Corruption in public procurement, connected to European funding, is currently a hot topic for Brussels. After distributing billions of euro over the past 15 years to new member states in the East, the European Commission now faces an unpalatable truth - often this money was funneled to oligarchic circles around those in power, was simply used inefficiently, or was pocketed by various officials.
OLAF - the European Anti-Fraud Office - was supposed to be a primary tool to combat these very problems. Yet the service often lacks the capabilities and power to deliver on its mandate. Sadly, Bulgaria is a prime example of that.
Last week, OLAF announced it had filed a request with the Bulgarian authorities to prosecute and charge officials in the Ministry of Interior regarding the procurement of off-road vehicles for the needs of border security. The investigation covers a period from 2016 up to 2018 and, according to OLAF, concerns "possible abuse of power". The damages incurred to the EU budget amount to 6 mln. euros.
What are the facts?
Let's start with the obvious: the procurement was badly mishandled, delayed beyond any deadline and quite possibly - manipulated.
At the end of 2016, Bulgaria received an additional 160 mln. euro from Brussels to deal with migratory pressure on the Turkish border. "We need this money to start buying jeeps, thermo-cameras and provide a normal daily schedule to the policemen on the border," announced prime minister Boyko Borissov at the time. The list also included software, radio transceivers and TETRA phones (the mobile network for security services), and mobile systems for fingerprint registration, etc. This was a unique opportunity for the Interior Ministry: 160 mln. euros is 10 times the normal annual budget for capital expenditures of the institution.
Part of this money - 17.5 mln euro - was supposed to go on all-terrain vehicles. The agreement with the Commission stipulated Bulgaria would buy 290 SUV's with higher clearance (meaning clearance of more than 24 cm). Those cars would then go to local police directorates on the external borders of the EU - with Serbia, Turkey and Macedonia.
In 2017, a caretaker government came to power in between elections. In that period the procurement details were modified: the clearance was lowered from 24 cm to 18 cm. Those 6 cms allowed a vastly wider range of car-importers to participate in the bidding. One of them was especially happy: "Bulgarian automotive industry", formerly known as "Litex motors". Its "Great Wall" models are made locally, rather cheaply, and since 2012 have been a favorite amongst state and local institutions. One main reason for that was the close connections between the people in power and the bank behind "Litex motors" - the now bankrupted KTB bank. After the bank failed, the company started having a bit of a rough time. Yet suddenly one of its models was now allowed in the competition.
The company won the bid, yet because of complaints the whole thing dragged on for another year: the signing of the contract took place in 2018 during the current government - 5 months after the deadline set out in the EC memorandum. So Bulgaria got a lot of jeeps with a lower quality than stipulated in the agreement, and later than planned.
Vehicle procurement is very easy to manipulate - even a slight change of rules can throw out half of the market. Bulgaria is rife with examples. So why has OLAF focused on this specific case right now? Naturally, the Anti-Fraud Office is very sensitive about money distributed under special circumstances and for the above-mentioned reasons a car procurement by an Eastern European government is a good candidate for an audit.
Yet there might be another reason. The caretaker government was appointed by President Roumen Radev and its Interior Minister was his current security advisor Plamen Uzunov. As a vocal critic of the government and the prosecution service, Radev is a primary target for both. Uzunov had already been under investigation for abuse of power and his arrest last year triggered anti-government and anti-prosecutor general protests. Pro-government media and ruling party deputies wasted no time in jumping on the OLAF announcement and pointing the finger at the Presidency.
So while the case certainly merits attention, the fact that this is the only public request from OLAF for prosecution is dubious. It is very similar to a previous case: in 2018, there was a success story of cooperation between the European Anti-Fraud Office and the local prosecution service. A ring of companies with formal owners, all leading to one person, was busted, for receiving 10 mln. euros in agricultural grants. In last year's report, OLAF cited that as a good example. Yet a closer examination reveals that the person charged - a local oligarch named Minyo Staykov - was already in custody facing other charges and was quickly falling out of favor with the powers of the day.
So while Brussels was cheering, in Sofia the operation looked more like a chastisement for someone who's broken the unofficial rules of the game and is demonstratively punished for that.
OLAF on a leash
This points to a bigger concern. OLAF is failing to deal with more serious crimes in countries like Bulgaria. One of the problems is its mandate. Article 14 of the Guidelines for OLAF investigations stipulates that "the national authority concerned shall be notified in good time of the on-the-spot check to be carried out and of the object, purpose and legal basis of the check the on-the-spot check should be conducted with the cooperation of the competent national authority."
In Bulgaria, there are two institutions that are supposed to work with OLAF - the prosecution service and the police, through a special unit called AFCOS, and an audit unit in the Finance ministry called AEUF. While its audits regularly catch small and big irregularities with procurement here, they are mainly for local use - to shield the EU money from being requested from Brussels. They seldom make it to any OLAF investigation.
In other words, while it looks like a pan-European investigative unit, OLAF is very dependent on national authorities and services. This ties its hands when dealing with countries like Bulgaria, where procurement manipulation often is sanctioned from the top and in coordination with the very people supposed to control it. So is it really a surprise that in the last OLAF report, the number of frauds or irregularities reported in Bulgaria percentage-wise is lower than in Germany?