# EUR-Lex - 52012DC0057 - EN

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# 52012DC0057

**REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL INTERIM REPORTOn Progress in Bulgaria under the Co-operation and Verification Mechanism /* COM/2012/057 final */**

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REPORT FROM THE COMMISSION TO THE
EUROPEAN PARLIAMENT AND THE COUNCIL

INTERIM REPORT
On Progress in Bulgaria under the Co-operation and Verification Mechanism

1.           Introduction

This interim report provides a technical update
on significant developments during the last six months in Bulgaria under the Co-operation
and Verification Mechanism ("CVM")[1].
The update focuses on measures that have been completed or will be completed
shortly, while also identifying actions which remain to be taken.

The recommendations of the last progress report
adopted by the Commission on 20 July 2011 are the point of reference for the
assessment of progress achieved against the benchmarks and the identification
of the remaining challenges. In summer 2012, the Commission will provide an
overall assessment of progress in Bulgaria under the CVM since accession.

2.           Judicial Reform and the
Fight against Corruption and Organised Crime: Summary of Developments in the
light of the Commission's recommendations

Bulgaria's response to the recommendations
included in the Commission's last report shows the following main developments.
The new specialised court and prosecution office for organised crime have
started work, the Commission for the Identification and Forfeiture of Criminal
Assets has delivered significant results and the newly established commission
to identify and sanction conflicts of interest has taken its first decisions.
In addition, Bulgaria initiated measures to improve judicial practice, the
organisation of the prosecution and the cooperation between the judiciary,
police and other administrative authorities. Further steps in judicial reform
have been announced for the coming months.

Developments in Bulgaria over recent months
point to a need for stronger action to implement the Commission's
recommendations in a number of areas. A law on asset forfeiture now being
debated in Parliament needs to be comprehensive, and backed up with strong
institutions, if it is to be effective in dissuading organised crime and
high-level corruption. An analysis of shortcomings in judicial and
investigative practice of important cases related to organised crime and
corruption has not yet been undertaken in a comprehensive way. Implementation
of the reformed Judicial System Act – designed to apply transparent and
objective procedures to judicial appointments, promotions and appraisals, and
to prioritise integrity – has not yet delivered the changes expected. A reform
of the election process of the Supreme Judicial Council is needed to enhance
the Council's transparency and integrity and as an important step towards a
fundamental reform of the judicial system. The track record of decisions and
penalties in cases related to high-level corruption, fraud and organised crime
under investigation and in court does not yet provide the convincing results
needed to provide effective dissuasion.

Further efforts are therefore needed during the
coming months in order to demonstrate convincing results and to contribute to the
Commission's overall assessment in summer 2012 of progress achieved by Bulgaria
under the CVM since its accession to the EU. The Commission will continue to
support Bulgaria in this endeavour.

3.           Update on the State of
Play

Reform of the Judiciary

In order to implement the reform objectives
of the new Judicial System Act, the Commission notably recommended to Bulgaria in
its last CVM report to establish a track record in appointments and appraisals respecting
transparency, independence, integrity and professional merit. In addition, the
Commission recommended that Bulgaria demonstrates a track record in
disciplinary and criminal follow-up to corruption and malpractice within the
judiciary and to ensure complete electronic access to court verdicts and a
strict application of the random allocation of court cases.

Since the Commission's last report, Bulgaria has
started to implement provisions of the Judicial System Act concerning the
reform of appointments, promotions and appraisals and the strengthening of
initial training of magistrates, and took steps towards a better management of
workload within the judiciary. During this period, the first appraisals of
judges under the new system have been launched and several senior appointments
have been made. Local ethics commissions have been created to advise on the
integrity of magistrates proposed for appointment, promotion or appraisal. A
study to rationalise the workload of magistrates has been launched and rules on
entry exams for the National Institute for Justice have been adopted.

