From euobserver.com

By Valentina Pop

Most EU funds are still on hold in Bulgaria due to weak financial supervision and scant follow-up on irregularities, while Romania seems to manage the monies better, a special report by the EU commission seen by this website reveals.

The document is a review of all EU financing programmes in Bulgaria and Romania from the date of their accession on 1 January 2007 until 31 July 2009. It was requested by the European Parliament in April, after the EU commission decided to freeze EUR 500 M of payments due to fraud and corruption.

The 17-page long update finds that the same problems which led to the suspension of pre-accession funds in 2008 were encountered with the regional and agricultural funds which Bulgaria began receiving after joining the EU: conflicts of interest, no follow-up on irregularities and fraud and lack of efficient oversight in the management of funds.

With every financing programme, the EU commission stresses the importance of "assuring that lessons are learnt in the transition form pre-accession funds," for instance in beefing up the administrative capacity and following-up on fraud and corruption cases.

All the national programmes which need to be in place for securing structural funds worth over EUR 3 B in 2007-2009 were "rejected twice by the commission" due to "shortcomings" in the management system and "for lack of consistency between audit findings and the overall audit opinion."

The absorption rate of EU funds in Bulgaria is therefore particularly low: only a third of the EUR 1,3 B of so-called pre-accession funds have been paid out and €109 million are still frozen.

Out of the EUR 1,03 B Bulgaria was entitled to in the last two years for regional and infrastructure projects under the so-called European Regional Development Fund (ERDF), Sofia only got EUR 288 M as advance payments, but no further funds can be cleared until the national programmes are approved.

The commission also found some fraud cases linked to this fund and "advised Bulgaria to cancel the launch of a number of inadequately designed grant schemes."

As an extra-safety measure, the commission said that its services will make on-the-spot checks before the next payments are made, in order to verify that the Bulgarian authorities have actually implemented all the requested measures.

The new centre-right premier, Boyko Borissov, who took office during the summer, has promised to tackle crime and graft and convince Brussels that his country can properly manage EU funds.

Former Prime Minister Sergey Stanishev on Sunday (18 October) admitted that together with fellow Socialists "we look more like a gang of villains rather than adherents to a cause."

He also confessed that public funds and resources were not distributed in the best possible way, that he failed to crack down on corruption and to provide for the absorption of EU funds.

"The Bulgarian government needs to show a credible and long-term engagement in the management of EU funds and fight against fraud," German Christian-Democrat MEP Ingeborg Grassle told EUobserver.

Ms Grassle was the MEP who requested the report. She said it was particularly worrying that none of the fraud cases involving EU money ended in a conviction in a Bulgarian court. Ms Grassle also criticised the commission for "paying a lot of money to Bulgaria despite suspicions and criticism concerning the control systems."

Romania better off

Despite similar problems with high-level corruption and lack of criminal convictions, Romania seems to have performed better in the first two years of EU membership when it comes to the management of EU funds.

All of its operational programmes for structural funds have been approved and money has already started flowing for different regional and infrastructure projects. Out of the roughly EUR 8 B it can get reimbursed for payments made in 2007-2009, Romania already received some EUR 2,6 Bin regional aid.

When it comes to pre-accession funds, Romania failed to absorb only EUR 169 M out of a total of EUR 3 B.

However, the commission remains concerned over the low capacity for financial management and control at local level and also stresses the importance of applying lessons learnt from the pre-accession programmes to the structural and agriculture funds.

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