Clare Nuttall in Bucharest -

A series of high-profile investigations in Romania and the launch of a new anti-corruption strategy in Bulgaria suggests that both EU member states are finally getting serious about tackling corruption. The prospect of EU membership is also seen as an incentive to clean up elsewhere in Southeast Europe, where according to a recent survey the informal economy remains the top obstacle to doing business.

On April 3, Bulgarian Deputy Prime Minister Meglena Kuneva announced plans for the new anti-corruption strategy that will include the launch of a single authority to tackle corruption. Six priority areas have been identified, including countering top-level corruption, reducing petty corruption and building a climate of public intolerance to corruption. The new agency will be responsible for investigations into over 7,600 senior government officials and magistrates, said Kuneva, a former European commissioner.

“The aim of the strategy is to turn Bulgaria into a country where petty corruption is limited largely to average EU levels, high-level corruption is not left unpunished, anti-corruption institutions work efficiently,” says a government statement.

Launch of the single agency would represent a considerable change in Bulgaria, where, according to Rositsa Dzhekova, coordinator of the security programme at the Sofia-based Center for the Study of Democracy, “There are many institutions tasked with fighting corruption but no single body to coordinate them, creating a situation of ‘shared irresponsibility’.”

The relative lack of progress in Bulgaria compared with Romania is one of the main motivations for the new strategy. Prime Minister Boyko Borissov said on April 3 that within four months Bulgaria is aiming to overtake Romania. “In a sense, they were trying to catch up with us... What has happened in a year and a half is that Romanians are now given to us as an example; four years ago they were behind us,” Borissov said on April 3, local newswire Novinite reported.

High crimes and misdemeanors

Borissov’s remarks follow a series of probes targeting high-ranking Romanian politicians and businesspeople launched by the country’s National Anticorruption Directorate (DNA). In March, Darius Valcov resigned as finance minister following the launch of a corruption probe. Other influential politicians that have become the target of corruption investigations include former presidential candidate Elena Udrea and former minister for large projects Dan Sova. Both the son of former Moldovan President Petru Lucinschi and the son-in-law of former Romanian president Traian Basescu are under investigation in a bribery probe, while Romania’s richest businessman Ioan Niculae was sentenced to 30 months in prison when he was found guilty of paying a bribe to the campaign staff of 2009 presidential candidate Mircea Geoana.

Some of these cases have already started to change Romania’s political landscape. The Valcov case opened as the government was finalising its new fiscal code, which will introduce a package of tax cuts ahead of the 2016 elections. His resignation at this critical point forced Prime Minister Victor Ponta to take over the finance ministry for a few days.

Meanwhile, the opposition National Liberal Party (PNL) had hoped to find a potential coalition partner in a new party planned by two former members of the ruling Party of Social Democrats (PSD), Geoana and Marian Vanghelie. However, plans for the party are now on hold after Vanghelie became the target of a corruption investigation, while Geoana has been implicated in the Niculae case. This dashed the PNL’s hopes of ousting the PSD before next year’s parliament elections.

Bulgarian Deputy PM Kuneva visited Romanian institutions to learn from their experience, but the Bulgarian plan does not exactly replicate the Romanian system. In particular, Sofia plans to set up a new unit within the Office of the Prosecutor General rather than a fully independent anti-corruption prosecutor like Romania’s DNA.

Bulgarians will, however, be looking to the Romanian example to assess the progress of their own anti-corruption institutions, specifically whether they are successful in pursuing top officials. “The Bulgarian public has anti-corruption fatigue. There have been many initiatives but nothing has really worked,” Dzhekova of the Center for the Study of Democracy tells bne Intellinews. “There will be a lot of pressure on the new institutions to deliver, and proof of this will be whether they make the high-level convictions seen in Romania.”

Pressure from on high

Both countries are under pressure form the EU to step up their efforts to fight corruption. Transparency International’s 2014 Corruption Perceptions Index puts them in 69th place, the lowest level of any EU countries, also tied with Greece and Italy. 

