Report from the Commission to the European Parliament and the Council on Progress in Bulgaria under the Co-operation and Verification Mechanism {SEC(2008) 2350}
Date: 2008-07-23
Institutions: European Commission
Subjects: Bulgaria, EU control, cooperation policy, corruption, exchange of information, judicial reform, rule of law

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.7.2008 
COM(2008) 495 final 

REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

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

{SEC(2008) 2350} 

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1. 

INTRODUCTION 

On entering the EU in 2007, Bulgaria faced still serious challenges in ensuring the functioning 
of its judiciary and in fighting corruption and organised crime. These challenges were judged 
by  the  Commission  and  the  other  Member  States  to  be  surmountable  and  the  Bulgarian 
authorities  committed  to  remedy  shortcomings  in  these  areas  so  that  Bulgaria  could  fully 
assume the rights and obligations of EU membership. The Bulgarian authorities and the other 
Member  States  recognised  that  far  reaching  judicial  reform  and  a  concerted  effort  to  fight 
corruption and organised crime were necessary if Bulgarians were to be able to exercise their 
rights as EU citizens and benefit from all the opportunities, including financial support, that 
EU membership would bring. More broadly, they recognised that principles which are at the 
heart of the EU – respect for the rule of law, mutual recognition and cooperating on the basis 
of  a  fundamental  bargain  of  trust  –  could  only  be  put  into  practice  if  these  problems  were 
tackled at source. 

Against this background, the Commission and the other Member States saw the need to work 
closely  and  cooperatively  with  Bulgaria  following  accession  to  ensure  that  the  necessary 
reforms  were  put  in  place  to  strengthen  the  judicial  system  and  to  fight  corruption  and 
organised  crime.  A  Cooperation  and  Verification  Mechanism  (CVM)  was  set  up  by  the 
Commission  to  monitor  progress  and  extend  support  in  dealing  with  these  shortcomings. 
Based on inputs from the Bulgarian authorities, complemented by expert missions, this report 
presents  a  summary  and  detailed  assessment  of  how  far  Bulgaria  has  come  in  meeting  the 
benchmarks set out in the CVM. It is the third report in a six monthly reporting cycle.  

The assessment points to the serious difficulties which the Bulgarian authorities are facing in 
making real headway in judicial reform and the fight against corruption and organised crime. 
Despite good efforts to establish necessary institutions and introduce required procedures and 
processes,  there  are  few  results  to  demonstrate  that  the  system  is  actually  functioning 
correctly. It would have been unrealistic to assume that deep seated change would be quick. 
However,  despite  the  efforts  of  the  Bulgarian  Government,  progress  has  been  slower  and 
more  limited  than  expected  and  the  need  for  verification  and  cooperation  will  continue  for 
some  time.  The  judicial  system  and  the  administration  need  serious  strengthening.  This  is  a 
long haul exercise. 

2. 

THE REFORM PROCESS IN BULGARIA 

2.1. 

Achievements  

Bulgaria  has  made  an  effort  to  set  up  institutions  and  introduce  procedures  and 
processes  which  could,  if  the  institutions  are  properly  staffed  and  the  processes 
effectively  managed,  deliver  the  results  expected  of  a  functioning  judiciary  and 
administration, free from corruption and the threat of organised crime.  

On  the  reform  of  the  judiciary,  Bulgaria  has  enacted  amendments  to  the 
Constitution and adopted the Civil Procedures Code, the Judicial Systems Act and its 
implementing  legislation.  These  laws  confirm  the  independence  of  the  judiciary. 
They  provided  for  the  establishment  of  the  Supreme  Judicial  Council  as  an 
independent  elected  body  charged  with  overseeing  the  governance  of  the  judiciary. 

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An  independent  judicial  inspectorate  was  set  up  and  has  become  operational, 
launching its first inspection missions.  

A  State  Agency  for  National  Security  (SANS)  has  been  set  up  to  fight  against 
corruption  and  organised  crime,  and  has  exercised  de  facto  investigative  powers 
since  the  beginning  of  2008.  It  has  established  a  roster  of  cases  which  are  being 
investigated under the supervision of the prosecution. In addition Bulgaria has made 
progress on the investigation of two important and symbolic cases. 

