- The Washington Times - Monday, December 1, 2008

SOFIA, Bulgaria

Bulgarians cringed as the decision became final: The European Union canceled $279 million in subsidies that it had suspended in July, on accusations of massive corruption.

Other nations, like Bulgaria, have received warnings, but never before had the EU actually pulled the plug on cash transfers, a tool used for decades to help poorer nations catch up to Western European living standards.

“It´s bad enough being the poorest of the European Union states and the most corrupt. But now we are losing money, money that our country really needs,” said Todor Rashkov, a shopkeeper in Sofia.

Nearly two years after Bulgaria joined the EU, the Balkan state of 7.5 million people is more than ever struggling to curb corruption and organized crime.

Transparency International, a global watchdog on corruption, declared Bulgaria the most corrupt country in the European Union.

The European Anti-Fraud Office (OLAF) has found irregularities and fraud in the acquisition of 76 percent of the European funds for Bulgaria. The continued failure to clean up its act could cost Bulgaria yet more of the $14 billion earmarked for it by 2013.

Impatience among European officials about the lack of prosecution of high-level corruption cases is growing. Franz-Herman Bruener, director-general of OLAF, warned in a report leaked to the Bulgarian press recently that “influential forces within the Bulgarian government and/or state agencies do not have an interest in seeing the punishment of anyone in the criminal gangs.”

Reports of corruption are daily in Bulgaria´s newspapers.

One day, it is a story about Kremikovtzi, a communist-era steel plant and one of Bulgaria’s largest companies, today insolvent, whose former chief executive is under investigation for fraud and embezzlement.

Another exposes the fraud investigators’ accusations against a group of companies with interests as diverse as Black Sea resorts, cold storage and scrap metal of tax and subsidy fraud and illegal import/export. The group´s leaders, who were briefly detained last year on suspicion of fraud, have connections as high as the nation´s president.

Earlier this year, Bulgaria’s interior minister, Rumen Petkov, resigned amid reports that he had met with organized crime figures.

Prior to last week’s EU decision, Meglena Plugchieva, the deputy prime minister, had expressed optimism that the EU funds would be released.

But after the announcement, she expressed disappointment at the final withdrawal of the funds.

“Which EU country is free of corruption and has solved all its problems?” she told Bulgarian radio.

“This approach of focusing only on the negative in Bulgaria and of negative assessment only of Bulgaria is unacceptable. I do not share it, and I do not see it as a reflection of the EU spirit.” she said.

On Nov. 10, authorities arrested the former executive director of Bulgaria’s farming fund, Asen Drumev, who is charged with misappropriation of EU farming subsidies.

Mr. Drumev, who headed the farming fund between 2004 and 2007, is charged with allowing payments from an EU agriculture program to a wine-making company despite proven irregularities in the project, the prosecution’s press service said.

This is the second case brought against him, while the farming fund has been mired in a series of scandals, leading to the resignation of two of Mr. Drumev’s successors shortly after taking office.

The core of Bulgaria’s gray economy are loops of politically connected business groups, who come together and separate as opportunities and obstacles arise, corruption specialists say.

Profits from illegal activities are injected into legal front companies, such as soccer clubs, where money can be easily laundered. But the brutal competition leaves a blood trail: all three past chairmen of the soccer club, Lokomotiv Plovdiv, have been killed.

Bulgaria´s organized crime network dates to the collapse of communism in 1989 and the early 1990s, when unemployed secret service agents and athletes, primarily wrestlers, swapped their former life for a new line of work: business.

The “mutri,” or mugs as they are called, control everything from cigarette smuggling to construction. As democracy took root and accession to the EU became a reality, some of the groups seemed to become legitimized, even muscling into public office.

For most Bulgarians, being the first state to be denied use of EU funds is disappointing, but comes as little surprise.

“It is hardly surprising that this is happening,” said Alexander Iliev, a taxi driver in Sofia. “None here follows rules. You can get anything here for a price. Nothing is sacred anymore. I don´t know what made our neighbors to the West think that being part of the EU would make Bulgaria change.”

“But it is a huge embarrassment to us, the everyday people who work and struggle to make ends meet,” Mr. Iliev added. “It´s simply disgraceful.”

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