The European Commission announced at a July 23 2008 news conference that it had suspended millions of euro in aid to Bulgaria and was withdrawing the accreditation of two Government agencies to manage pre-accession funds, Bulgarian National Television reported from Brussels.

The EC had made the decision because of serious irregularities and because measures to improve problems in dealing with the funds were inadequate, the news conference was told.

The news emerged as Bulgaria's opposition parties tabled a motion in Parliament of no confidence in the Cabinet on the grounds of mishandling of European funds that, the opposition parties said, had caused enormous financial and moral losses to Bulgaria.

As official details emerged of the July 23 EC report on Bulgaria, senior officials including Prime Minister Sergei Stanishev, Deputy Prime Minister in charge of EU funds Meglena Plougchieva and Deputy Prime Minister and Foreign Minister Ivailo Kalfin were scheduled to give news conferences to offer Bulgaria's response.

A report adopted by the EC on July 23 said that the fight in Bulgaria against high-level corruption and organised crime was failing to produce results and the EC had to act to protect European taxpayers' money.

"Therefore, the Commission has taken the decision today to formalise this suspension (of pre-accession aid) and withdraw the accreditataion for two government agencies in charge of managing these pre-accession funds," EC spokesperson Johannes Laitenberger said.

The two agencies are the Central Finance and Contracts Unit at the Finance Ministry, and the Ministry of Regional Development and Public Works's Phare funds agency.
 
BNT reported that it was expected that the EC would reconsider the decision on suspension when Bulgaria responded with appropriate measures.

A day before the report was released, with its criticisms of Bulgaria's severe shortcomings against organised crime and corruption, Prosecutor-General Boris Velchev said that work on these issues had proved a failure, and called for the setting up of a new special institution to deal with organised crime and corruption.

"One of the reasons for this failure is the fact that we tried to combat the organised crime problems with the forces of the prosecution offices and the Interior Ministry," Velchev said. He agreed with the EC view that Bulgaria should devote all its resources to fighting endemic organised crime and graft.

On July 22 2008, Bulgaria's Cabinet media office announced that Prime Minister Sergei Stanishev had a working meeting with Plougchieva, Interior Minister Mihail Mikov, Finance  Minister Plamen Oresharski, Justice Minister Miglena Tacheva and European Affairs Minister Gergana Grancharova.

The meeting was prompted by the second-reading debates on three bills amending the Public Procurement Act, the Interior Ministry Act and the Roads Act.

The Cabinet statement said that ministers had informed Stanishev about "concrete measures applied to continue reforms in the key sectors of justice and management of European funds".

Oresharski reported to the Prime Minister about the active work that is being done on the action plans under the Phare, Ispa and Sapard pre-accession funds; results can be expected in September.
 
"There has been an enhancement of the activities aiming to strengthen the system for handling and control of European funds and to guarantee good and transparent management of the money of Bulgarian and European taxpayers," according to the Cabinet statement.

The statement said that Tacheva reported on the work done to develop a concept of a new justice policy and a new criminal code. She said that the concept would be ready in the next few months.

"The key purpose is to apply quickly specific measures that would unblock the overburdened prosecution and judiciary system and lead to fast and effective administration of justice," the statement said.

Last week, Prime Minister Stanishev instructed the ministers to prepare comprehensive action plans mapping out concrete and practical urgent measures that would produce results in two key sectors - justice and EU funds management.

The action plans will be presented and discussed at a meeting of Bulgaria's tripartite coalition Cabinet in the mountain resort town of Bansko, scheduled for July 26 2008.