INTERIM REPORT FROM THE EUROPEAN COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL On Progress in Bulgaria under the Co-operation and Verification Mechanism
Date: 2010-03-23
Institutions: European Commission
Subjects: Bulgaria, corruption, judicial reform, organised crime, report, rule of law

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EUROPEAN COMMISSION 

Brussels, 23.3.2010 
COM(2010)112 final 

INTERIM REPORT FROM THE EUROPEAN 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 EUROPEAN 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 CVM. 
It does not contain an assessment on progress achieved.  

The  last  progress  report  adopted  by  the  Commission  on  22  July  2009  and  its 
recommendations  remain  the  point  of  reference  for  the  assessment  of  progress 
achieved against the benchmarks and the identification of the remaining challenges. 
The Commission will provide its next assessment in summer 2010. 

2. 

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

During  the  last  six  months,  Bulgaria  has  initiated  several  concrete  proposals  for 
reform  which  respond  to  recommendations  made  by  the  Commission:  A  partial 
revision of the Penal Procedure Code is currently under Parliamentary discussion and 
work is ongoing on a substantial reform of the Criminal Assets Forfeiture Act and on 
a  revision  of  the  Conflicts  of  Interest  Law.  Bulgaria  also  decided  to  strengthen  the 
structures  of  the  prosecution  in  the  fight  against  serious  crime  by  using  joint 
investigation  teams  for  some  priority  cases  involving  high-level  corruption  and 
organised  crime.  In  addition,  Bulgaria  launched  a  structural  reform  of  the  National 
Revenue  Agency  and  of  the  National  Customs  Agency  and  started  to  work  on  a 
comprehensive strategy to fight corruption and organised crime. 

At  the  same  time,  the  Inspectorate  to  the  Supreme  Judicial  Council  continued  its 
good track record and the Supreme Judicial Council (SJC) pursued the monitoring of 
cases of high public interest.  

However,  the  judiciary  continued  to  produce  only  few  results  in  cases  involving 
high-level  corruption  and  organised  crime  and  a  further  street  killing  occurred  in 
January 2010. Allegations of serious corruption related to senior appointments in the 
judiciary  involving  members  of  the  SJC  still  need  to  be  fully  examined.  A  quicker 
and more complete administrative follow-up to the Commission's concerns regarding 
irregularities, conflict of interest and fraud in the implementation of EU funds needs 
to be implemented before the next assessment. 

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). 

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3. 

OUTLOOK 

4. 

4.1. 

In the last six months, Bulgaria has launched a number of important initiatives which 
show will for reform.  

These efforts are laudable. Although their merit can only be assessed in the light of 
their effective contribution to the fight against corruption and organised crime once 
they  are  implemented,  Bulgaria's  recent  efforts  demonstrate  a  growing  recognition 
that substantial and far-reaching reforms are required. 

In order to achieve practical and measurable results in a significant number, Bulgaria 
should extend further its reform efforts. Reforms recommended by the Commission 
in  July  2009  should  become  a  matter  of  national  priority  and  must  be  launched  in 
more areas to achieve a profound reform of the judiciary. 

The Commission will continue to support Bulgaria in this endeavour and provide its 
next in-depth assessment of progress by summer this year.  

TECHNICAL UPDATE ON BENCHMARKS  

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

The Inspectorate to the Supreme Judicial Council (SJC) continued to register a good 
track record of inspections. The Inspectorate has conducted scheduled inspections of 
the  whole  Bulgarian  judicial  system  with  the  exception  of  the  Sofia  Appellate 
Region's  civil  branch.  Although  the  Inspectorate's  recommendations  to  courts  and 
prosecutors' offices had not been consistently followed in all cases, the Inspectorate 
reported that the inspections produced overall a visible preventive effect among the 
magistrates.  

The  newly  established  joint  working  group  of  the  SJC  and  the  Inspectorate  should 
contribute  to  the  unification  of  disciplinary  practice,  assist  in  targeting  inspections 
and in the application of inspection findings by the SJC to appraisal and appointment 
procedures.  Current  practice  shows  that  sanctions  imposed  by  the  SJC  are  often 
lenient.  Some  cases  have  also  been  dismissed  due  to  the  expiry  of  statutory 
deadlines. 