Appointing and promoting competent magistrates
of high integrity is an important part of judicial reform. Since last summer,
several senior judicial appointments made by the Supreme Judicial Council and
by Parliament have raised concerns regarding their objectivity, transparency
and the thoroughness of the evaluation of the candidates' merit and integrity.
Concerns have also been raised regarding the procedures for appraisals.
Upcoming appraisals and promotions should demonstrate their capacity to
properly reflect differences in performance and to take integrity issues fully
into account.

The fight against corruption within the
judiciary shows a mixed picture. The ethics commission of the Supreme Judicial
Council and the newly established local ethics commissions have not yet been
able to deliver proper integrity screening in the context of recent
appointments and appraisals. During 2011, six magistrates were acquitted by
court in six cases related to corruption and
abuse of office. There are ongoing cases against 28 magistrates in 27 criminal
proceedings. Decisions in first or second instance were reached in 13 cases, of
which ten led to convictions, six with suspended sentences.

Despite some examples of good practice,
court verdicts are not yet systematically published and standards of
publication have not been aligned. Bulgaria has announced the adoption of
guidelines by the Supreme Judicial Council to address shortcomings in the
random allocation of court cases.

In order to improve the management,
accountability and efficiency of the judicial system, the Commission recommended
to Bulgaria to take further steps towards a fundamental reform of the judicial
system, notably by establishing and implementing proposals for reform of the
Supreme Judicial Council and the prosecution.

Since the
Commission's last report, the General Prosecutor has announced initiatives to
promote a further specialisation of the prosecution, such as organisational
measures, methodological guidance and software tools. There is a plan to
enlarge the mandate of the specialised teams in charge of fraud cases with the
involvement of EU funds to criminal offences against the state budget such as
tax fraud, and to set up joint teams focused on high-level corruption cases. In
addition, the General Prosecutor has established a service for criminological
research and access to a register of special investigative means is expected to
be extended to all the prosecution offices. The establishment of a unified
information system across the prosecution, police and other administrative
authorities is still to be put in place. More wide-ranging proposals for the
reform of the prosecution are currently being discussed and have been announced
for early 2012.

The credibility of the Supreme Judicial
Council has been in question over recent months. Following the resignation of
two members of the Council in protest at the actions of the Council, the
elections for their replacement in September were boycotted by some courts.
This prompted a public debate about how to increase the professional capacity
and accountability of the Council. This debate on the reform of eligibility and
procedures for election to the Supreme Judicial Council needs to be quickly
made concrete if reforms are to be in place before the expiry of the current Council's
mandate in autumn 2012. The discussions with the relevant stakeholders recently
initiated by the Justice Minister should provide a basis for concrete proposals
to be made. In the meantime, concrete steps can be taken to improve the
accountability of the Supreme Judicial Council, such as an earlier publication
of agendas, a systematic opening of committee meetings to the public or to
observers from civil society, and the live web-streaming of the Council's
meetings.

In order to achieve better results in
high-level organised crime and corruption cases, the Commission notably recommended
that Bulgaria analyse judicial and investigative practice, adopt and implement
detailed action plans and correct shortcomings in cooperation with
international experts and civil society.

Since the Commission's last report, several
actions have either been taken or prepared in order to respond to the
Commission's concerns on judicial and investigative practice. These actions
include a report on weaknesses in judicial practice by the Supreme Court of
Cassation, work by the Prosecutor's Office to develop guidelines to analyse
acquittals, and inter-agency cooperation agreements between the police and
administrative control authorities. A number of training programmes for prosecutors
and police investigators have been carried out. In addition, amendments to the
Penal Procedure Code have been made in order to limit the number of cassation
referrals, and a unit has been set up to identify divergent jurisprudence and
to support the interpretative activities of the Supreme Court of Cassation.

These initiatives should be completed by a more
comprehensive and systematic analysis of weaknesses in the investigation,
prosecution and trial of cases of high public interest. Involving external and
independent expertise would allow the measures taken to benefit from best
practice and to demonstrate progress through objective indicators.

Fight against Organised Crime

In order to improve the effectiveness of the
fight against organised crime, the Commission notably recommended to Bulgaria to
properly equip and define the mandate of the new specialised court and prosecution
office for organised crime and to continue the reform of police.

