Industry comments on the EU monitoring reports on Bulgaria and Romania were unequivocal: graft represents a reputational risk, writes Nick Kochan.

Nick Kochan is a freelance writer. His work may be seen at his website www.kochan.co.uk.

Romania and Bulgaria’s systems for fighting corruption have come under attack from the EU’s Cooperation and Verification Mechanism (CVM) in a devastating report published yesterday (25 January). Bulgaria’s efforts against graft “are fragmented and largely ineffective”.

Bulgaria's EU justice monitoring report goes unnoticed The European Commission’s monitoring report on Bulgaria’s progress in improving its law-enforcement system went largely unnoticed, as its publication yesterday (25 January) coincided with the appointment of a caretaker government in Sofia, pending snap parliamentary elections on 26 March.

The monitors’ view on Romania is more positive. However, the report says that corruption in Romania is a “deep-seated societal problem with consequences for both government and economy”.

Romania praised again in EU justice monitoring report but weaknesses remain The European Commission has released its latest report on Romania’s progress under the Cooperation and Verification Mechanism, which puts its judicial system under close surveillance for potential corruption and organised crime. EURACTIV Romania reports.

The CVM tests are seen as key milestones in the countries’ development and both governments have expressed disappointment at the findings. They will face further scrutiny at the end of the year.

Both CVM reports assess judicial independence and efficiency, integrity and the fight against corruption. The CVM report on Bulgaria has the additional mandate to assess the fight against organised crime.

The EU report blames a lack of political consensus in dealing with an endemic threat to both countries’ economy and reputation. The EU monitors are particularly harsh in criticising Bulgaria’s prosecuting agency where repeated reorganisations have meant that organised crime bosses are escaping justice.

Procedures to prosecute complex cases of corruption are missing in Bulgaria, while the criminal code is seen as a “source of problems in the prosecution of serious crimes”. The country’s prosecuting service is insufficiently independent from government and it is widely regarded as “over-powerful”.

On the positive side, the Commission says Romania’s National Anti-Corruption Directorate (DNA) is effective in indicting politicians of all ranks and parties and bringing them to trial. The country is also effective at confiscating criminal assets, through its newly established National Agency for the Management of Seized Assets.

Romania’s National Integrity Agency (NIA) has gained a track record in investigating “unjustified wealth”, says the report, “in spite of the upheaval caused by the resignation of the Agency’s President”. Horia Georgescu was arrested in March 2015 following allegations of his involvement in a property scam.

The report notes a “recurring problem concerning resistance to the implementation of the Agency’s reports, even when confirmed by a court decision”.

Question marks over judicial independence are undermining Romania’s process of reform. The monitors say that deficient legislative practice allows for the “sudden introduction of changes through parliament, bypassing better regulation and consultation”. Greater transparency is needed in publishing information about progress in combatting corruption. Romania needs to explain why its prosecutors refuse to lift parliamentary immunities and so enable the prosecution of a politician.

Industry comment on the EU report was unequivocal. Romania needs to make a lot of progress in combatting corruption, says James Wilson, director of the EU-Romania Business Society. Wilson says that graft represents a “reputational risk” for the country and acts as a deterrent for foreign investment. “The past year has been particularly concerning for foreign investors, with Romanian authorities seizing the assets of key energy investor, KazMunayGas, as well as the Romanian Government losing arbitration against CEZ, ENEL, E.on and Raiffeisen. Romania’s new government should lead the way in creating a positive climate for inward investment.”