Bulgaria has made progress on local corruption, by introducing new administrative 
procedures,  in  particular  for  the  border  police,  which  reduce  the  possibilities  for 
corruption. Bulgaria closed duty-free shops and duty free petrol stations which were 
allegedly focal points for local corruption and organised crime. 

2.2. 

Results 

Considerable efforts have gone into setting up institutions and processes. However, 
this  reform  has  not  yet  produced  sufficient  results.  The  adoption  of  laws,  the 
introduction  of  procedures  and  the  creation  of  institutions  is  necessary  but  not 
sufficient  –  the  laws  have  to  be  implemented  and  the  institutions  have  to  work 
effectively to produce more concrete results.  

On  judicial  reform,  the  shortcomings  of  the  Penal  Code  and  the  Penal  Procedure 
Code remain. The Penal Procedure Code adopted in 2006 has not been instrumental 
in improving the efficiency of the pre-trial phase. The roles and responsibilities are 
not sufficiently precise or well defined to facilitate cooperation between the different 
actors.  Important  cases  are  sent  back  to  the  prosecution  on  the  basis  of  small 
procedural flaws. Delays in trials are frequent and there are no procedural safeguards 
to prevent courts from delaying decisions. The Penal Code is outdated and is part of 
the reason why the judiciary is overloaded.  

A  reform  of  law  enforcement  in  the  Ministry  of  the  Interior  which  includes  the 
police - was proposed in April 2008. This is a welcome step, but the lack of clarity 
about roles and of the various actors in the pre-trial phase in relation to intelligence 
gathering, investigation and prosecution of criminal cases has generated debate. The 
divergent views between the responsible bodies about these roles and responsibilities 
has created uncertainty and impeded performance. While the new institution, SANS, 
has  already  shown  a  first  track  record  of  investigations,  this  has  not  yet  translated 
into the effective treatment of cases in the legal system. 

The administrative capacity of both law enforcement and the judiciary is weak. The 
police  do  not  have  enough  well  trained  staff  or  equipment  to  investigate  complex 
cases. There has been limited progress on the computerisation of the judiciary. There 
is  insufficient  reliable  information  and  data  on  investigation,  indictment  and 
judgements of cases. This hinders the achievement of high quality results in the work 
of the judiciary and the Ministry of Justice. 

On local corruption, there was little follow-up – few investigations and sentences - 
to widespread allegations of corruption and vote buying at the November 2007 local 
elections.  These  practices  were  allegedly  repeated  during  local  by-elections  in  at 
least two towns in early June 2008. There are signs of corruption in the health and 

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education sectors. Despite awareness raising activities, no complaints have been filed 
and no whistle blowers have emerged. There is little control or monitoring of conflict 
of interest in public procurement. A strategic approach to fighting local corruption is 
missing.  The  anti-corruption  Commission  of  the  Council  of  Ministers  has  not  been 
active in this regard. 

The  fight  against  high  level  corruption  and  organised  crime  is  not  producing 
enough  results.  While  there  has  been  movement  on  a  few  cases  and  widespread 
publicity given to the 'war on corruption', these cases represent a negligible share of 
such  crimes.  The  statistical  information  provided  is  not  reliable  and  sometimes 
contradictory. Bulgaria has made little progress in freezing or confiscating financial 
assets resulting from criminal activities. 

Allegations  of  corruption  and  fraud  are  affecting  the  delivery  of  EU  financial 
assistance  programmes.  Bulgaria  needs  to  substantially  strengthen  its  capacity  to 
correctly manage EU funding. This has meant that several EU funding programmes 
have  had  to  suspend  or  freeze  activities.  OLAF,  the  EU  anti-fraud  agency,  reports 
that  procedural  blockages,  slow  progress  of  cases  through  the  judiciary,  leaks  of 
confidential  information  and  alleged  influence  on  the  administration  and  judiciary 
are  impeding  the  rapid  and  effective  resolution  of  corruption  and  fraud  cases. 
Decisions  relating  to  the  management  of  EU  funds  are  governed  by  the  specific 
control  requirements  of  the  respective  EU  financial  regulations  and  related 
procedures.  An  accompanying  report  sets  out  in  detail  the  problems  that  have 
emerged in the EU funding context.  