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  

In  response  to  recommendations  by  the  Commission,  the  government  introduced 
several  amendments  to  the  Penal  Procedure  Code  with  a  view  to  improving  the 
efficiency and transparency of the judicial process. The debate in Parliament so far 
has shown that not all amendments may be supported.2 

2 

The  amendments  extend  the  admissibility  of  evidence  in  court  and  reduce  the  formality  of  judicial 
procedures.  They  would  include  admissibility  as  evidence  in  court  of  statements  by  police  officers, 
official  documents  provided  by  OLAF  (European  Commission's  Anti-Fraud  Office)  and  intelligence 
gathered  through  special  investigative  means  before  the  official  opening  of  a  pre-trial  case.  Other 
amendments  include  streamlined  procedures  for  registering  indictments,  the  possibility  to  assign  an 
attorney to a defendant by court decision, facilitating transfer of cases between judicial districts and a 
right  for  the  prosecution  to  appeal  the  return  of  cases  by  court.  During  second  reading  on  4  March, 

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Draft amendments to the Penal Code tabled by the Government aim to strengthen the 
sanctions for offences such as homicide, abduction and credit fraud. 

Bulgaria  provides  a  positive  evaluation  of  the  instrument  of  plea-bargaining  which 
had  led  to  increased  judicial  efficiency.  On  the  other  hand,  the  application  of  the 
expedited  procedure  had  resulted  in  undue  leniency  in  cases  where  the  indictment 
was  fully  sustained  by  evidence.  As  a  result  of  the  evaluation,  the  Bulgarian 
authorities consider excluding some serious criminal offences from the application of 
the  expedited  procedure  and  aiming  at  limiting  the  court's  ability  to  deliver 
judgments under the defined minimum3. 

No  progress  has  been  reported  with  procedures  to  adopt  the  new  draft  Statutory 
Instruments  Act  which  should  introduce  clear  rules  for  transparency  and  public 
debate and codify the different stages of the legislative process. 

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 

Appraisal  of  magistrates  continued  to  be  criticised  as  most  magistrates  were 
receiving  the  highest  rating.  In  response  to  a  recommendation  by  the  Commission, 
the  SJC  adopted  an  ordinance  to  improve  fairness  and  objectivity  of  the  annual 
appraisal exercise.4 The Supreme Judicial Council continued the monitoring of cases 
of  high  public  interest  for  their  celerity  at  trial  stage.  Out  of  fifty  such  cases,  nine 
cases have reportedly resulted in conviction.5 The SJC identified reasons for delays 
in  some  cases  and  issued  follow-up  recommendations,  however,  abusive  delays  in 
some important cases continued.6 

During  the  second  half  of  2009,  allegations  of  trade  in  influence  and  corruption  in 
relation  to  senior  judicial  appointments  involving  members  of  the  SJC  were  made 
public.  In  response  to  the  allegations,  the  SJC  launched  formal  disciplinary 
proceedings  against  a  number  of  magistrates.  Two  members  of  the  SJC  resigned 
from their posts under public pressure, and returned to the magistracy. Before that, 
the  SJC  stated  that  both  members  had  violated  the  magistrates'  ethical  code  and 
requested their resignation. The lack of legal basis reportedly prevented the SJC from 
taking  disciplinary  measures  against  them.  As  a  response,  the  Minister  of  Justice 

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Parliament  dismissed  the  introduction  of  a  possibility  for  investigating  police  officers  to  provide 
evidence in court and postponed discussion about a possibility to assign an attorney to a defendant by 
court decision. 
According  to  draft  proposals  for  amendment  of  the  Penal  Procedure  Code,  the  expedited  procedure 
would not be applied any more for premeditated murder or when an offence is made while under the 
influence  of  drugs  or  alcohol,  when  a  crime  is  committed  by  or  against  a  judge,  prosecutor  or 
investigative organ, not for kidnappings, human trafficking, drug trafficking, or production or storing of 
drugs. 
The  main  changes  include  a  transfer  of  responsibility  for  the  appraisal  of  senior  magistrates  to  the 
central appraisal commission with the Supreme Judicial Council, the creation of two sub-commissions 
for judges and prosecutors, the requirement to verify 15 randomly selected case files of the candidate 
for  appraisal.  In  addition,  findings  of  the  Inspectorate  and  sanctions  will  be  taken  into  account  in 
appraisals. 
Eight out of nine convictions were imposed in the first half of 2009, the last one in July 2009. The level 
of penalties and whether decisions were enforced was not reported.  
For instance, the following reasons for recurrent delays were registered in a particular case: failure of 
defendant  to  appear  (three  times),  absence  of  defendant  through  sickness  and  non-attendance  of 
witnesses (twice). 

