Банкеръ Weekly


Caretaker Govt Introduces Rules on EU Money by 2020

In Bulgaria temporary things often prove most durable. In the country, there are “movable objects”, such as buildings near the sea, that offer temporary employment, at which places some people have managed to retire. However, the same is going to happen with the caretaker government of Georgi Bliznashki. This is to be taken not in the sense that the kind-hearted and always smiling professor of law will rule Bulgaria long, but that the so-called “temporary” official solutions will be crucial in the years ahead. These are precisely the provisions for determining some of the most important rules for EU funds until 2020. And before anyone can argue that now is the time for such actions and the lack of regular (non caretaker) government is just a coincidence, we’ll explain that some of these provisions had to be adopted by the end of 2013 and a further delay in their passing by a month or two is completely irrelevant, while others are valid, but vary according to the taste of the official authorities. Of course all of these reforms can be very good and helpful, except it’s arguable whether it is the work of a caretaker government to deal with them.

But either way the results are present. At an initiative of the Deputy Prime Minister Iliana Tzanova decreeNo70 of the Council of Ministers of 2010 governing the coordination in the management of European Union funds is to be amended. It provides for the establishment of the Coordination Council of the government, which will assist it at expert level while discussing current issues related to the management of EU funds. Chairman of the Board will be the Deputy Prime Minister on Management of EU funds (author’s note - nobody can be sure that such a ministry will exist in the next cabinet). It will further include people from governing bodies, audit authority, certifying authority, the Public Procurement Agency, the Agency for State Financial Control and the National Association of Municipalities. Observers did Representatives of the Court, branch and employers’ organizations.

Amendments to the Decree envisage the creation of a Methodological Council for financial corrections, which will play the role of mediator in disputes between beneficiaries and managing authorities, so the parties do not come to court procedure. The new structure will support the Council of Ministers in the process of identifying and making financial corrections in case of violations in procurement and contract projects. Chairman of the Board on financial corrections is again nominated to be Deputy Prime Minister on the Management of EU funds. Members will be representatives of the governing bodies, the Public Procurement Agency and the Agency for State Financial Inspection. If necessary, its activities will be assisted by external experts.

Caretaker Government has prepared a draft bill amending its own Methodology for determining financial corrections. The main reason for this are the threats of the National Association of Municipalities that local authorities will no longer pay for the mistakes and misconceptions of control and omissions of state authorities. As we know now, a number of entities, mainly municipalities, are penalized although they have not made any violations. That’s why the new methodology provides that beneficiaries should not be penalized when they fully complied with the legislative provisions. Fines will not be imposed when for an established violation by the Managing Authority or the Executive Agency “Audit of EU Funds” there is a decision of the Commission for Protection of Competition (CPC) or the Supreme Administrative Court (SAC), with which the beneficiary has complied. This will end the absurd situation which punishes misconduct already removed. The same will apply if the notice or documentation for public procurement specifies unlawful requirements or evaluation criteria, but where they are subject to control by the CPC and SAC. For comparison, the practice so far and especially the case with suspended money under the Environment OP show that many of the projects with imposed financial corrections have been declared lawful by the antimonopoly commission or court.

“Finding an objective mechanism to fairly imposing financial corrections is a must for the whole system of management of EU funds. The question is crucial for municipalities and budget in view of the serious financial impact and implementation of projects under the Operational Programmes. For a first time such a mechanism is proposed and discussed with stakeholders and this is an important step in solving the problem,” said Deputy PM Iliana Tzanova.

Along everything else, the caretaker cabinet of George Bliznashki acted in other directions. They created an expert group led by the Secretary of the Public Procurement Agency Ivo Katzarov looking for ways to reduce errors in tenders. Thus they came to the proposal for a standardization of documents relating to the advertising of public contracts, and exchange and harmonization of practices and documents governing supervisory bodies in the system that now are often in conflict. They also envisaged an early introduction of ex-ante control by random procedures at low cost.

Another group of experts, led by Savina Goleminova, adviser in the Cabinet of the Deputy Prime Minister Iliana Tzanova, is even working on developing a draft law on the management of EU funds. Under the proposal, the now existing institutional framework, the Deputy Prime Minister or minister who will be responsible for overall coordination of the system for the management of EU funds remains intact. The Central Coordination Unit also remains in place as part of the administration of the Council of Ministers and the Council for Coordination of relevant ministers whose governments are managing authorities of the programmes.

A new element, however, is the proposal at an expert level to create a Board of Governors and supervisory bodies, to discuss issues of a horizontal nature, to organize regular meetings to exchange experiences and best practices and to examine and propose solutions to problems of a systemic nature. Another important part of the draft law is the possibility of appealing the decisions of the heads of the governing bodies before an administrative court at the permanent or present address or registered office of the applicant as the application or the complaint itself will not stop the execution of the act.

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