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12.—(1) Where an applicant–
(a)in making the application, or in furnishing any information in connection with the application for grant or under regulation 9(1) or 10(2), has made a statement which was false or misleading in a material respect;
(b)has failed to do something which he undertook to do if the grant was made; or
(c)is in breach of any condition subject to which the grant was made,
the Secretary of State may withhold the whole or any part of any grant payable to that applicant, and may recover the whole or any part of any such grant already paid to him.
(2) Before withholding or recovering any grant under paragraph (1) or under regulation 10(8), the Secretary of State shall–
(a)give to the applicant for grant a written explanation of the reasons for the proposed withholding or recovery;
(b)afford the applicant for grant an opportunity of appearing before and being heard by a person appointed for that purpose by the Secretary of State; and
(c)consider the report by the person so appointed and supply a copy of the report to the applicant for grant.
(3) Insofar as the grant paid under these Regulations includes aid under the Council Regulation–
(a)the words “in a material respect” in paragraph 1 shall be of no effect; and
(b)the Secretary of State may insofar as permitted by Article 20(2) of the Commission Regulation, withhold from or, as the case may be, require an applicant to whom paragraph (1) applies to pay an amount not exceeding 10% of the aid payable, including any amount already paid, in respect of the undertaking in addition to recovering or withholding the aid under that paragraph.
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