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presented a proposal for an amendment to the Judicial Systems Act which intends to 
strengthen  the  disciplinary  responsibility  of  members  of  the  Supreme  Judicial 
Council.7  

Of at least thirty magistrates allegedly involved, seventeen magistrates resigned over 
allegations  of  trade  in  influence  in  this  case.  Disciplinary  proceedings  were 
reportedly  initiated  against  all  magistrates  suspected  of  trading  in  influence  who 
applied for administrative positions, no matter whether they have been appointed or 
not.  The  SJC's  disciplinary  proceedings  resulted  so  far  in  seven  demotions.  As 
criminal  proceedings  were  not  initiated  by  the  prosecution  against  any  of  the 
magistrates involved, the allegations could not be verified in substance. 

After several public signals, the SJC launched an investigation into irregularities at a 
regional  court.  The  report  of  the  investigation  which  was  adopted  by  the  SJC  in 
February  revealed  a  number  of  serious  shortcomings  in  the  management  of 
court.8 Disciplinary and legal follow-up to the findings are pending. 

The  lack  of  accountability  of  the  Chief  Public  Prosecutor  was  criticised  by  the 
European Court of Human Rights.9 The ECHR's ruling called on Bulgaria to install 
appropriate checks and balances among institutions in the judicial system. 

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 

As  a  follow-up  to  recommendations  of  the  Commission,  Bulgaria  has  created  five 
additional standing joint teams to address key organised crime cases (see benchmark 
6).  These  teams  have  also  been  charged  on  a  pilot  basis  with  the  investigation  of 
allegations of fraud and negligence of official duties against three previous ministers 
and  two  Members  of  Parliament.  By  the  beginning  of  March,  altogether  six 
indictments  involving  two  former  ministers,  two  Members  of  Parliament  and  one 
former director of a state agency have been registered. 

Bulgaria  strengthened  the  capacity  of  the  joint  investigative  team  for  the 
counteraction of EU fraud. Bulgaria reports that out of 125 cases under investigation 
by the team in 2009, 108 files were forwarded to court.  

As  a  response  to  recommendations  of  the  Commission,  Bulgaria  prepared 
amendments  to  the  law  on  the  prevention  of  conflicts  of  interest  with  a  view  to 
establishing a commission in charge of implementing the law under the supervision 
of  Parliament.  It  is  expected  that  the  establishment  of  a  specialised  commission 
would extend the limited scope of application of the conflict of interest law to other 
areas, improve its enforcement and increase its effectiveness through the application 
of sanctions or the forfeiture of assets.  

A  number  of  high  level  corruption  cases  are  currently  under  investigation.  Seven 
indictments have recently been registered but two important fraud cases before court 
still encounter severe delays. No convictions in high level corruption cases have been 
reported since July 2009.  

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According to the plans, SJC members who undermine the standing of the judiciary could be subject to a 
permanent exclusion from positions in the judiciary.  
The report confirms allegations against the head of court regarding conflict of interest and irregularities 
with the random allocation system of cases. 
Kolevi v. Bulgaria (application no. 1108/02), available at: www.echr.coe.int/ECHR/homepage_en . 

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Insufficient  controls  at  administrative  level  to  prevent  irregularities  and  detect 
administrative  violations  continue  to  be  reported.  In  many  cases,  signals  reach  the 
judicial  authorities  before  preliminary  administrative  checks  are  performed.  At  the 
same  time,  administrative  control  bodies  are  not  sufficiently  pro-active  to  establish 
risks and to identify ex-officio possible cases of fraud and corruption. Reforms which 
should  lead  to  greater  accountability  and  efficiency  have  been  initiated  at  the 
National Revenue Agency and at the National Customs Agency. 