2.3. 

Improvements needed  

Some fundamental improvements are needed, although the first priority should be to 
deliver results irrespective of structural deficiencies. This requires continued political 
will and determination. 

Steps  need  to  be  taken  to  facilitate  a  more  effective  administration  of  justice. 
Adjustments  need  to  be  made,  including  to  the  Penal  Procedure  Code,  to  improve 
efficiency in the pre-trial phase, reduce delays and establish safeguards in relation to 
delays.  A  thorough  reform  of  the  Penal  Code  is  needed,  including  a  better 
differentiation  between  minor  offences  and  serious  crime  and  an  update  of 
definitions  to  take  account  of  new  forms  of  criminality.  It  is  important  that  a  more 
effective  law  on  conflict  of  interest  and  asset  control  be  established  –  the  current 
draft is not sufficient to achieve its purpose. Once a revised law is adopted it needs to 
be implemented as soon as possible. 

The newly established Supreme Judicial Council needs now to assume responsibility 
for the reform process and take steps to ensure that the judiciary delivers expeditious 
and effective decisions. The Inspectorate of the Supreme Judicial Council still has to 
establish a track record of pro-active investigations into procedural deficiencies and 
disciplinary cases which should then be followed up swiftly by the Supreme Judicial 
Council. 

Law  enforcement  needs  to  be  better  organised  to  handle  complex  cases.  The  roles 
and responsibilities of actors in the pre-trial phase must be clarified so as to achieve 
improved cooperation between the police, investigators, specialised departments and 

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the prosecution. The current debate on the reform of the pre-trial process is creating 
uncertainty  and  is  detrimental  to  achieving  results  in  on-going  investigations  In 
particular,  the  precise  interaction  of  police,  SANS  and  the  prosecution  should  be 
codified. The investigative role of SANS needs to be clarified and clearly separated 
from  its  intelligence  role.  Parliamentary  oversight  must  be  established,  not  to 
interfere in the investigative activities, but to ensure normal accountability. The role 
of  investigating  magistrates  and  their  authority  over  special  investigations  needs  to 
be clarified. The lack of respect for confidentiality and for the protection of witnesses 
during the pre-trial and trial phase is a recurring problem which needs to be rectified. 

The  administrative  capacity  of  both  law  enforcement  and  the  judiciary  needs  to  be 
strengthened.  The  police  need  better  trained  staff  and  the  necessary  equipment  to 
investigate  complex  cases.  The  computerisation  of  the  judiciary  needs  to  be 
completed  and  more  efficient  case  management  systems  introduced  at  the  pre-trial 
stage.  The  development  of  a  unified  information  system  would  generate  useful 
information  and  data  on  the  efficiency  of  the  judicial  system  and  thereby  facilitate 
the  work  of  both  the  Supreme  Judicial  Council  and  the  Ministry  of  Justice, 
particularly as concerns the latter's role in penal policy making. 

Bulgaria  needs  to  improve  transparency  and  the  notification  and  regulation  of 
financial asset flows and transactions in order to better detect and deal with financial 
assets  from  criminal  activities.  In  a  similar  vein,  Bulgaria  needs  to  strengthen  its 
capacity  to  fight  fraud  and  exercise  adequate  financial  control.  Equally  important, 
conflict of interest and unwanted influence need to be contained systematically. This 
is  particularly  important  so  that  Bulgaria  can  continue  to  benefit  from  EU  funding. 
The absence of convincing results under the current structures is striking and needs 
to be addressed urgently. 

3. 

CONCLUSIONS 

The Co-operation and Verification Mechanism and its related benchmarks were designed to 
allow Bulgaria to demonstrate, on a regular basis, that it has made progress on reform of the 
judicial system and in fighting corruption and organised crime. The onus is on the Bulgarian 
authorities  to  show  the  judicial  system  works  and  that  investigations  into  corruption  and 
organised  crime  lead  to  arrests,  prosecution  and,  depending  on  the  court's  judgement, 
convictions with dissuasive effect and seizure of assets. So far, Bulgaria has not yet been able 
to demonstrate that its judicial system is working effectively in this manner. Institutions and 
procedures look good on paper but do not produce results in practice; recommendations are 
made but are not followed up. The core problems remain and need to be addressed urgently.  

