Interim Report from the Commission to the European Parliament and the Council On Progress in Bulgaria under the Co-operation and Verification Mechanism
Date: 2009-02-12
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, 12.2.2009 
COM(2009) 69 final 

INTERIM REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

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

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INTERIM REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

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

1. 

INTRODUCTION –  

When Bulgaria entered the EU on 1 January 2007, a Co-operation and Verification 
Mechanism  (hereafter  CVM)1  was  set  up  to  help  Bulgaria  remedy  certain 
shortcomings  in  the  areas  of  judicial  reform,  the  fight  against  corruption  and 
organised crime and to monitor progress in these areas through periodical reports. 

The  present  report  is  an  interim  report  providing  a  technical  update  on  significant 
developments having occurred during the last 6 months in Bulgaria under the CVM2. 
It  does  not  contain  an  assessment  on  progress  achieved.  The  update  is  limited  to 
measures that have either been completed or where their finalisation can be expected 
shortly. 

The communication adopted by the Commission on 23 July 2008 remains the point 
of reference for the assessment of progress achieved against the benchmarks and the 
identification  of  the  remaining  challenges.  The  Commission  will  make  its  next 
assessment in summer 2009. 

2. 

JUDICIAL  REFORM  AND  THE  FIGHT  AGAINST  CORRUPTION  AND  ORGANISED 
CRIME: GENERAL COMMENTS ON THE STATE OF PLAY  

The  Bulgarian  authorities  broadly  accepted  the  Commission's  assessment  of  July 
2008.  To  respond  to  the  challenges  identified  by  the  Commission,  initial  steps  for 
structural and legislative reform were taken by the prosecution office, the Ministry of 
Justice  and  the  Ministry  of  the  Interior.  These  measures  need  to  be  sustained  and 
further extended in order to deliver concrete results. 

Since July 2008, some developments took place under Benchmarks 1- 3 (reform of 
the judiciary) notably as regards the work of the Inspectorate to the Supreme Judicial 
Council which has gained some operational capacity. The Supreme Judicial Council 
launched an analysis on disciplinary case law, started to examine why cases are sent 
back  to  the  prosecution  and  set  up  a  reporting  mechanism  on  the  movements  of 
cases. Further measures have been announced with the aim of reducing the uneven 
workload  of  the  courts,  improving  administrative  management  and  organising  a 
transparent  appointment  process  which  assures  a  high  professional  quality  and 
integrity regarding magistrates at management level. On the legislative side the Law 
on  Conflict  of  Interest  has  been  adopted  and  the  Public  Procurement  Act  been 
amended. 

A  significant  development  regarding  Benchmarks  4-6  (corruption  and  organised 
crime) was the launching of the pilot project on joint investigation teams composed 
of  representatives  from  the  prosecution,  the  State  Agency  for  National  Security 

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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). 
The cut-off date of this report is 15 January 2009. 

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(SANS),  and  the  Ministry  of  the  Interior.  The  next  steps  should  be  indictments 
regarding the serious crime groups targeted by these joint teams. 

Steps to reform the Ministry of the Interior and to clarify the respective competences 
of  authorities  in  the  pre-trial  phase  were  taken  but  results  and  impacts  are  not  yet 
measurable.  Further  attention  needs  to  be  paid  to  developing  transparent  and 
accountable arrangements between SANS and the Ministry of Interior on e.g. the use 
of special surveillance means, the extent of Parliamentary control over SANS and the 
extension of powers of investigating police forces. 

A  comprehensive  reform  of  the  pre-trial  phase  to  improve  the  current  system  of 
admissibility  of  evidence  and  important  legislation  concerning  land  swaps,  party 
financing and the forfeiture of criminal assets are awaited. 

3. 

CONCLUSION - OUTLOOK 

4. 

4.1. 

