Breaches of Procurement practices in Bulgaria

A simple article outlines examples of high-officials pressure during Evaluation phase in Tenders. The fact outlined happened over tenders for EU agricultural and other funds.



Bulgaria’s Deputy AgriMin Probed for Abuse of EU Funds

 January 9, 2013, Wednesday

Bulgaria’s Deputy Agriculture MinisterSvetlana Boyanova, has been investigated by the Main Inspectorate at the Council of Ministers for violations in the use of EU funds.

The information was reported Wednesday by the Bulgarian news agency BGNES, citing documents from the probe and its conclusions, provided to the journalists from the media.

The agency further reports the probe has been initiated by Prime Minister, Boyko Borisov, while the conclusions span on 10 pages. They involve Boyanova’s work as the person assigned by Agriculture Minister, Miroslav Naydenov, to oversee the “Rural Areas Development” Directorate, and strategies for BGN millions.

The tipoff has been received on November 4, 2011, and has been sent by Margaritka Astradzhieva, a Deputy Chair of the Committee for the Assessment of Local Strategies, with a copy to the EU anti-fraud office OLAF.

According to the tipoff, Boyanova and her team made attempts to interfere in the work of the Committee by pressuring them to provide information on the assessments and on their decisions.

The tipoff further claims that in June, 2011, Demina Bayraktarska, the Chair of the Committee, has been summoned in the office of the Deputy Agriculture Ministerand has been questioned on concrete applications – if they had been approved and if they would receive financing.

The answers have been negative and two days later, Naydenov has issued an order for the replacement of the Committee’s team, including Bayraktarska, Astradzhieva and several members. Another order of Naydenov, signed by Boyanova, has mandated a second assessment of the said applications with Boyanova being the person controlling the execution of the order.

Astradzhieva insists the second assessment aimed at manipulating the results. No sanctions are pending against Boyanova, one year after the tipoff and after the probe has proved that the allegations were true. The results have been simply sent to the Agriculture Ministry with a request to fix the “wrongdoings.”

Similar breaches of procedure are witnessed on EU funded project in structures of the Ministry of Justice in Bulgaria. Again Controlling person of the Evaluation commission was changed at the state owner Registry Agency to the Ministry of Justice. In 2011 a long waited IT System tender has been announced by the Project Leader as a tender controlling person. At the time the evaluation committee due to start work, the Executive Director of the Agency at that time Mrs. Nikolova in 2011 changed the controlling person with one, not involved in the project. The new person was closely instructed by Mrs. Nikolova for the selection of proposals. At the same time the letter of the Project Leader to the Deputy Minister of Justice for potential breaches in this change was not forwarded to the Managing Authority and the Project Leader was put under pressure not to disseminate the information about these deeds of the Agency’s director. As an outcome of the ”secured evaluation” the Tender evaluation prolonged more than 8 months, and was returned twice for re-evaluation. And resulted EURO 40 000 financial corrections from the EU funds managing authorities for  evaluation breaches.

If such breaches are tolerated from Ministry of Justice itself and EU Agricultural Managing Authority, what to say about corruption and breaches in procurement procedures upon Bulgarian lower administrative levels.


Steve Hanke: Co…

Steve Hanke: Corruption Is Bulgaria’s Achilles Heel
Finance – January 5, 2013, Saturday
Johns Hopkins economist Steve Hanke is known as the “father” of the currency board in Bulgaria.

If Bulgaria manages to tackle corruption successfully, the country will become number one on the Balkans, Johns Hopkins economist Steve Hanke, who designed the currency board in Bulgaria in the 1990s, says.

“Something must be done against corruption. If this changes, Bulgaria will definitely have the leading role on the Balkans. Investors are always surprised when they see how good the economic and bank indicators of the country are. The problem is that they refuse to even look at them because of the corruption and the judicial system,” Hanke said in an interview for the Bulgarian National Radio, BNR, Saturday.

The economist further stressed he believed the best part of Bulgarian “history” must be told, with presenting the positives, and not just the negative. He reiterated corruption was the country’s “Achilles’ heel” in preventing economic growth.

Regarding the newly imposed tax on bank deposits, which became effective in Bulgaria on January 1, the Professor voiced strong disagreement with such “political decision.”

“I have been opposing this since the day it was announced. At times of crisis the bank system should not be interfered with. This is a case of pro-cyclic regulation. Times are bad and should not be additionally worsened with imposing new taxes in the middle of the crisis. Other than that, the regulation of Bulgarian banks by the Central Bank, BNB, is a very good one,” said he.

Hanke stated that Bulgaria was one of the very few countries to successfully deal with bank capitalization i.e. in the time of economic boom the country tightened control over banks, and in the time of crisis, this control was eased.

The economist noted his opinion that Brussels and the West in general should have learned a lesson from bank regulation and the successful practices of countries such as Bulgaria and Estonia.

The Corruption and faults in Judiciary system in Bulgaria are not just back-warding phenomena for Bulgaria at time of crisis. They constitute the ‘peak of the iceberg” of a deeper processes  that in fact lead Bulgaria to the bad social results – the current years politics.

Steve Hanke himself provided consultancy for the Currency board, that in fact saved the Bulgarian financial/bank system of the deregulation trend that in fact ruined other countries bank systems and outraged financial crisis.

However politics of shortening social costs, economy regimes, budget cuts are symbols of an attempt to further deregulation in other sectors of economy and thus providing satisfactory ground to shadow economy and criminal practices. As the case with high corruption level and judiciary faults in Bulgaria are.

So – corruption and Judiciary system inadequacy in Bulgaria are answers to the sound bank system development. The first two are main area where crisis could express itself and it is more than evident. The mere fact that the EU authorities recommendations for improving the Bulgarian judiciary system are simply neglected shows that this system is guardian of the deregulation and corruption practices – hence functioning just the opposite to its natural role.