Bulgarian  citizens  deserve  access  to  the  full  benefits  of  EU  membership  which  should 
contribute to strengthening the rule of law and eliminating corruption. Progress in meeting the 
benchmarks set under the Cooperation and Verification Mechanism and in dispelling doubts 
about Bulgaria's ability to deal with corruption and organised crime  will allow Bulgarians to 
reap  these  benefits    and  enhance  their  confidence  in  the  rule  of  law.  It  will  have  long  term 
positive  effects  on  the  Bulgarian  economy.  Bulgaria  has  responsibilities  vis  à  vis  other 
Member  States,  for  example  as  part  of  Justice  and  Home  Affairs  policy  as  well  as  in  the 
common management of EU funds.  Adequate administrative capacity and effective control of 
conflict of interest, fraud and financial irregularities is a necessary condition for Bulgaria to 
fully  benefit  from  EU  pre-accession  and  structural  funds..  These  funds  are  the  practical 

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expression of the Union’s solidarity with Bulgaria and it is in everyone's interest to see them 
being used to support Bulgaria's less favoured regions. 

A clear strategy and an unequivocal commitment at all levels to reform the system are needed. 
This  is  not  simply  a  question  of  giving  new  institutions  and  processes  time  to  prove  their 
effectiveness.  Even  with  the  existing  structures  –  and  despite  their  deficiencies  -  Bulgaria 
should be able to show results in the fight against organised crime and corruption, to prevent 
conflicts  of  interests  and  to  deal  convincingly  with  alleged  connections  between  part  of  the 
political class, business and organised crime. To ensure the efficient absorption and delivery 
of EU funds Bulgaria needs not only to enhance substantially its administrative capacity but 
also  drastically  curb  opportunities  for  high  level  and  petty  corruption  and  vigorously  fight 
organized crime.  

Continued need for cooperation  

It is not only in Bulgaria's but in the EU's wider interests to have a healthy administration and 
judiciary in Bulgaria which is able to successfully deal with corruption and organised crime. 
That  is  why  cooperation  and  support  is  essential.  That  is  why,  for  the  time  being,  the 
Commission considers support to be a more effective than sanctions and will not invoke the 
safeguard provisions set out in the Accession Treaty. However, it is clear that there will be a 
need to maintain the Co-operation and Verification Mechanism for some time to come. 

The  February  report  under  the  Cooperation  and  Verification  Mechanism  highlighted  the 
significant amounts of assistance Bulgaria has received in recent years from Members States 
and the Commission in either financial terms or technical expertise. This  assistance has not 
always delivered expected results and there is a growing sense of frustration amongst Member 
States who have offered support, because of lack of transparency and results in their dealings 
with the Bulgarian administration and poor results. 

It  is  important  to  reinvigorate  the  reform  process,  putting  assistance  to  better  use.  All  sides 
have  to  make  a  renewed  effort  to  help  Bulgaria  succeed.  Bulgaria  recognises  its  need  for 
independent, high level expert advice. The Commission is ready to work in cooperation with 
Bulgaria and the other Member States to provide this assistance – but it requires that those on 
the  receiving  end  provide  access  to  information  and  use  the  advice  strategically  and 
effectively so as to move forward with reform. 

Outlook 

Bulgaria presents a mixed picture. The reform of the judiciary and law enforcement structures 
is an important opportunity for Bulgaria: it is necessary and long overdue. The test of progress 
will  be  substantial  results  in  investigating,  prosecuting  and  judging  cases  of  high-level 
corruption and organised crime. 

Bulgaria has taken steps in the right direction - the setting up of the State Agency for National 
Security and the proposed reform of the Ministry of Interior, and the appointment of a deputy 
Prime  Minister  for  coordinating  the  sound  management  of  EU  funds.  Bulgaria  has  now  to 
translate words into deeds and deliver on its commitment to serious reform.  

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The  Commission  strongly  encourages  Bulgaria  to  intensify  its  reforms  and  to  maintain  its 
close  cooperation  with  the  other  Member  States  and  the  Commission  so  that  the  significant 
remaining challenges can be tackled successfully together. Bulgaria can count on the full and 
active support of the Commission in this process. 

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