REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL INTERIM REPORTOn Progress in Bulgaria under the Co-operation and Verification Mechanism
Date: 2012-02-08
Institutions: European Commission
Subjects: Bulgaria, EU control, corruption, fight against crime, judicial reform, organised crime

EUROPEAN COMMISSION 

Brussels, 8.2.2012  
COM(2012) 57 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

INTERIM REPORT 

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

 
 
 
 
  
 
 
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 

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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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 

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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 
judicial  and 
investigative  practice,  adopt  and  implement  detailed  action  plans  and  correct 
shortcomings in cooperation with international experts and civil society. 

that  Bulgaria  analyse 

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 

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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. 

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The  reform  of  police  investigative  practice  launched  in  2010  has  been  pursued 
through further training in recent months2. 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  substa ntial  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. 

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. 

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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 

3 

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

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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. 

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