Europe, Headlines

BULGARIA: Netting of Big Fish Brings Hope

Claudia Ciobanu

BUCHAREST, Jun 17 2008 (IPS) - A conviction in a high profile corruption case may alleviate some of the toughness expected from a July report of the European Commission on the progress by Bulgaria in combating corruption and organised crime.

Valentin Dimitrov, former head of the Sofia heating utility company Toplofikatsiya, was sentenced May 30 to five years in jail for currency fraud.

The verdict could prove critical to Bulgaria’s position in the EU. Bulgaria joined the European Union (EU) Jan. 1, 2007 under some of the harshest conditions ever imposed on a new member state. The country’s endemic corruption led the European Commission (EC), the executive arm of the EU, to impose a safeguard clause stating that unless progress is made in fighting corruption, European funds could be withheld, and verdicts passed by Bulgarian courts would not be recognised in other EU states.

The EC is evaluating Bulgaria bi-annually, and some fear that the upcoming July report might invoke the threatened clause.

Faced with this threat, the Bulgarian government has taken some last-minute measures to prove its determination to reform. Interior Minister Roumen Petkov was forced to resign Apr. 13 following suspicions that he had been in contact with businessmen linked with organised crime circles while these were being investigated.

Petkov’s resignation coincided with a restructuring of the Bulgarian government announced Apr. 22, which featured most prominently the naming of Meglena Plugchieva as deputy prime minister in charge of monitoring and coordinating EU funding, a newly created position. The EC had repeatedly frozen pre-accession funds for Bulgaria to the value of tens of millions of euros each time on account of mismanagement of such money.

Bulgarian political scientist Tatiana Kostadinova from the Florida International University notes that these measures have probably been taken under fear of losing European funds.

The resignation of Petkov “took place a short time before the release of the next EU report and only after efforts were made to avoid it,” Kostadinova told IPS. “When the public learned about the meetings of Petkov with suspicious businessmen, the first reaction of President Georgi Parvanov was to say that he did not have information, and then somehow protect the minister. According to some accounts, Petkov submitted his resignation only after strong pressure from Brussels (the European Commission).

“It is also not clear why the structural change in the cabinet (the creation of the new position of a minister overseeing the management of EU funds) was needed. The country already had a minister of European integration and a minister of foreign affairs,” says Kostadinova. “Was it not possible to strengthen the capacity of the Ministry of European Integration so that it exercises a more effective control over the use of funds?”

The government reshuffle might be merely a façade meant to appease the EU. On the other hand, convictions such as the one of Valentin Dimtrov are more likely to persuade both EU actors and the Bulgarian public that authorities are finally tackling high-level corruption and crime.

The Dimitrov case has been closely watched by Bulgarians, especially inhabitants of capital Sofia. Dimitrov was arrested in July 2006, after running the Sofia heating utility company for a decade.

In February 2006, the head of Toplofikatsiya called for a 12 percent increase in the price for heating, causing municipal inspectors to run an investigation verifying whether the raise was indeed necessary. Many people had been refusing to pay the high heating bills anyway, and would not accept an even more expensive price. In a country where the average monthly income in 2006 was 240 euros (according to the National Statistics Institute), the heating bill for a two-room apartment could easily reach 80-90 euros.

The investigation found Dimitrov, whose salary was about 500 euros monthly, owning a villa valued at 400,000 euros, driving a Lexus sports vehicle, and having a jacuzzi and a solarium in his office (all shown on Bulgarian television at the time). In July 2006, investigators further revealed that Dimitrov held over 1.5 million euros in an Austrian bank account. The head of Toplofikatsiya allegedly kept many more millions in Bulgarian accounts, some of them in his mother’s name.

Dimtrov was investigated for embezzlement, mainly in the form of receiving bribes for awarding overpriced contracts, making purchases without contracts in the name of Toplofikatsiya, and hiding public purchases by using incremental billing. In the end, Dimitrov was convicted to five years in jail for currency frauds worth four million euros, for which he was indicted at the end of 2007.

Bozhidar Dzhambazov, the prosecutor in this case, told IPS that, while he is satisfied with the prison sentence given, he intends to protest against the part of the verdict that acquits Dimitrov on some of the currency fraud charges and the decision not to confiscate the money in Dimitrov’s accounts. Dzhambazov says another investigation on Dimitrov, for money laundering, has been completed and the case is expected to enter court soon.

Dzhambazov is the head of a special unit of prosecutor-investigators set up in November 2006 by prosecutor-general Boris Velchev to pursue the 25 most high-profile cases of corruption in Bulgaria.

The good news coming from Dzhambazov is that, in spite of the high stakes of the case, his team felt no pressure from politicians or criminal circles to be soft on Dimitrov. “The only pressure we felt during the investigation came from the strong public expectations for a quick resolution of the case,” the prosecutor said. “Many, many people were personally affected by the crimes at Toplofikatsiya, which is Sofia’s only central heating provider, and they wanted to know the truth.”

Restoring citizens’ confidence in the country’s institutions seems to be a key battle in Bulgaria at the moment. According to political scientist Tatiana Kostadinova, “large segments of the Bulgarian public are disappointed with the national political elite, and hope for a more active involvement of the EU.” However, as European officials have often stated, there is only so much the EU can do: put pressure on the national government for more transparency, monitor progress and withhold funds, and publicly support the reformists. Even with Bulgaria a member of the EU, the ball is still in the court of the national authorities.

But prosecutor Bozhidar Dzhambazov is optimistic. “Dimtrov’s sentence is a sign that justice can work in Bulgaria. And such sentences do not occur only occasionally here,” Dzhambazov told IPS. “What makes the Toplofikatsiya case extra special for society is that it brought to court people at a very high level. I hope it sends a message to everyone that we are all equal before the law. The Bulgarian justice system is in a process of reform and my wish is that this reform will restore the public’s trust in the judiciary.”