The next assessment of progress by the Commission in summer 2009 will show the 
extent to which Bulgaria has been able to address the shortcomings identified by the 
Commission  in  the  reform  of  the  judiciary  and  to  produce  convincing  and  tangible 
results  in  the  fight  against  corruption  and  organised  crime.  In  order  to  demonstrate 
systemic and irreversible change, Bulgaria needs to show that it has put in place an 
autonomously  functioning,  stable  judiciary  which  is  able  to  detect  and  sanction 
conflicts  of  interests,  corruption  and  organized  crime  and  preserve  the  rule  of  law. 
This  means  in  particular  adopting  the  remaining  laws  needed  to  complete  the  legal 
system  and  showing  through  concrete  cases  of  indictments,  trials  and  convictions 
regarding high-level corruption and organised crime that the legal system is capable 
of implementing the laws in an independent and efficient way. 

TECHNICAL UPDATE ON BENCHMARKS  

Benchmark  1:  Adopt  Constitutional  amendments  removing  any  ambiguity 
regarding the independence and accountability of the judicial system 

The  implementation  of  the  Constitutional  amendments  requires  a  fully  functioning 
and  independent  judicial  inspectorate  with  a  trail  of  disciplinary  investigations.  In 
this  respect,  in  the  second  half  of  2008,  the  Inspectorate  to  the  Supreme  Judicial 
Council has gone into full operation. It has carried out numerous ad-hoc inspections 
(following media reports or on its own initiative), planned inspections of two out of 
five  appellate  regions3  and  thematic  inspections  (inter  alia  on  the  housing  criminal 
group in Kostinbrod). 

The  Inspectorate  also  carried  out  disciplinary  inspections  and  highlighted  the  need 
for  interpretative  judgements,  decisions  or  decrees  where  conflicting  jurisprudence 
was identified. 

The  Inspectorate  has  been  pro-active  in  carrying  out  its  mandate  and  demonstrated 
encouraging  preliminary  results.  It  is  important  now  to  ensure  that  the  Supreme 
Judicial  Council,  the  Prosecution  Office,  the  courts  or  other  relevant  competent 
bodies  follow  up  the  work  of  the  Inspectorate  appropriately  and  take  the  necessary 
corrective actions. 

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Veliko Turnovo and Burgas Appellate Regions 

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4.2. 

Benchmark  2:  Ensure  a  more  transparent  and  efficient  judicial  process  by 
adopting  and  implementing  a  new  judicial  system  act  and  the  new  civil 
procedure  code.  Report  on  the  impact  of  these  new  laws  and  of  the  penal  and 
administrative procedure codes, notably on the pre- trial phase  

The implementation of the new judicial system act and the new civil procedures code 
is proceeding although significant problems remain in criminal proceedings. In this 
respect,  the  Bulgarian  authorities  need  to  adopt  a  comprehensive  approach  towards 
criminal procedure which delivers effective and efficient administration of evidence 
in court while respecting procedural guarantees. 

Although proposals have been made by the judiciary and external experts, the Penal 
Code  has  not  yet  been  reformed  and  the  extremely  cumbersome  penal  procedures 
have  not  yet  been  sufficiently  streamlined.  A  partial  reform  of  the  Criminal 
Procedure Code was adopted on 17 December 20084. Problems may arise from the 
fact that the amended law obliges the court to apply an "expedited procedure" which 
implies automatically a penalty below the legal minimum if the defendant admits the 
facts  and  request  this  procedure  irrespective  of  the  seriousness  of  the  crime 
committed. Before 1 January 2009 judges could in practice decide whether to accept 
such  a  request  by  the  defendant.  In  its  next  report,  the  Commission  will  closely 
monitor  the  effect  of  this  amendment  and  assess  whether  it  is  a  step  back  in  the 
protection against serious crime, including fraud and high-level corruption. 

Inefficiencies identified in the pre-trial phase have not yet been addressed. Too few 
complex criminal cases reach court; at court  level, cases continue to be returned to 
the Prosecution5 or are delayed, often due to an abuse of procedural rules. 

The  Law  on  the  Ministry  of  Interior  was  amended  on  22  July  2008  in  order  to 
improve  the  management  of  the  Ministry  of  Interior  by  reducing  the  number  of 
management  levels,  removing  overlapping  functions,  giving  management  direct 
control  over  operational  functions  and  introducing  intelligence-led  policing.  On  2 
October the Council of Ministers adopted the Regulation for the Application of the 
Law  on  the  Ministry  of  Interior.  One  important  element,  i.e.  the  reform  of  police 
investigation,  provides  for  the  recruitment  of  specialists  from  various  relevant 
backgrounds such as e.g. finance. It is too early to assess whether these reforms will 
achieve their goals, such as improvement in effectiveness of police investigation, in 
particular in complex cases. 