Since the Commission's last report, a
conviction was pronounced in appeal against defendants in an important
organised crime case, who had been acquitted in first instance. A final verdict
in cassation is pending. Concerns regarding the absence of effective witness
protection have appeared in the same case. Important cases of serious and
organised crime are at trial phase. First instance decisions in two other
organised crime cases against a number of defendants were delivered in November
and December 2011. Other important cases related to organised crime have seen
little development in court in recent months. Further improvements in investigative
practice, in terms of investigation techniques and in the collection of
evidence remain to be demonstrated through enhanced professionalism during
police actions, shorter periods of investigation and through final verdicts.

The new specialised courts for organised crime
cases of first instance and appeal and the attached prosecution offices became
operational at the beginning of January 2012. While the Constitutional Court has
recently issued a ruling concerning the scope of competence of the newly
created courts, a precise delineation of competence will have to be established
through test cases under the guidance of the Supreme Court of Cassation. This
may have implications for workload and therefore staffing. A special division
of thirty police officers at the central level and twenty investigative police
officers across the country has been designated to support the investigations
of the specialised prosecution office for organised crime. The impact of these
structures on the swift handling of serious crime cases remains to be assessed.

The reform of police investigative practice
launched in 2010 has been pursued through further training in recent months[2]. Bulgaria has announced the
development of joint methodological guidelines for the police, the prosecution
and other administrative bodies concerning the identification and freezing of
criminal assets. Further efforts to enhance professional practice will be
required in order to demonstrate the impact of reform in terms of a higher
number of indictments meeting high professional standards, as well as final
court decisions in organised crime cases.

Although donations to police have been limited
to public authorities and state-owned companies and are now entered into a
public register, the practice of donations to police still raises questions
regarding accountability and financial transparency, notably the risk of
circumventing public procurement rules.

In order to support the fight against organised
crime and corruption, the Commission notably recommended to Bulgaria to adopt
stronger asset forfeiture legislation and to improve current practice and
results in forfeiting criminal assets.

In 2011, the Commission
for the Identification and Forfeiture of Criminal Assets (CEPACA) obtained final court decisions confirming confiscation amounting to
close to€5 million. This constitutes a substantial increase compared to
previous years. The Commission has been reorganised since a new director was
appointed in spring 2011. Closer cooperation with the prosecution has been
established in some specific cases; however this cooperation is not yet
systematically applied. A new draft law for asset forfeiture was introduced
into Parliament in January. The draft law sets out a regime for non-conviction
based asset forfeiture. The bill focuses on targeting assets linked to
organised crime activity. While the Commission also recommended the inclusion
of the power for CEPACA to undertake pro-active asset verification of senior
officials and politicians, this aspect does not seem to be pursued. The draft
law links investigations by CEPACA to criminal pre-trial proceedings initiated
by the prosecution, allowing its work to start earlier than at present but the
draft law also excludes the possibility for CEPACA to launch ex-officio checks
on the grounds of administrative infringements. It also raises questions about
the operational independence of CEPACA. The parliamentary discussions should be
an opportunity to strengthen the draft to ensure an asset forfeiture regime
which is comprehensive in scope, covers a sufficient timespan to be effective,
and is backed up by strong institutions. The real impact of this future law
will need to be assessed in terms of a further increase of decisions on
confiscated assets and in terms of the independence of CEPACA.

Fight against Corruption

In order to improve the effectiveness of the
fight against high-level corruption, the Commission recommended to Bulgaria
notably to establish a network of specialised prosecutors, to adopt pro-active
investigative strategies and to demonstrate a track record of sanctions for
conflict of interest.

