period from the start of application of the provisions of Article 16 § 1 (a) for the exceptional natural disaster acknowledged by the Commission on (date) to (date) inclusive.

Priority axis

     Name

     Measure

National currency

euro

| Public expenditure | Private funding | Total eligible cost | Public expenditure | Private funding | Total eligible cost
| EC | National | | | EC | National | |
(1) | (2) | (3) | (4) | (2) + (3) + (4) = (5) | (6) | (7) | (8) | (6) + (7) + (8) = (9)

1. Priority 1
   Measure 1
   Measure 2
   Measure n
Total Priority 1

n. Priority n
   Measure 1
   Measure 2
   Measure n
Total Priority n

Grand Total | | | | | | | |
In the event of differences in relation to a previous declaration these are identified by ”*” and explained on pages …… to ……
The rates of exchange used for national currency/euro conversion are as follows:		Rate .................... ;		Date: ....................