The Law on Amendment to the Special Intelligence Means Act was finally approved 
by the National Assembly on 17 December 2008. It is too early to assess its impact. 

The  issue  of  Parliamentary  control  over  the  State  Agency  for  National  Security 
(SANS) needs to be resolved. 

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The  Bulgarian  authorities  informed  the  Commission  that  the  Law  aims  at:  simplifying  the  pre-trial 
phase  and  the  burden  of  proof  in  cases  related  to  organized  crime,  exempting  the  liability  of  a  bribe 
taker  in  specific  cases  in  order  to  detect  a  proof  and  increasing  criminal  liability  for  violations  of 
electoral law. 
Restitutions concern particularly Sofia, where the majority of complex cases are judged and an average 
of 20% of cases is returned. 

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4.3. 

Benchmark  3:  Continue  the  reform  of  the  judiciary  in  order  to  enhance 
professionalism,  accountability  and  efficiency.  Evaluate  the  impact  of  this 
reform and publish the results annually 

In 2008 almost half (47%) of the disciplinary proceedings instituted in the Supreme 
Judicial  Council  (SJC)  were  based  on  proposals  made  by  the  Inspectorate.  Six 
proceedings have been concluded, nine were due for a conclusion and further three 
are scheduled for initial hearings. Significant corrective action by SJC is needed to 
follow  up  on  the  findings  of  inspections  such  the  one  examining  why  cases  are 
returned  to  the  prosecution.  One  of  the  key  tests  for  the  professionalism  and 
transparency of the judiciary this year will be the appointment of the administrative 
heads of the judicial authorities, in which the SJC has a vital role. 

All 180 courts in Bulgaria are reported to have fully operational internet sites, which 
should  contribute  to  the  transparency  and  the  access  to  justice.  It  is  essential  that 
these sites respect fully the right to data protection and the protection of privacy. 

4.4. 

Benchmark 4: Conduct and report on professional, non-partisan investigations 
into allegations of high-level corruption. Report on internal inspections of public 
institutions and on the publication of assets of high-level officials 

Data on overall follow-up of corruption cases from the second half of 2008 show a 
downward  trend  compared  to  the  first  half  of  20086.  This  negative  trend  seems  to 
continue in November- December 2008. 

In  response  to  the  CVM  report  of  July  2008  joint  teams  counteracting  EU  fraud, 
organised  crime  and  corruption  and  money  laundering  were  set  up  at  the  Supreme 
Cassation Prosecution Office. These teams consist of staff of the prosecution, police, 
SANS and the national investigation service. Other services (e.g. tax authorities) are 
integrated depending on the specific case. While it is too early to assess the results of 
these joint teams, their positive potential can be noted. 

The  National  Assembly  adopted  the  Conflict  of  Interest  Prevention  and  Disclosure 
Act  on  16  October  2008.  The  law,  which  entered  into  force  on  1  January  2009, 
targets  conflicts  of  interest  between  public  functions  and  private  interests.  The  law 
creates  similar  standards  for  holders  of  public  posts  in  all  institutions  at  central, 
district and local level. It applies a fully decentralised control mechanism which must 
prove its effectiveness given the absence of functional independence in many cases: 
The Commission will closely monitor enforcement of the law7. 

The  amendments  to  political  party  financing  rules  are  still  being  debated  in  the 
National Assembly. The rules in force for the financing of election campaigns vary 
depending on the type of elections and do not address donations in kind, unregulated 
cash  transactions  or  the  question  of  the  public  register  of  donors.  Legislation  on 

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The following figures for high-level corruption offences have been communicated by Bulgaria: 
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January to May 2008: 200 pre-trial proceedings initiated; 78 prosecutors' acts submitted to court; 
103 indictments and 55 convictions. 
June to October 2008: 179 pre-trial proceedings initiated; 63 prosecutors' acts submitted to court; 
76 indictments and 50 convictions. 

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-  November- December 2008: 30 pre-trial proceedings instituted, 18 prosecutors’ acts brought to the 

court, 19 persons accused and 11 convicted. 

Application of the law has been postponed in parts until 1 March. A debate on amendments is however 
ongoing.  It  is  important  that  the  law  continues  to  address  family  links,  political  party  affiliations  and 
membership in non-profit organisations. 

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campaign financing rules need to be coherent, clear and set strict control mechanisms 
with a view to the national and European elections which will take place in summer 
2009.  The  authorities  must  also  strengthen  their  efforts  to  curb  vote-buying.  The 
initiatives of civil society to prevent election fraud are encouraging. 

There  is  a  risk  of  a  reduction  of  transparency  regarding  information  on  owners  of 
company assets with the entering into force of the Commercial Registry Code. The 
Commercial  Code  does  not  require  registration  of  changes  in  the  acquisition  and 
transfer  of  shares  taking  place  after  the  first  registration  of  the  company.  The 
Commission  will  closely  monitor  this  situation  which  risks  impeding  effective 
financial investigation. 

4.5. 

Benchmark  5:  Take  further  measures  to  prevent  and  fight  corruption,  in 
particular at the borders and within local government 

On  16  October  2008,  the  National  Assembly  passed  several  amendments  to  the 
Public Procurement Act which entered into force on 1 January 20098. These should 
contribute  to  improved  transparency,  equal  treatment  and  non-discrimination  in 
public procurement. The impact of the amendments need to be monitored closely and 
must be complemented by the strengthening of administrative capacity and effective 
control procedures based on continuous risk assessment9. 

The  Commission  notes  that  laws  which  should  prohibit  abuse  of  land  and  forest 
swaps  enter  into  force  as  of  1  February  (forests)  and  1  March  (land).  The 
Commission  will  continue  to  closely  monitor  the  effective  implementation  of  these 
laws. 

4.6. 

Benchmark  6:  Implement  a  strategy  to  fight  organised  crime,  focussing  on 
serious  crime,  money  laundering  as  well  as  on  the  systematic  confiscation  of 
assets of criminals. Report on new and ongoing investigations, indictments and 
convictions in these areas 

In  order  to  increase  the  efficiency  of  the fight  against  organized  crime,  joint  teams 
have been established at the level of the Supreme Cassation Prosecution Office (see 
benchmark 4). 

However,  the  statistics  presented  by  the  Bulgarian  authorities  show  no  significant 
change10 in the prosecution and judicial follow-up of organized crime cases in 2008. 

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Main changes include: Compulsory publication of all completed procedures in the procurement registry, 
compulsory publication of price offers, increased sanctions for violations, compulsory participation of 
outside  experts  in  evaluation  committees,  increased  thresholds,  additional  checks  on  procurement 
procedures involving EU funds, more leverage for additional bonus payments for officials involved in 
procurement and limited public access to information due to the data protection. 
Typical violations of public procurement rules in Bulgaria include the division of a large contract into 
several smaller ones which then fall below the competition threshold, the abuse of sub-contracting, the 
participation  in  the  tendering  process  of  several  affiliated  companies  to  create  false  competition  and 
manipulation of terms of reference and of the evaluation of bids. 
Date  on  offences  related  to  organised  crime  for  the  period  June  to  October  2008:  39  pre-trial 
proceedings initiated; 43 prosecutors' acts submitted to court; 147 indictments; 65 convictions with 35 
convictions becoming effective. The corresponding figures for the period January to May 2008 are: 48 
pre-trial  proceedings  initiated;  30  prosecutors'  acts  submitted  to  court;  132  indictments  and  60 
convictions with 48 convictions becoming effective. The November- December 2008 data demonstrate 
that in that period: 11 pre-trial proceedings were instituted, 10 prosecutors' acts were submitted to the 
courts, 52 people were accused, 17 people were convicted and 17 convictions became effective. 

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No major court decisions on high profile cases of organised crime have been taken in 
recent months. 

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