EU to dock Bulgaria funds, warn on justice reforms

The European Union executive will adopt three reports on July 23 on justice, crime and corruption problems in Bulgaria and Romania and the handling of EU funds in both Black Sea states that joined the bloc in January 2007.

Drafts of the reports are being kept secret, even from the governments in Sofia and Bucharest, but an EU source familiar with the contents said the scale of corruption and the failings of the judicial system would be censured in both countries, but only Bulgaria stands to lose money immediately.

Three categories of funds granted to Sofia before accession for agricultural marketing, technical assistance and road building, already suspended due to investigations by the EU anti-fraud agency OLAF, will be withheld, the source said.

"In Bulgaria, there are serious, systemic problems. We will be confirming that certain money will be forfeited," the source said, speaking on condition of anonymity. He declined to give a figure but confirmed it was likely to be around half a billion euros.

The threat to future funds may be of even more concern to Sofia, which is due to receive some 11 billion euros in farm subsidies and regional development aid in the 2007-2013 budget period but has received very little because of concerns about its payments agencies for disbursing EU funds.

"If they withdraw the accreditation of the payments agencies, that is far worse than any safeguards," a Bulgarian official said.

"POWERFUL FORCES"
The persistence of problems of corruption and high-level protection in Bulgaria was highlighted on Wednesday when Bulgarian newspapers published leaks of the latest OLAF report on its probe into suspected abuses in the spending of 34 million euros in SAPARD farm marketing funds.

Deputy Prime Minister Meglena Plugchieva, appointed this year to oversee all EU funds, presented the report to the country's Supreme Judicial Council on Tuesday.

The document, obtained by Reuters, says the administration failed to take measures, and talks about alleged high-level political umbrella protecting graft in the SAPARD programme.

"There are powerful forces in the Bulgarian government and/or Bulgarian state institutions who are not interested in punishing anyone from the circle around (two named Bulgarian businessmen)," Dnevnik daily quoted a letter from OLAF to Plugchieva as saying.

European Commission anti-fraud spokesman Maximilian Strotmann said the leak of what he called routine correspondence between OLAF and a member state was "very regrettable."

Bulgarian Chief Prosecutor Boris Velchev said prosecutors had been investigating members of the network mentioned in the OLAF report since December 2006 on charges of taking part in an alleged criminal group involved in suspected EU fund frauds. "There is no state patronage over this group," he said.

Socialist Prime Minister Sergei Stanishev also denied any protection of the group and played down criticism in the report. "There is some hysteria about these issues. Only here they attract so much public attention," he told reporters. "There are problems with EU funding in all European Union countries."

The EU source said the Commission's report would praise Plugchieva's efforts, the appointment of a new interior minister and the establishment of a national security agency that has begun handling key money laundering probes.

However, it would note a systematic failure to deal with high-level corruption as well as frequent suspensions of cases and court referrals for further investigation in both the pre-trial and trial phases which prevent convictions.

"The fact is that no one is in prison, almost no one is in court and few cases are even in the pre-trial phase," the Bulgarian official acknowledged.

The EU source said the Commission would not trigger a safeguard clause in the accession treaty that could freeze judicial cooperation with Bulgaria and withdraw other member states' recognition of its court judgments, since that would be counter-productive.