Bulgaria likely to lose €.5m in funding because of corruption

BULGARIA:FEARS ARE growing in Bulgaria that the European Union will withhold funding next week to punish it for its failure to tackle organised crime and corruption.

The European Commission is expected to deliver unflattering reports on Romania and Bulgaria's efforts to fight graft and criminality, but only the latter is likely to lose EU aid.

Sources who had seen drafts of the EU reports told Reuters that Bulgaria would probably be stripped of some €500 million and be threatened with future losses unless it intensified its fight against corruption and cleaned up the way cash from Brussels was spent.

"In Bulgaria, there are serious, systemic problems. We will be confirming that certain money will be forfeited," the source said.

The funds to be withheld relate to agricultural, road-building and technical assistance projects that have already been frozen due to graft investigations by EU anti-fraud agency Olaf.

Yesterday's Bulgarian newspapers were full of striking details from a supposedly confidential report sent by Olaf to Bulgaria, in which the government is accused of having links with alleged criminals, and state agencies are lambasted for their lack of co-operation in corruption inquiries.

The Olaf report estimates that Bulgarian farm projects worth over €30 million have been tainted by graft, and focuses on one particular "criminal network composed of more than 50 Bulgarian enterprises and various other European and off-shore companies", according to extracts published in Dnevnik newspaper.

The report said the network was run by two businessmen, one of whom "allegedly financed the election campaign of the current Bulgarian president and is the business partner of the former deputy foreign minister, who, according to information available, attempted to influence an ongoing investigation into that individual".

"There are powerful forces in the Bulgarian government and/or Bulgarian state institutions who are not interested in punishing anyone from the circle around (them)," Olaf concluded.

Prime minister Sergei Stanishev denied that the group had state protection and accused the EU of overstating the corruption problem in Bulgaria.

But Meglena Plugchieva, the new deputy prime minister in charge of overseeing how EU funds are spent, said the leak of such a sensitive report was in itself a bad sign for the country.

"I'm very unpleasantly surprised that Olaf's report has been distributed to the media, while the magistrates for whom it was intended are not working on it," she said.