By Adam Brown and Elizabeth Konstantinova
July 23 (Bloomberg) -- The European Union today will judge anti-corruption efforts by its newest and poorest members, Romania and Bulgaria. They're in for a scolding, putting them at risk of having aid payments cut.
A report by the European Commission, the EU's executive arm, likely will say the Balkan nations -- rated the federation's most corrupt members by Transparency International -- have made strides, undertaking probes of Cabinet ministers, businessmen and lawmakers. But neither has managed to convict a senior politician.
``Catching the big fish has been the main issue, and it's a political one,'' said Victor Alistar, director of Transparency International Romania, in an interview.
In Romania, lawmakers still have the power to veto investigations of their colleagues. In Bulgaria, pre-trial procedures cause frequent court referrals back to prosecutors, delaying justice, the EU said in a preliminary report in February.
The commission allowed Romania and Bulgaria to join in January 2007 over objections from some EU lawmakers, who argued that the countries were too corrupt. Each has a per-capita gross domestic product that is a third of the EU average.
A year and a half later, the union may reconsider some the 43 billion euros ($68 billion) in aid the two countries stand to gain through 2013 -- 32 billion euros for Romania (population 22 million) and 11 billion euros for Bulgaria (population 8 million).
$400 Million Cut
The British Broadcasting Corp., citing an advance copy of the report due today, said on July 18 that the EU plans to cut Bulgaria's aid by $400 million unless it steps up efforts by November.
``It won't be a surprise that we will be criticized for organized crime and corruption in the high echelons of power,'' said Gergana Grancharova, Bulgaria's Minister of European Affairs, in an interview in Sofia yesterday. The ``report will become our bible for resolving future problems. We are talking about profound reforms spreading beyond the term of one government. There are powerful circles that resist change.''
The BBC said Romania faces ``strong criticism'' in the report but no sanctions. Romania's government said in an e-mail yesterday that EU officials had congratulated it for ``very good cooperation'' in cracking down on one category of graft: So far this year, suspected fraud related to EU aid funds have fallen to 0.7 percent of the total, down from 1.3 percent last year, the government said.
``Not a single one of us is going to like this report,'' Romanian President Traian Basescu said in a speech in Bucharest on July 7. ``We promised to fix the deficiencies in the justice system within a year. Meetings between the Romanian government and representatives of Brussels are dominated by the failure of the justice system.''
Today's report comes 13 months after the union's first report on the two countries' performance
That report accused both of failing to tackle graft. The EU told Bulgaria to increase independence and transparency of its justice system and conduct ``professional, non-partisan investigations into allegations of high-level corruption.'' Romania was told to increase accountability of public officials and judges, probe allegations of high-level corruption and better fight graft in regional governments.
An interim EU report, in February, said the countries had failed to show ``convincing results.''
``This one will be a more detailed report and will go through each of the benchmarks,'' said Mark Gray, a European Commission spokesman, referring to areas of concern to the EU. ``We have more information to assess. Parts will be political and parts more technical.''
``We have serious problems and a lot of work to do,'' Bulgarian Deputy Prime Minister Meglena Plugchieva, told reporters in Sofia this month.
In Romania, prosecutors have accused 10 current and former ministers of corruption, including ex-premier Adrian Nastase and Labor Minister Paul Pacuraru. Six of the accused, including Justice Minister Tudor Chiuariu, resigned. Chiuariu was accused of benefiting from the cut-rate sale of public land to a private owner. He and the other officials deny wrongdoing.
Parliament hasn't yet decided whether to authorize an investigation of Chiuariu and the others.
Romania has ``to look at small and medium issues, but they don't have the managerial capacity, the level of expertise needed,'' said Transparency International's Alistar. ``No prosecutor has received updated professional training in Romania in the past year, and this shows.''
In Bulgaria, Socialist Prime Minister Sergei Stanishev replaced five ministers after EU investigators found irregularities in spending on several aid projects and froze payments.
Bulgarian companies misused EU farm aid worth 32 million euros, the EU's anti-fraud office said in a July 7 report. Violations ranged from falsified contract bids to selling used farm equipment as new, the report said.