Bulgarian business life riddled with corruption, firms warn

SOFIA – Widespread corruption in Bulgaria is poisoning the business atmosphere, making long-term planning nearly impossible and increasing corporate costs, international companies and experts have warned here. Businesses see corruption as «an improper practice but one that is inevitable and effective nonetheless,» Kirko Kirkov, head of the Bulgarian International Business Association, told a recent gathering here of international investors and Bulgarian companies. «Corruption saves time, nerves and money in dealings that businesses have with the state administration,» he acknowledged. «But it’s not right. It reduces the scope for planning.» Kirkov’s association counts more than 200 enterprises from 25 countries among its members, notably the banks BNP and Citibank, food groups Coca-Cola and Danone, and oil giants such as Shell. «We must put a halt to practices that require companies to pay or make gifts to get public services that depend on the good humor of an official,» he insisted. Corruption infects privatization schemes, official markets, import and export administrations and the legal system, according to the association. The cost of corruption in Bulgaria is estimated at between 0.9 and 1.2 percent of the gross domestic product a year, the Bulgarian free market institute has found. More than a third of business leaders who landed government contracts have acknowledged paying bribes of between two and 10 percent of the contract value, according to a survey of 500 companies carried out last month by the Vitosha Research Institute. Analysts say the numerous licenses and registrations required by Bulgarian law invites corruption. The number of such requirements is three times higher here than is true of most other European countries, said Krassen Stanchev of the free market institute. While in Finland a single license is sufficient to offer telecommunications services, no fewer than 12 are needed in Bulgaria, he added. To fight corruption, the Bulgarian International Business Association is advocating «clear rules and simplified procedures for access to public services, as well as the rapid and effective control of officials who act improperly,» Kirkov said. Added Bulgarian Justice Minister Anton Stankov, «We are aware of the problem and are working to unite administrative services in a single body, to encourage administrative operations by electronic communications and to make the bureaucracy more transparent and effective.» Some progress has in fact been recorded. The Vitosha Research Institute has noted a decline in corruption over the last three years, particularly in 2003. But six out of every 10 businessmen here remain skeptical of the usefulness of lodging a complaint against a corrupt official, the institute has also found. Bulgaria is bidding to join the European Union and EU leaders said on Friday they hoped to admit the country in January 2007, along with Romania. They urged both countries to press ahead with economic and structural reforms to enable their membership negotiations to be be concluded in 2004 and their accession treaties signed in 2005. «To this end, it is crucial for both countries to bring their administrative and judicial capacity up to the required level,» an EU statement said.