Bulgaria made only slow progress on judicial reform and tackling corruption and organised crime in the last year, according to the European Commission’s January 2015 report on progress under the Co-operation and Verification Mechanism (CVM), a tool created to assess steps taken in Bulgaria and Romania in these areas.

Romania’s report was significantly more positive although it singled out the parliament – the weak spot in the fight against corruption – for criticism after MPs voted several times to block investigations into ministers and parliament members.

The prospect of EU membership is seen as an incentive to tackle corruption among the prospective member states of Southeast Europe. Progress in this area is one of the categories measured on the EU’s annual enlargement reports.

Albania’s reputation for corruption and organised crime resulted in the country being turned down several times in its attempt to achieve EU candidate status, before its candidacy was finally endorsed by EU foreign ministers in June 2014. However, ministers warned that Tirana must make concrete progress against corruption and organised crime before the country can progress towards EU membership.

While successive governments have promised to tackle these problems, critics say their efforts have been largely cosmetic. In 2014, shortly before the meeting of EU foreign ministers, Tirana launched a massive operation against the “marijuana mountain” at Lazarat, where an estimated €4.5bn worth of the drug is produced every year. By contrast, efforts to tackle the less visible and more difficult problem of narcotics trafficking have been relatively lacklustre.

“In Albania they concentrate on the goal of EU membership rather than the behaviour that would get them membership and the good this could do for the country, its economy and its people,” Gary Kokalari, founder of Albanians for a Democratic Albania, which is involved in fighting corrupt practices in Albania, tells bne Intellinews. He also believes that the EU could do more to put pressure on Albania, in particular to clean up its judicial system. “At the heart of this problem is a judicial system that is dysfunctional, corrupt and highly politicised.”

Highlighting the existence of top-level corruption and links to organised crime in Albania is the unfolding scandal that has dragged in top government officials and caused the resignation of the chief of police, Artan Didi.

It started in early March, when MP Tom Doshi claimed he and fellow parliament member Mark Frroku had been the targets of an “assassination plot” masterminded by the parliamentary speaker, Ilir Meta. After prosecutors launched an investigation – calling in Prime Minister Edi Rama and Interior Minister Saimir Tahiri among others for questioning – they concluded on March 20 that they suspected Doshi and Frroku of making up the allegations.

Shortly after, the two MPs were arrested and the Belgian authorities submitted a request for Frroku’s extradition. He and three others had been found guilty of the murder of Aleksander Kurti, who was killed in Brussels on March 5, 1999, in what appeared to be a turf war between rival prostitution gangs. Didi resigned on March 31, after revelations surfaced about the police’s failure to cooperate with Belgian authorities in their attempt to have Frroku extradited.

While this is an extreme case, the more prosaic problems of corruption and a large informal sector are taking their toll on the economies of Southeast Europe.

The Business Environment and Enterprise Performance Survey, released by the European Bank for Reconstruction and Development and the World Bank on April 9 finds competition from the informal sector is the single largest challenge to doing business across the transition countries. This was the primary problem cited by company managers surveyed in four of the nine Southeast European countries, and among the top three problems in seven of the nine.

In Albania, the role of corruption in deterring investment has had a damaging effect on the economy. “Albania’s reputation can’t get much worse,” says Kolakari. “Legitimate businesses steer away from Albania, and part of the reason is the rampant corruption and the fact that the judiciary is a joke.”

In Bulgaria, 51% of companies consider corruption to be a problem, while 94% believe close links between business and politics leads to corruption, and 66% say the only way to succeed in business is to have political connections, according to a November 2014 report by regional anti-corruption and good governance initiative Southeast Europe Leadership for Development and Integrity (SELDI).

Meanwhile, in Romania, the highly publicised efforts of the DNA have sent out encouraging signs to investors. Standard Bank’s Demetrios Efstathiou listed the anti-corruption drive among 11 factors contributing to growth in Romania. “[The] political environment, following the recent election of President Klaus Iohannis, favours greater transparency and less corruption, positive for FDI and long-term growth,” Efstathiou wrote in an April 9 analyst note.