BULGARIA HAS lost €220 million of EU funding for failing to adequately tackle fraud and mismanagement in several state agencies that handle applications for European aid.
Additional EU funding will remain suspended and could also be lost, said the European Commission yesterday, which has repeatedly warned Sofia to root out corruption.
"We hope that Bulgaria will now take urgently the necessary steps to improve the management of the funds," said a commission spokesman, who noted that a move to strip such European funds from a member state was unprecedented.
In July the commission suspended more than €500 million in pre-accession funds. The contracting period for €220 million of this cash has now run out, which means it will be permanently lost. The remaining EU cash could also be forfeit unless the commission's concerns over corruption are addressed within 12 months.
A draft EU report prepared in July, which proposed the suspension of funds, raised concerns that corrupt officials and organised criminals were "siphoning off" EU cash.
Olaf, the EU's anti-fraud agency, is investigating, among other matters, fraud and possible corruption regarding agricultural projects. These schemes were awarded €26 million in funding. Olaf has also complained to the Bulgarian authorities about breaches of confidentiality and leaks of confidential information regarding its inquiry into the misuse of EU funds.
Sofia says it is making huge efforts to crack down on fraud and organised crime. A spokeswoman for Bulgaria's mission in Brussels called the decision "a disappointment", given Sofia's work in fighting corruption. "We put a lot of effort in," she added.
However, in September the non governmental organisation Transparency International ranked Bulgaria as the most corrupt country in the EU, on a par with Mexico, Swasiland and China. There are also grave concerns in Brussels about the country's failure to convict anyone for more than a hundred contract killings carried out in recent years.
The loss of the EU funding to Bulgaria is a relatively small amount in the context of its overall allocation, worth €11 billion between 2007-2103.
But the commission has signalled that it will strictly monitor the contracting of projects by Bulgarian state agencies to ensure they are not open top fraud. It has not ruled out suspending portions of this much bigger EU programme if problems are suspected.