EU enlargement commissioner Olli Rehn told a seminar on May 29 that Bulgaria could lose hundreds of millions of euros over its inability to sufficiently tackle corruption and organised crime, international news agencies reported.

According to EUobsever, this would be the first ever such move by Brussels against a member state.

"We will have to deal with the question of EU funds," Rehn was quoted by Reuters as saying, "with the question as to whether there are so endemic problems that they merit a possible suspension of EU funds."

Rehn did not elaborate according to Reuters, saying "I don't want to jump the gun now."

The EC is preparing reports on Bulgaria's shortcomings in fighting organised crime, expected to be published in July.

Rehn's remarks come only days after Deputy Minister of Regional Development and Public Works Dimcho Mihalevski told private broadcaster bTV he expected funds to be unfrozen within months. If this would not happen, Mihalevski said he expected changes in Cabinet.

Earlier this year, Mihalveski resignation from the position manager of the European Union's pre-accession aid Phare programme under pressure of the EC.

The EC's biggest concern was the suspected nexus of a political old guard rooted in the pre-89 Communist era, Russian business interests and organised crime, Reuters quoted an unnamed source as saying.