The implementation of the Law on Prevention and Detection of Conflict of Interests 
reportedly  led  to  the  establishment  of  forty-seven  cases  of  irregularities  since  mid 
2009. However, the publication of asset declarations of high-level officials, Ministers 
and Members of Parliament on a dedicated site of the National Audit Office has not 
been systematically updated nor was any follow-up by the control bodies in charge of 
verifying  the  declarations  reported.  In  addition,  no follow-up  to  allegations  of 
conflict  of  interest  among  high  officials  and  Members  of  Parliament  by  a  specially 
designated parliamentary committee has been reported since December 2009. 

4.5. 

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

On  18  November  2009,  the  Council  of  Ministers  adopted  an  ambitious  strategy  to 
prevent  and  combat  corruption  and  organized  crime,  which  would  be  implemented 
across  the  whole  public  sector  with  the  help  of  an  action  plan  and  with  foreign 
assistance. 

Bulgaria  should  increase  administrative  efforts  to  prevent  irregularities  in  public 
procurement and to follow-up concerns in the implementation of EU funds. It will be 
important  that  the  results  of  the  Parliamentary  discussion  of  amendments  to  the 
public procurement law ensure an effective protection against fraud and corruption in 
public procurement.10 

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  response  to  a  recommendation  by  the  Commission,  Bulgaria  established  five 
permanent  joint  investigative  teams  under  the  direction  of  the  Supreme  Cassation 
Prosecution  Office.  These  teams  are  lead  by  prosecutors  and  include  investigative 
police officers, investigating magistrates and representatives of the State Agency for 
National  Security  (SANS),  the  latter  in  particular  to  collect  financial  intelligence. 
The five teams will focus mainly on the investigation of important organised crime 
cases.11 

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According to some proposals to amend the public procurement law, irregular public tenders would no 
longer be cancelled, but subject to payment of a contractual fine of 2% of the value of the contract by 
the contracting authority. 
Since mid-2009, Bulgaria restricted the competence of the State Agency for National Security (SANS). 
Although representatives of SANS participate in the recently established joint teams, responsibility for 
the investigation of organised crime cases was shifted back to the Ministry of the Interior. On the other 
hand, SANS will, as reported, keep responsibility for the gathering of intelligence concerning high-level 
corruption. The Anti-Fraud Co-ordination structure (AFCOS) was also transferred back to the Ministry 
of Interior from the Ministry of Finance. 

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In  response  to  another  recommendation  by  the  Commission,  Bulgaria  intends  to 
substantially  strengthen  the  legislation  on  the  forfeiture  of  criminal  assets  and  the 
mandate  of  the  Commission  for  the  Forfeiture  of  Criminal  Assets  (CEPACA). 
Amendments include in particular: broadening of the definition of "related persons" 
whose assets could be seized, giving CEPACA the right to act ex-officio, assessing 
assets  on  the  basis  of  their  market  value  and  a  shift  of  the  burden  of  proof  when 
assets are suspected to have been acquired illegally. The legal amendments focus on 
forfeiture  by  civil  courts  which  would  be  independent  of  a  specific  decision  in  a 
criminal  case  but  conditional  upon  a  number  of  other  elements  such  as  specific 
criminal  history.  It  is  expected  that  the  draft  will  reach  Parliament  in  March 
following public consultation.  

Since mid-2009, Bulgaria carried-out a number of arrests and launched investigations 
in connection with organised crime groups. 

During  the  same  period,  two  indictments  in  high-profile  cases  were  filed,  one  for 
murder  and  for  setting  up  an  organized  crime  group  and  one  for  tax-evasion. 
Substantial assets were frozen in the second case.12  

A  possible  witness  in  a  high-profile  organized  crime-case  was  killed  in  Sofia  on  5 
January  2010.  Organised  crime  cases  in  court  have  generally  shown  little 
development since mid-2009 and no convictions have been reported in this period. 

Bulgaria  considers  strengthening  the  legal  protection  against  money  laundering 
through amendments to the notary's act which would prohibit cash payment for real 
estate transfers. The amendments are currently being discussed by Parliament. 

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In total, Bulgaria reports 29 indictments in relation to organised crime since mid 2009. 

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