Article 19 Recovery

(1) Where the Managing Authority assisted by the Joint Secretariat in accordance with the Cooperation Programme document and the other documents in the meaning of point (a) of Article 2 of this Agreement suspects or was informed about the irregular use of funds provided under the financial contribution of the Russian Federation and under the financial contribution of the ENI by a Russian beneficiary in the Russian Federation it shall apply appropriate follow-up actions, such as suspension of the reimbursement of the financing related to the lead beneficiary or another beneficiary and expenditure under examination, withdrawal or reduction of the funds granted, or recovery of the funds granted.

(2) Once it has been established by the Managing Authority that a financial irregularity has occurred and an amount has been unduly paid, that ineligible expenditure will be either deducted as set out in paragraph 3 of this Article or recovered as set out in paragraphs 4 to 10 of this Article.

(3) The ineligible expenditure of funds provided under the financial contribution of the Russian Federation and under the financial contribution of the ENI by a Russian beneficiary in the Russian Federation shall be deducted from future payments of the same financial source to the lead beneficiary in case there is still a progress report that has not been paid out and the irregular amount can be covered from it.

The irregular amount shall be deducted from the project's progress report through a correction report signed by the lead beneficiary.

The Managing Authority shall be responsible for the recovery of the amounts from the lead beneficiary and sends out the pre-filled correction report to the lead beneficiary.

(4) The ineligible expenditure of funds provided under the financial contribution of the Russian Federation and under the financial contribution of the ENI by a Russian beneficiary in the Russian Federation shall be recovered from the lead beneficiary in case there are no or not enough open project's payment claims of the same financial source to recover the irregular amount.

The Managing Authority shall be responsible for the compilation of the documentation giving a basis for the recovery. The Managing Authority shall be responsible for the recovery process including the order for recovery letter to the lead beneficiary.

(5) The lead beneficiary shall transfer the repayment amount to the Cooperation Programme's account, specified in the recovery letter, within one calendar month following the date of the letter of the Managing Authority asserting the repayment claim. The order for the recovery letter shall contain the exact recovery date.

(6) The lead beneficiary shall recover the amount from the respective Russian beneficiary in the Russian Federation in accordance with an established system agreed in the partnership agreement as defined in Article 8(3) of this Agreement.

In case the lead beneficiary does not succeed in securing repayment of the irregular amount from the respective Russian beneficiary in the Russian Federation by the deadline specified in the recovery letter, the lead beneficiary shall inform the Managing Authority without delay. This information shall include a proof that the lead beneficiary has undertaken all necessary steps of recovery in accordance with the partnership agreement as defined in Article 8(3) of this Agreement.

(7) Upon this proof and in case the lead beneficiary does not pay back the irregular amount by the deadline specified in the recovery letter, the Managing Authority shall inform the Russian National Authority by sending a written request setting out a complete file.

(8) For amounts from funds under the financial contribution of the ENI that could not be recovered, the Russian National Authority shall guarantee by its financial contribution to the Cooperation Programme the recovery of respective irregularly spent amounts.

(9) The Russian National Authority shall be entitled to claim the unduly paid funds from the Russian beneficiary in the Russian Federation concerned by all legal means.

If the Russian National Authority and the Russian beneficiary in the Russian Federation do not come to an agreement, the dispute shall be referred to an appropriate court of the Russian Federation.

(10) Where the recovery from the Cooperation Programme by the Commission relates to systemic deficiencies in the management and control of the Cooperation Programme by the Cooperation Programme authorities and management bodies listed in Article 5(1) of this Agreement, the Parties will hold necessary consultations in order to resolve the situation with due regard to the apportionment of liabilities among the participating countries as laid down in the Cooperation Programme document and the other documents, and as defined in point (a) of Article 2 of this Agreement.

(11) Recovered amounts may be reused by the Cooperation Programme.

However, those amounts may not be reused for any operation that was the subject of the correction or, where a financial correction is made for a systemic irregularity or deficiency in terms of paragraph 10 of this Article, for any operation affected by the systemic irregularity or deficiency.