Since the
Commission's last report, one final sentence and two non-final sentences were pronounced in high-level corruption cases against three
Members of Parliament and an
acquittal in second instance was rendered in a case against a former minister. Six non-final convictions were delivered
against sitting and former mayors, four with suspended
sentences. Investigations of alleged fraud of EU funds were not pursued by the
prosecution, though investigations into related cases based on the same facts
continue in another Member State. In all cases related to fraud of EU funds
brought to court in 2011, criminal responsibility was replaced by
administrative fines. An important case of fraud of EU funds has been delayed
in appeal in court for over 18 months. Follow up by
the prosecution is awaited in a number of files concerning serious
irregularities in the management of EU funds which were forwarded by OLAF in
2010-2011.

The
Commission for the prevention and detection of conflict of interest set up in June 2011 is now operational. It has received 146 signals and
issued 25 decisions, with conflict of interest established in 12 cases. Its
ability to have a dissuasive impact will depend inter alia on the number of
cases concluded, its capacity to pursue conflict of interest in a pro-active
manner and its ability to deliver sound and well motivated decisions in
sensitive cases. Effective measures against conflict of interest also require
unitary practice regarding the publication of conflict of interest declarations
by different administrative bodies, and a streamlined legal basis for the
Conflict of Interest Commission regarding sanctions and statutes of limitation.

The General Prosecutor has committed to set up
networks of specialised prosecutors for economic and financial crime by the end
of 2011 and to develop methodological instructions for the investigation of
complex economic and financial crime, in cooperation with international
experts, by April 2012. The Ministry of the Interior and the General Prosecutor
intend to develop further joint instructions on the investigation and
collection of evidence, and cooperation with the National Revenue Agency is now
on a clearer footing. Monthly reports on progress on cases of high public
interest are also being drafted. The extent to which these changes carry
through into intensified action in such cases will need to be assessed.

Allegations of electoral fraud, following
the Presidential and local election of last October are being investigated by
the prosecution. Dissuasive sanctions for vote-buying as well as full
transparency in political party financing – in line with GRECO recommendations
– remain essential for public trust the authorities' ability to fight organised
crime and corruption.[3]

In order to
improve the prevention of corruption, the Commission notably recommended to Bulgaria
to demonstrate concrete results in a comprehensive anti-corruption project, to
improve the system of declaring and verifying assets of public officials and to
strengthen administrative capacity in the area of public procurement.

The horizontal
anti-corruption project ("Borkor") proposed in the beginning of 2010
has now set up premises and recruited permanent staff. An advisory council is
in place, modalities of cooperation with central and local administration have
been defined and a list of tasks and possible legislative proposals has been
agreed. It is expected that the project will be operational in mid-2012.

Bulgaria has issued
a new instruction on disciplinary action within the Ministry of the Interior
and amendments to the Code of Ethics were adopted in December, whose purpose is
to counter and prevent corruption by officials working for the Ministry of the
Interior. The impact of these measures will need to be demonstrated in
practice.

Since the Commission's last report, there have
been no concrete developments in the control system of asset declarations of
senior civil servants in order to detect and pursue inexplicable wealth. Recent
recommendations to address legislative gaps in the protection against
corruption by the United Nations Convention against Corruption (UNCAC) should
be addressed in the new Penal Code.

Legal amendments in autumn 2011 aimed at strengthening
ex-ante and ex-post control in public procurement procedures. The impact of
these measures will depend on sufficient administrative capacity and on an
effective delineation of competences between the different competent
authorities in the area of public procurement and other authorities including
implementing authorities under structural funds. The staff capacity of both
competent authorities in the area of public procurement has reportedly been
strengthened. The impact of these measures will need to be assessed in terms of
their practical implementation.

[1]               Commission Decision 2006/929/EC of 13 December 2006
establishing a mechanism for cooperation and verification of progress in
Bulgaria to address specific benchmarks in the areas of judicial reform and the
fight against corruption and organised crime (OJ L 354, 14.12.2006, p. 58).

[2]               Bulgaria reports that from June to November 2011, a
total of 1660 operational police officers were trained in investigative
functions. 1149 police investigators underwent training on investigating
corruption, economic and organised crime as well as financial investigations.

[3]               The final OSCE report on the Bulgarian local and
presidential elections can be accessed at http://www.osce.org/odihr/elections/86893