Bulgaria could lose funds over crime, EU warns
BRUSSELS, May 29 (Reuters) - The European Commission warned new EU member Bulgaria on Thursday it could lose European Union funds if it failed to tackle corruption and organised crime.
EU Enlargement Commissioner Olli Rehn told a seminar on crime in the Balkans that the EU executive would report on Bulgaria's shortcomings in fighting organised crime in July.
"We will have to deal with the question of EU funds -- European taxpayers' money...with the question as to whether there are so endemic problems that they merit a possible suspension of EU funds," he said.
Rehn did not elaborate. "I don't want to jump the gun now...we are currently preparing these reports," he said.
An EU source told Reuters last week Brussels was moving closer to stripping Bulgaria of some European Union funds.
Sofia stands to lose hundreds of millions of euros (dollars) in funds already frozen and to face stricter auditing conditions on nearly 11 billion euros ($17.34 billion) in EU money it is due to receive between now and 2013.
The July report will cover the fights against corruption in Bulgaria and its Black Sea neighbour Romania, which also joined the bloc in January 2007.
Both poor, former Communist countries are subject to special monitoring because they did not fully satisfy EU standards on justice, crime and payment systems upon accession.
Bulgaria looks set to lose money due to evidence that corruption has directly affected its agencies handling EU payments. Romania may get a warning to step up the fight against graft, but no financial penalty, the source said.
Brussels' biggest concern is the suspected nexus of a political "Old Guard" rooted in the pre-1989 Communist era, Russian business interests and organised crime, the source said.
A spokeswoman for the Bulgarian EU mission, Betina Joteva, said last week Prime Minister Sergei Stanishev and his coalition had a strong political will to deal with the problems.
The EU source said Stanishev did not appear to have the authority to enforce measures to fight corruption and organised crime, highlighted by a string of unsolved contract killings. (Reporting by David Brunnstrom; Editing by Robert Woodward)
