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Corruption is an obstacle to doing business in Bulgaria. A lack of autonomy and transparency in the judicial system has weakened corruption investigations and property rights, encouraged public official impunity, and created an uncertain investment environment. Kickbacks and bribes plague the public procurement sector, eradicating fair market competition and resulting in fewer opportunities for foreign investors. Companies face demands for facilitation payments and bribery when registering businesses or accessing public utilities. The Criminal Code prohibits various types of corruption, including extortion, trading in influence, facilitation payments and bribery of foreign officials. A complex legal framework and weak enforcement, however, hamper the country's ability to effectively combat corruption.
Last updated: October 2015
Bulgaria's judicial system is subject to political influence and is vulnerable to corruption. Widespread corruption has deteriorated public and business confidence in the judiciary institution (HRR 2014), rendering it the least trusted institution in Bulgaria (Greco, May 2015). Businesses point to the lack of independence of the judiciary and perceive the efficiency of the legal framework to settle disputes and to challenge government regulations to be weak (GCR 2014-2015). The judiciary is plagued by nepotism (ICS 2015) and high-ranking members of the judiciary are susceptible to bribes, abuse of office and influence peddling (NiT 2015). The system of appointment of judges has also been criticised for its lack of transparency and objectivity (European Commission, Jan. 2015). A significant majority of citizens perceive the judiciary to be corrupt (GCB 2013). Corruption cases are rarely solved and are often initiated due to political incentives (HRR 2013). Bulgaria has signed the New York Convention of 1958 and is party to the International Center for the Settlement of Investment Disputes (ICSID).
Corruption and impunity are widespread within Bulgaria's police sector (HRR 2014). Businesses report high costs of doing business because of police failing to protect companies against corruption and organised crime (GCR 2014-2015). Three-quarters of businesses pay for security in Bulgaria (ES 2013). While the government has mechanisms in place to investigate and punish corruption among police forces, enforcement has been ineffective, and police officials continue to engage in corruption with impunity (HRR 2014). Two-thirds of Bulgarian respondents identify the police as corrupt (GCB 2013).
Bulgaria's public services are affected by corruption, and foreign companies can expect demands for bribery andfacilitation payments. Almost a fifth of companies report gifts and informal payments being necessary to "get things done", especially when obtaining operating licenses and electrical connections (ES 2013). Corruption and inefficient government bureaucracy constitute as the two most problematic factors for doing business in Bulgaria (GCR 2014-2015). Two-thirds of citizens perceive public officials and civil servants to be corrupt (GCB 2013). The average cost and time required to deal with construction permits is lower than the regional average (DB 2015).
Corruption strongly affects Bulgaria's land administration, particularly when enforcing contracts (BTI 2014). Foreign investors are not adequately protected and often suffer from weak enforcement of property rights (GCR 2014-2015). Almost a fifth of companies expect to give gifts to get a construction permit (ES 2013), and almost half of citizens surveyed believe that corruption and bribery are widespread among officials issuing building permits (SESC, Feb. 2014).
Businesses' weak compliance with Bulgaria's tax laws contribute to a large informal economy and opportunities for corruption (BTI 2014); however, only a small number of companies expect to make facilitation payments or give gifts to tax officials (ES 2013). Bulgaria's tax rates and regulations are not identified to be an obstacle to doing business (GCR 2014-2015). The number of annual tax payments made by companies is significantly less than the regional average (DB 2015).
Corruption is an obstacle when doing business across Bulgaria's borders. Businesses report that irregular payments are likely to occur when dealing with the border administration (GETR 2014). Corrupt customs officials exchange bribes with organised crime groups and smugglers (European Commission, Feb. 2014). More than two-thirds of respondents believe that abuse and corruption are widespread among customs officials (Eurobarometer, Feb. 2014), and Bulgaria's tariffs and burdensome import procedures are considered the most problematic factors for importing and exporting goods (GETR 2014). Nevertheless, dealing with imports and exports is less costly and time-consuming than the regional average (DB 2015).
Risks of corruption are quite high in Bulgaria's public procurement sector, with conflicts of interest, kickbacks andbribery being frequently reported (BTI 2014). Foreign companies report of extortion by public officials in exchange for public tenders (CSD, June 2012), and almost a third of companies expect to give gifts to procurement officials in order to secure government contracts (ES 2013). More than half of all companies report of corruption preventing them from winning tenders (European Commission, Feb. 2014), and many businesses perceive the level of favouritism to be high among public officials when awarding contracts (GCR 2014-2015). Evidence shows a concentration of public procurement among larger companies, and the channelling of certain procurement contracts to specific companies (CSD, Mar. 2015). Awarding large procurement contracts involving big road and energy infrastructure development projects, are reportedly heavily affected by political patronage (CSD, Mar. 2015). Procurement in Bulgaria's energy sector also lacks transparency.
