(Case T-259/05)

EAGGF – Guarantee Section – Expenditure excluded from Community financing – Fibre flax – Hemp – Bananas – OLAF report – Report of the Court of Auditors – Bilateral meeting under Article 8(1) of Regulation (EC) No 1663/95 – Breach of essential procedural requirements – Abusive practice – Existence of financial harm to the EAGGF

4. Agriculture – EAGGF – Clearance of accounts – Definitive refusal to accept responsibility for certain expenses – Need for a prior inter partes procedure (Commission Regulation No 1663/95, Art. 8) (see paras 81-89, 191-198)

7. Agriculture – EAGGF – Clearance of accounts – Disallowance of expenditure arising from irregularities in the application of the Community rules – Challenge by the Member State concerned – Burden of proof (see paras 112,154)

10. Agriculture – EAGGF – Clearance of accounts – Power of the Commission to monitor the regularity of expenses – Finding by the Commission of irregularities going beyond irregularities proven before a national criminal court – Lawfulness (see para. 174)

11. Agriculture – Common agricultural policy – EAGGF financing – Principles – Obligations of the Member States – Adoption of necessary measures of surveillance and control – Finding of failures in the control system implemented by a Member State (see paras 208-211)

Re:

ANNULMENT in part of Commission Decision 2005/354/EC of 29 April 2005 excluding from Community financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), Guarantee Section (OJ 2005 L 112, p. 14).

Operative part:

The Court: