Report from the Commission to the European Parliament and the Council on progress in Bulgaria under the Co-operation and Verification Mechanism {SEC(2009) 1074}
Date: 2009-07-22
Institutions: European Commission
Subjects: EU control, Romania, cooperation policy, corruption, exchange of information, judicial reform, rule of law

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.7.2009 
COM(2009) 402 final 

REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

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

{SEC(2009) 1074} 

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REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

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

1. 

INTRODUCTION - CONTEXT AND METHODOLOGY 

1.1. 

Objective:  

When  Bulgaria  joined  the  European  Union  in  January  2007,  a  Co-operation  and 
Verification Mechanism (CVM)1 was set up to help the new Member State tackle the 
recognised need for far reaching judicial reform and the fight against corruption and 
organised  crime.  The  CVM  is  an  autonomous  Commission  decision  based  on  the 
Accession  Treaty.  It  enables  the  Commission  to  work  closely  at  political  and 
technical  level  with  the  Bulgarian  authorities  to  monitor  and  evaluate  progress,  to 
provide technical advice, and financial support. The CVM enables all other Member 
States to follow and support developments in these areas in Bulgaria and to provide 
both expertise and financial support. The interim and annual reports prepared by the 
Commission under the CVM assess progress and identify remaining shortcomings to 
help Bulgaria set priorities for actions to be undertaken to fully meet the benchmarks 
set out at the time of accession.  

This  report  sets  out  the  Commission's  assessment  of  progress  in  meeting  the 
benchmarks since its last full report (23 July 2008). It also makes recommendations 
to  Bulgaria  based  on  this  assessment.  The  accompanying  technical  update  sets  out 
the  Commission's  detailed  assessment  of  progress  in  each  of  the  benchmarks.  .The 
report  is  based  on  regular  input  received  from  the  Bulgarian  authorities  notably  in 
response  to  detailed  questionnaires  from  the  Commission  for  each  benchmark.  The 
Commission has been assisted in its work by a number of high level experts from the 
Member States and has also drawn on documentation and input provided by a variety 
of other sources. 

1.2. 

The benchmark methodology:  

The Commission sees all the benchmarks as closely interlinked. In its dialogue with 
Bulgaria  ample  evidence  has  been  given  that  progress  under  one  benchmark 
contributes to progress under another benchmark. The rationale for the CVM is not 
to establish a check-list, but to develop an independent, stable judiciary which is able 
to detect and sanction conflicts of interests, combat corruption at all levels and deal 
effectively  with  organised  crime.  Therefore  the  Commission  does  not  envisage 
removing the benchmarks one by one but rather working with Bulgaria to the point 
where the CVM in its entirety is ended. 

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  area  of  judicial  reform 
and the fight against corruption and organized crime (OJ L 354, 14.12.2006, p.58). 

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2. 

STATE OF THE REFORM PROCESS IN BULGARIA 

Achievements 

As in previous years a detailed assessment by the Commission of progress in meeting 
the benchmarks set out under the CVM can be found in the factual update annexed to 
this  report.  The  main  report  summarizes  the  key  findings  of  the  Commission  and 
presents recommendations for action by Bulgaria.  

The  CVM  report  of  July  2008,  and  the  report  on  the  administration  of  Community 
funds in Bulgaria resulted in a change in attitude and a more open and frank dialogue 
at  all  levels  with  the  Bulgarian  authorities.  The  widespread  existence  of  organised 
crime and corruption is no longer denied and some efforts are being undertaken by 
the prosecution and the judiciary to combat these problems. A number of steps were 
taken  to  follow  up  on  the  recommendations  made  by  the  Commission  in  its  last 
assessment. 

Fight against organised crime 

Bulgaria  has  started  to  restructure  its  prosecution  service  in  order  to  increase  its 
efficiency,  with  particular  focus  on  the  prosecution  of  serious  crime  cases  since 
September 2008.  

The  setting  up  of  joint  teams  between  the  prosecution,  police,  the  National 
Investigation  Service  and  the  State  Agency  of  National  Security  improved 
coordination  and  led  to  tangible  progress  regarding  investigations  in  particular  into 
EU  fraud  demonstrated  by  the  growing  number  of  investigations  and  indictments. 
The  establishment  of  a  permanent  Joint  Team  for  the  Suppression  of  Offenses 
against  the  EU  Financial  System  is  an  excellent  initiative,  as  it  combines  several 
functions,  intelligence,  specialised  knowledge,  and  investigation  concerning  a 
specific type of criminality under one authority.  

The  same  efficient  organisational  set-up  has  not  yet  been  established  for  organised 
crime where joint teams only operate on an ad hoc basis. Nevertheless these ad hoc 
teams have already shown more pro-active targeting of members of known organised 
crime  groups.  First  convictions  have  been  achieved  through  plea-bargaining  and  a 
shortened trial procedure ("expedited procedure"). However, this process often leads 
to  sentencing  below  the  legal  minimum  in  cases  where  the  defendant  admits  the 
facts. Both procedures are now proactively used against members of organised crime 
groups  in  order  to  counter  the  general  inefficiency  of  criminal  procedures  in 
Bulgaria. For the first time, these procedures have led to the imprisonment of a few 
members of organised crime groups, which can be seen as an important message to 
the public that well-known criminals are no longer above the law. These convictions 
might  facilitate  asset  freezing  and  investigations  for  money  laundering  leading  to 
possible second convictions. Nevertheless, it should be considered whether the use of 
plea bargaining in cases of organized crime overall ensures sufficient deterrent effect. 
Moreover, this should not prevent Bulgaria to organize a proper trial system. 

These  first  successes  have  to  be  judged  against  the  fact  that  killings  linked  with 
organised crime continue and known criminals are not apprehended. There is a need 
for  clear  evidence  that  the  authorities  and  the  political  class  are  unequivocally 

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committed to eradicating the root-causes of the problem. This situation causes unease 
and  uncertainty  in  the  administration,  the  police  and  the  judiciary.  They  cannot  be 
expected  to  conduct  the  fight  against  organised  crime  and  corruption,  when  the 
signals coming from the authorities and the political leadership are not aligned and 
clear.  It  should  be  avoided  that  their  laudable  efforts  cause  exposure  to  threats  and 
intimidation. 

Police  reform  is  continuing,  although  staff  levels,  structures  and  procedures  within 
the  newly  formed  criminal  police  and  the  re-organised  police  investigation  service 
still  need  to  be  consolidated.  Organisational  overlaps  continue  in  the  new  structure 
which has not yet led to increased effectiveness in the investigation of serious crime. 

The track record of the Commission for freezing and confiscation of criminal assets 
(CEPACA)  has  improved  significantly  since  mid  2008,  with  over  130  cases  now 
awaiting  court  decisions.  Although,  the  applicable  legal  framework  seems  to  allow 
the  freezing  of  assets  at  the  time  when  an  official  investigation  e.g.  into  money 
laundering  is  opened,  freezing  seems  to  be  practiced  only  several  months  into  the 
pre-trial  phase  or  at  the  time  of  indictment  and  therefore  looses  most  of  its 
operational  effect.  In  addition,  the  conditions  of  asset  freezing  fixed  in  the  law  are 
too restrictive and do not match the reality of crime in Bulgaria. Legal amendments 
to improve the efficiency of freezing and confiscation of assets, tabled in November 
2008, were rejected by a wide cross party majority in Parliament. Faced with these 
difficulties,  CEPACA  has  also  developed  a  practice  of  obtaining  civil  confiscation 
orders in such cases. But overall, legal loopholes seriously undermine the efficiency 
of CEPACA's work. 

Reform of the Judiciary  

Any progress achieved at the prosecution, for example in the fight against EU fraud, 
will be limited, unless the judiciary is further reformed and shows more commitment 
to  the  efficiency  of  the  judicial  system.  Serious  concerns  subsist  regarding 
unreasonable  delays  in  judicial  proceedings.  The  delays  are  largely  caused  by  the 
extreme formality of the criminal procedure, a certain passivity of the bench and the 
seemingly limitless possibilities offered by the criminal procedure law to defendants 
to stall the proceedings.  

In the absence of appropriate legislative initiatives to remedy this problem, a working 
group  of  the  Supreme  Judicial  Council  (SJC)  has  made  a  detailed  inventory  and 
analysis  of  specific  cases.  For  each  individual  case,  measures  were  proposed  or 
adopted to try to accelerate proceedings, in the form of recommendations to improve 
the  celerity  of  "cases  of  high  public  interest".  These  are  cases  against  known 
to  multiple  delays.  The 
emblematic 
recommendations  of  the  SJC  suggest  legal  amendments  (e.g.  the  introduction  of 
residence registration) as well as substantial changes in the organisation of courts and 
in  legal  practice.  The  initiative  of  the  SJC  is  commendable;  the  impact  of  the 
recommendations and their follow-up have still to be demonstrated.  

figures  which  have  been 

subject 

The complexity and formality of the criminal procedure is in itself a major cause for 
the  inefficiency  of  the  judicial  system.  It  forces  investigation  and  prosecution  to 
concentrate  on  simplistic  methods  to  obtain  evidence  and  to  avoid  complicated 
investigations. In  addition, this  formal approach does not even benefit the rights of 

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defendants,  because  law  enforcement  authorities  constantly  use  the  most  invasive 
investigative techniques because ‘softer’ evidence is not accepted in court. 

Since June 2008, the Inspectorate to the Supreme Judicial Council has become fully 
operational  and  has  achieved  an  encouraging  track  record  in  the  investigation  of 
disciplinary violations and of systemic weaknesses of  judicial practice. Some of its 
findings  have  led  to  improvements  in  particular  through  interpretative  decisions  by 
the Supreme Court of Cassation.  

Efforts  have  also  been  undertaken  by  the  Supreme  Court  of  Cassation  to  promote 
uniform  jurisprudence  through  regular  joint  meetings  with  regional  courts.  Even 
more  importantly, the Supreme Court  made active  use of its legal  power  to issue a 
series  of  interpretative  decisions  which  are  mandatory  for  each  court  and  ensure 
uniform application of law. 

Legislative action shows a mixed and sometimes contradictory approach: legislation 
was  initiated  to  avoid  abuses  of  defendants'  rights  (ordinance  on  sick  leave)  and  to 
increase the penalties for EU fraud, but at the same time, an Amnesty Act exempted 
from  criminal  proceedings,  acts  of  negligence  punishable  up  to  5  years,  including 
those committed in public function prior to July 2008. This sends a message which 
conflicts with the government's commitment to eradicate corruption at all levels, in 
particular regarding negligent acts performed in public office.  

Likewise,  some  efforts  were  undertaken  by  the  Ministry  of  Justice  to  draft  a  new 
penal policy, but at the same time numerous recommendations to simplify the over 
formalistic penal procedure adopted in 2006 were not followed up. The Penal Code 
itself  is  outdated.  The  legal  system  therefore  continues  to  show  substantial 
shortcomings  in  particular  in  relation  to  the  basic  penal  legislation,  but  also  in 
relation  to  other  important  legislation,  e.g.  on  the  forfeiture  of  criminal  assets.  The 
lack  of  initiative  from  the  legislator  regarding  the  basic  criminal  legislation 
represents  an  important  shortcoming.  Excessive  formalism  in  judicial  practice,  the 
weakness and lack of accountability of public administration in general and the lack 
of initiative in a strictly hierarchical system must be corrected by a modernisation of 
the legal framework designed to avoid delays in decisions and increase their sense of 
responsibilities. 

Fight against corruption 

Steps have been taken since last summer at the level of the Council of Ministers to 
reinforce inter-ministerial coordination and to engage in preparatory work for a new 
anti corruption strategy based on an evaluation and a consultation of stakeholders. In 
addition, a central website to signal corruption offences has been set up (via an EU-
funded  project)  which  allows  complaints  to  be  lodged  centrally  against  all 
institutions  and  to  check  the  status  of  the  complaint.  Coordination,  supervision, 
technical  support  for  all  regional  anti  corruption  offices  and  a  network  of 
inspectorates at all ministries were provided.  

At the same time, there is a need for a more pro-active approach in vulnerable areas 
and  sectors  such  as  health  or  education,  for  example  through  the  provision  of 
administrative guidelines on how to mitigate these risks and more rigorous control of 
compliance.  A  general  lack  of  initiative  in  these  vulnerable  areas  is  noticeable. 

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Although  indications  of  fraud  and  corruption  (including  collusion  with  organised 
crime) are abundant in the public domain, law enforcement agencies seem reluctant 
to  take  the  initiative  and  seem  to  wait  until  some  other  administration  formally 
reports  irregularities  before  starting  an  investigation.  There  are  far  too  few  ‘ex 
officio’ investigations – meaning investigations started on own initiative and not on 
the  basis  of  a  complaint  or  administrative  notice.  This  lack  of  initiative  in  law 
enforcement  is  to  a  large  extent  due  to  a  passive  attitude  and  the  limited  political 
support for a pro-active approach to tackle fraud and corruption. This lack of support 
causes law enforcement personnel to feel insecure about starting an investigation, in 
case it threatens to expose high level corruption. Against this background, Bulgaria 
might  consider  setting  up  specialised  structures  for  prosecuting  and  judging  high 
level  corruption  and  organised  crime  cases.  Such  structures  would  need  to  be 
functionally and politically independent of government and have a clear mandate for 
a pro-active agenda. 

3. 

SAFEGUARD CLAUSES 

In the light of the above assessment, the question arises whether the safeguard clause 
should  be  triggered.  In  public  discussion  of  the  CVM  there  is  often  confusion 
between the likely duration of the Mechanism and the time limited safeguard clauses 
contained in the Treaty of Accession. There is no automatic link between the CVM 
and the safeguard clauses enshrined in the accession Treaty for Bulgaria. Safeguard 
clauses  are  a  standard  feature  included  in  accession  treaties.  The  safeguard  clauses 
were introduced to ensure the efficient functioning of the internal market and of the 
area of freedom security and justice. They can be triggered until the end of 2009 to 
allow  for  the  temporary  suspension  of  the  application  of  the  relevant  Community 
legislation if that is necessary. The Commission is of the view, based on the above 
assessment, that the conditions for invoking the safeguard clauses are not fulfilled.  

The CVM has now entered its third year. It was not introduced for a fixed period as it 
should  only  be  removed  when  all  the  benchmarks  it  set  have  been  satisfactorily 
fulfilled. It is clear that meeting the objectives set in the benchmarks is a long-term 
task:  for  instance,  tackling  the  root  causes  of  corruption  and  eradicating  organised 
crime will take time. The kind of deep seated changes that are needed can only come 
from within Bulgarian society. The CVM is a support tool in this endeavour; it is not 
an  end  in  itself  nor  can  it  replace  commitment  that  Bulgarian  authorities  need  to 
make in order to align the judicial system and practice with general EU standards. 

4. 

CONCLUSIONS AND RECOMMENDATIONS 

The Commission has seen some new momentum in Bulgaria's efforts to improve the 
judiciary and combat corruption since its July 2008 report. This can be seen through 
efforts  by  individual  actors  in  the  prosecution  service  and  the  judiciary  to  tackle 
structural  problems.  They  deserve  support  and  recognition  for  their  efforts.  These 
pragmatic  steps  contribute 
judiciary  and  a 
strengthening  of  the  prosecution  and,  in  some  cases,  have  curbed  opportunities  for 
corruption. 

increased  efficiency  of 

the 

to 

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However,  these  steps  are  confined  to  the  technical  level  and  have  limited  impact. 
While  increased  overall  awareness  and  these  individual  initiatives  are  to  be 
welcomed,  they  are  not  adequately  backed  up  by  a  broad  political  consensus  or  a 
convincing strategy to make the fight against organised crime and corruption the top 
priority for Bulgaria. As a result, in the public perception, justice in Bulgaria is slow, 
sometimes inequitable and in some cases subject to influence and interference. At the 
same  time,  the  measures  taken  are  seen  as  piece-meal  and  as  not  systematically 
followed up at all levels. What is still missing is sufficient political commitment for 
broader initiatives which could form a more decisive, strategic approach.  

Despite some encouraging pragmatic steps to render the judiciary more efficient and 
to address more actively the fight against corruption and organised crime, there are 
many  shortcomings  which  need  to  be  urgently  addressed  by  the  Bulgarian 
Government. 

Based  on  its  most  recent  assessment  the  Commission  invites  Bulgaria  to  take  up 
action in the following areas:  

regarding organised crime and the fight against corruption:  

•  develop an integrated strategy against organised crime and corruption; 

•  make  the  ad  hoc  structure  of  joint  investigation  teams  on  organised  crime 

permanent ;  

•  set up specialised structures for prosecuting and judging high level corruption and 
organised crime cases with appropriate functional and political independence; 

•  promote  proactive  ex-officio  investigations  of  corruption  by  all  administrative 

authorities with control functions;  

•  ensure effective implementation of the recent conflict of interest law through the 

development of implementing guidelines and a central reporting system; 

•  on a horizontal level, monitor the impact of laws for the fight against corruption 

and organised crime and amend legislation where appropriate; 

•  improve the efficiency of the system to freeze/confiscate criminal assets; 

•  strengthen  the  capacity  of  the  general  inspectorate  and  of  inspectorates  to 
ministries and agencies and mandate them to act pro-actively in the identification 
and mitigation of vulnerable spots; 

•  strengthen  the  28  regional  anti-corruption  councils  in  partnership  with  Civil 

Society; 

•  establish better administrative arrangements to safeguard whistle-blowers;  

•  monitor closely progress in the fight against corruption on central and local level 

through the inter-ministerial coordination group;.  

regarding the efficiency of the Judiciary: 

•  proactively  detect  and  analyse  non-uniform  application  of  law  and  stimulate 

further interpretative decisions by the Supreme Court; 

•  pursue urgently the draft concept paper for a full redraft of the Penal Code 

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•  consider  a  thorough  reform  of  the  Penal  Procedures  Code  to  simplify  criminal 

proceedings and to reduce excessive formalism;  

•  implement  urgently  the  recommendations  of  practitioners  to  improve  practice 

under the existing Penal Procedures Code; 

•  implement  all  recommendations  by  the  SJC  regarding  delays  in  important 

criminal cases and extend the monitoring systematically to all relevant cases 

•  monitor  the  use  and  impact  of  expedited  procedures  (lower  penalty  against 

confession) and plea bargaining; 

•  control  the  effective  respect  by  all  courts  of  the  requirement  to  publish  all 

judgements; 

•  ensure  objective  performance  assessment  of  all  magistrates  and  review  the 

ordinance on rules and criteria for appointments by the SJC; 

•  analyse and address contradictory practice by the SJC in disciplinary proceedings; 

•  ensure a swift and effective follow up to the recommendations and findings of the 

inspectorate of the Supreme Judicial Council. 

The  Commission  calls  on  Bulgaria  to  move  on  with  its  reform  process  and  to 
implement  the  recommendations  it  has  made.  The  Commission  will  support  and 
monitor progress on this basis next year. Continuous pressure for delivery is needed 
and  the  Commission  also  invites  the  other  Member  States  to  continue  assisting 
Bulgaria and help delivering progress. For its part the Commission will continue to 
support Bulgaria's efforts through political and technical dialogue and the provision 
of appropriate expertise, where necessary. 

Outlook: 

This  report  demonstrates  that,  at  technical  level,  some  steps  have  been  taken  to 
respond  to  the  recommendations  contained  in  the  July  2008  report  of  the 
Commission. A momentum has been created which is yielding first results. However, 
more substantial results in investigating, prosecuting and judging cases of high-level 
corruption  and  organised  crime  are  needed  in  order  to  secure  lasting  change  in 
Bulgaria. A profound reform of the judiciary has still not started. This requires long 
term  and  unequivocal  political  commitment.  In  the  view  of  the  Commission,  the 
Mechanism acts as a support tool which needs to be maintained until these reforms 
are  achieved.  The  Commission  will  therefore  reassess  further  progress  in  summer 
2010. 

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