EU:THE EU is poised to suspend up to €1 billion in aid for Bulgaria over concerns that corrupt officials and organised criminals are fraudulently siphoning off European funds, writes Jamie Smyth.
Four Bulgarian state agencies will be blocked from handling a range of EU funding programmes designed to help poor regions of the country, according to a draft report prepared by the European Commission that will be published next week.
The report, which has been seen by The Irish Times, blames weak administration and inadequate controls in Bulgaria for failing to prevent fraud. "High level corruption and organised crime exacerbates these problems of general weakness in administrative and judicial capacity," it says, listing investigations into the misappropriation of EU funds.
In one case cited by the report, the EU's anti-fraud office, Olaf, is investigating fraud and possible corruption regarding agricultural projects awarded €26 million in funding.
It is also investigating the activities of an ex-executive director of the Sapard agency in a matter involving some €10 million of agricultural projects. Criminal proceedings have recently been initiated against the individual, and the prosecutor's office in Bulgaria has formally accused the ex-director of "wrongful approval of projects". Bulgaria has already received €235 million in funding from the Sapard programme, but a further €210 million has now been frozen.
The largest amounts of money that have been suspended relate to payments made under the Phare programme, which provides technical assistance to states before they join the EU to improve their ability to absorb funding.
The report says about €610 million in EU funding, including around €250 million which has not yet been contracted, has been suspended. "Monitoring and audits show serious weaknesses in the management and control systems and point to a number of irregularities, suspected fraud cases and conflicts of interest between the programme administration and contractors," says the report, which notes that Bulgaria could lose the suspended funds because it may not be able to meet contractual deadlines.
"Urgent action is needed because deadlines for contracting some of the funds are approaching, after which the funds will be lost to Bulgaria," it says, urging the government to take urgent action to crack down on fraud.
The report notes that Olaf's investigations have been frustrated by Bulgarian officials who may be connected to criminals.
"Olaf has been faced with instances of breaches of confidentiality, improper transmission and leaks of confidential information. There is strong suspicion of the involvement of organised crime," concludes the report, which officials in Brussels say is one of the toughest ever issued about an EU member state.
Bulgarian deputy prime minister Meglena Plugchieva, who was appointed this year to clean up the handling of EU funds, was in Brussels yesterday to meet officials at the EU anti-fraud agency.
She has been given a partial draft of the report, although key sections such as the conclusions were removed.
The 27 commissioners are scheduled to debate the report next week and could amend the language and some of the key recommendations.
These include urging the Bulgarian government to: introduce proper controls to protect EU funds from fraud and corruption; improve supervision of public procurement procedures; increase spot checks and audits of projects, and report any suspicions of fraud to the commission immediately.