Among the main risks of corruption are the concentration of market power in the hands of the public administration, the lack of effectiveness, integrity and control of procurement officials and bodies, structural governance deficiencies, and too many frequent changes to the legal framework of public procurement (CSD, Mar. 2015). Companies convicted of violating procurement regulations, are excluded from future tenders. Corruption cases involving high-level public officials and the construction of important infrastructure projects are rarely investigated and prosecuted (ICS 2015).
Bulgaria's Criminal Code criminalises active and passive bribery, extortion, trading in influence, money laundering, abuse of officе and embezzlement. The code also prohibits bribery of foreign officials and facilitation payments. Money laundering is addressed in the Measures against Money Laundering Act. The Civil Servants Act and the Law on Preventing and Detecting Conflicts of Interest provide regulation for conflicts of interest in the public service. The Law on Protection of Competition and the Public Procurement Act addresses corruption in the public procurement. The Law on Political Parties provides for anti-corruption measures that guarantee transparency and accountability of political party funding. The Rules of Procedures prohibits MPs from receiving gifts that exceed one-tenth of their basic monthly salary (GRECO, May 2015). The Code of Administrative Procedure is aimed at limiting opportunities for corruption and establishing an efficient system of administrative justice. Bulgaria included a section on the ethical conduct of parliamentarians in its Rules of Procedures in 2014, thus reflecting the increased concern with integrity within the assembly (GRECO, May 2015). The Rules of Procedures also stipulates the declaration of assets for MPs. Penalties for corruption offences range from 1 to 15 years imprisonment. In exceptional bribery cases, punishments can reach 30 years imprisonment, a fine of BGN 30,000 and confiscation of property. Whistleblowers are protected by the Law on Prevention and Disclosure of Conflict of Interest (Art. 32), however, it is limited to public sector cases. The Criminal Procedure Code also provides protection for civil servants assisting in criminal proceedings. Enforcement of anti-corruption legislation suffers from a weak institutional framework and a corrupt judicial system (EUACR 2014).
To address these weaknesses and to respond to EU criticism, the government established a specialised anti-corruption body in each branch of the government, with inspectorates under the Council of Ministers and all regional offices to deal with allegations of corruption (NiT 2015). These bodies are described as fragmented, susceptible to political influence and having limited power (GRECO, May 2015). Bulgaria has ratified the United Nations Convention against Corruption (UNCAC) and the OECD Anti-Bribery Convention.
The Constitution of Bulgaria protects freedoms of speech and of the press, which are generally respected in practice (HRR 2014). However, the media is influenced by political and business interests, resulting in an absence of independent media coverage and self-censorship (BTI 2014). Libel and defamation suits are often brought against journalists who report on corruption or on mismanagement by government officials (HRR 2013). Journalists also experience intimidation and physical attacks. Bulgarians actively use online sources of information, including social media, blogs and online newspapers. Bulgaria's media environment is considered 'partly free' (FotP 2014).
Bulgaria's civil society is reasonably developed, and a small number of civil society organisations (CSOs) are actively involved in the fight against corruption. Freedoms of assembly and of association are protected by the Constitution (HRR 2014). Public support to CSOs is limited, and think-tanks in Bulgaria operate entirely by means of foreign donor support (BTI 2014).
- World Bank & IFC: Doing Business 2015.
- Freedom House: Nations in Transit - Bulgaria 2015.
- GRECO: Fourth Evaluation Round - Evaluation Report Bulgaria 2015.
- US Department of State: Investment Climate Statement - Bulgaria 2015.
- World Economic Forum: The Global Competitiveness Report 2014-2015.
- European Commission: On Progress in Bulgaria under the Co-operation and Verification Mechanism, 28 January 2015.
- Center for the Study of Democracy: Anti-Corruption Policies Revisited - The Bulgarian Public Procurement Market: Corruption risks and dynamics in the construction sector, March 2015.
- World Economic Forum: The Global Enabling Trade Report 2014.
- European Commission: EU Anti-Corruption Report 2014.
- US Department of State: Human Rights Report - Bulgaria 2014.
- European Commission: EU Anti-Corruption Report 2014 - Annex Bulgaria.
- European Commission: Eurobarometer Special Surveys, February 2014.
- Freedom House: Freedom of the Press - 2014.
- Bertelsmann Foundation: Transformation Index 2014 - Bulgaria.
- US Department of State: Human Rights Report 2013 - Bulgaria.
- Transparency International: Global Corruption Barometer 2013.
- World Bank & IFC: Enterprise Surveys 2013 - Bulgaria.
- Center for the Study of Democracy – Bulgaria: 'Corruption and Anti-corruption in Bulgaria 2011- 2012', Policy Brief No. 35, June 2012.