Bulgarian law allows defendants found guilty of defrauding European Union funds to avoid serving prison time, provided it is their first offence, prosecutor Bozhidar Djambazov said on August 4. The harshest penalty in such cases is a fine, capped at 5000 leva.

The revelations from Djambazov, who is part of the special prosecution unit charged with investigating EU funds fraud, come less than two weeks after the European Commission’s interim report on the state of Bulgaria’s judiciary and law enforcement once again criticised Sofia for insufficient efforts combating organised crime and corruption.

The problem lies with two articles of the Penal Code – the first stipulates that anyone found guilty of presenting false data or withholding data in order to receive EU funding is punishable by up to three years’ imprisonment and a 5000 leva fine; the other punishes the use of EU funds for any purpose than the one declared with up to five years in prison.

But under Bulgarian law, first-time offenders can have their sentences suspended because EU funds fraud is not qualified as a serious crime.

Prosecutors cannot indict defendants using other provisions of the Penal Code because the two articles take precedence in EU funds fraud cases, Bulgarian-language daily Dnevnik quoted Djambazov as saying. In some cases, judges will send investigations back to the prosecutor or dismiss the lawsuits if the indictment is under either of the two articles, he said.

Prosecutors can neither seize property, nor impose travel restrictions on defendants – the 5000 leva fine is the heaviest punishment available.

The two articles made it into the law in the previous legislature and were passed with the votes of the tripartite ruling coalition in 2005 and 2006. In November 2008, the head of the special prosecution unit, Margarita Popova, was the first to raise the issue of amendments to the two articles, Dnevnik said, but none have been passed by Parliament.

Popova was appointed Justice Minister in the new Cabinet of Prime Minister Boiko Borissov and has already said that her policy priority will be amendments to the Penal Code and Penal Procedure Code to make life easier for prosecutors in EU funds fraud cases. With Parliament not in session in August, the timetable for adopting them remains unclear, although Parliament’s legal affairs committee can meet to discuss amendments outside plenary sessions.

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The two articles are just one of the major issues Popova will have to quickly deal with, the Amnesty Act being the other. The same EC report criticised the law for opening a loophole for public officials, charged with malfeasance or abuse of public funds, to escape justice. The law grants amnesty from prosecution to public officials who have committed a crime of negligence prior to July 1 2008 and if that crime carries a sentence of up to five years under the Penal Code.

Although the new act has not yet been enforced in a case investigating EU funds fraud, its provisions were more than enough reason for prosecutors not to charge public officials. "If this law did not exist, we could have had more than enough reasons to start legal actions against public officials," Popova told Dnevnik just days before her nomination as Justice Minister.