Series:Center for the Study of Democracy - CSD Reports

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CSD-Report 05 - Bulgaria’s Capital Markets in the Context of EU Accession: A Status Report

CSD-Report 05 - Bulgaria’s Capital Markets in the Context of EU Accession: A Status Report

Author(s): Stefan Petranov,Jeffrey Miller / Language(s): English

The objective of this report is to contribute to the discussion on the capital market reform in Bulgaria in preparation for eventual integration into the European Union. The report views the accession issue on two levels. The first one is whether the necessary capital market institutions and legislation are in place, while the second one is whether capital markets function in a manner that supports economic growth and development. The impetus for the development of the capital markets in Bulgaria was the first wave of the mass privatization program. This program was similar to the program implemented earlier in the Czech Republic. At the same time the Czech Republic is among the first countries in transition that has been invited to negotiate accession with the European Union. For these reasons it is useful to compare the process of capital market developments in both countries. However, it should be taken into consideration that because of the problems that have surfaced recently in the Czech capital markets, the Czech example does not necessarily furnish solutions to the problems that are likely to arise. A large number of the companies are listed on the Bulgarian Stock Exchange-Sofia, but in practice the majority of the smaller ones have not been traded at all. While the unadjusted market capitalization figure amounts to roughly 0 million, this includes all investment funds, holding companies and all shares in partially privatized state owned companies. The actual figure for shares not held by the Government and available for trading on the BSE-Sofia is probably closer to 5 million. This works out to 1 per participant in the mass privatization program, which is a little above one-month’s salary. The market also has very low levels of turnover. Turnover figures at the individual company level are available only for trades on the BSE-Sofia. Most company shares have been traded very few times since the stock market opened. Only eight companies have traded shares in more than half of the sessions for which they were registered.

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Corporate Governance and Control in Bulgaria

Корпоративно управление и контрол в България

Author(s): Maria Prohaska,Plamen Chipev / Language(s): Bulgarian

This publication aims to present the state and specific problems of corporate governance and control in Bulgaria. It has been prepared as part of the Corporate Governance Initiative Project in Bulgaria with the financial support of the Center for International Private Enterprise of the United States Chamber of Commerce. The main objective of the project is to facilitate the introduction of modern standards of corporate governance and procedures that will ensure accountability and accountability, transparency in the economy and control mechanisms in companies. The publication includes two authors' reports, which analyze the tendencies in corporate governance in Bulgaria after the first wave of mass privatization and the initial stages of concentration of ownership. They present both the main features and problems of corporate governance as well as the structure of forms of corporate control and the expected consequences for the future of corporate governance in Bulgaria.

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Situational Assessment of Extremist Trends

Ситуационна оценка на тенденциите в екстремизма

Author(s): Rositsa Dzhekova,Luděk Moravec,Nadya Stoynova / Language(s): Bulgarian

Violent extremism is one of the major challenges Europe is currently facing. The threat is both external as well as internal as indicated by the rise in home-grown Islamist terrorists, as well as of nationalistic and anti-immigrant movements and far-right aggression. An accurate picture of the spread, nature and trends in the extremist and terrorist activity and actors is paramount to formulating strategic policy approaches and effectively allocating available resources. This publication provides a methodological framework for the establishment of a viable mechanism for monitoring and assessment of the state and developments over time in extremist acts and actors on the national level. The situational assessment is an instrument for systematic collection and analysis of statistical data, open source data and intelligence information pertaining to extremist actors and activities, for the purposes of developing regular situational reports of the spread, nature and trends in extremism and violent radicalisms. Following the application of the situational assessment tool, the publication presents main findings on extremist trends and monitoring capacities in three countries from Central and Southeast Europe: Bulgaria, the Czech Republic and Greece.

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Monitoring Anti-Corruption in Europe. Bridging Policy Evaluation and Corruption Measurement

Мониторинг на антикорупцията в Европа. Оценка на антикорупционните политики и измерване на корупцията

Author(s): Alexander Stoyanov,Alexander Gerganov,Andrea Di Nicola,Fabrizio Costantino / Language(s): Bulgarian

Corruption and measures to counteract it have been subject to so much research and political attention that it would seem that their every aspect must have been explored. Yet corruption proves bafflingly resilient, always finding new conduits for spreading; squeezed temporarily out of one public sector, it reappears in another. It could only benefit the anticorruption effort, therefore, if novel methods for analysis and prevention were found. It is in response to this need that the current report seeks to build bridges between the evaluation of anticorruption policies and the measurement of corruption. Monitoring Anticorruption Policy Implementation (MACPI) was born of the understanding that innovation in anticorruption is as important as it is in other social and economic fields. MACPI provides the anticorruption community with a precision-guided tool, which gives exhaustive feedback on the enforcement of policies.

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Energy Sector Governance and Energy (In)Security in Bulgaria

Управление на енергийния сектор и енергийна (не)сигурност в България

Author(s): Ruslan Stefanov,Todor Galev,Martin Tsanov,Martin Vladimirov,Nadejda Gantcheva / Language(s): Bulgarian

This report explores the major governance deficiencies in the Bulgarian energy policy regarding the strategic, institutional, and legal framework of the sector. The report focuses on state capture of energy policy by private political and economic interests that led to bad management practices in the sector, to lack of consistency in the legal and regulatory framework, to deteriorating investment environment, and to the involvement of the country in infrastructure projects that undermine the national long-term strategy and policy priorities. This has affected negatively the Bulgarian taxpayers and consumers, has jeopardized the financial stability of the state-owned energy companies, and, ultimately, has reduced the energy security of the country. The report recommends that the implementation of the country’s energy policy should be reconsidered and should be based on EU priorities and on sound cost-benefit analyses with regard to Bulgaria’s energy security.

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Civil Society in Bulgaria: Between Social Entrepreneurship and State Capture

Гражданското общество в България: от социално предприемачество до завладяване от държавата

Author(s): Todor Yalamov,Maria Doichinova,Lyubomir Kutin / Language(s): Bulgarian

This publication analyses the changes in the third sector during the 2010 – 2013 period and at the same time outlines the positive practices in the social entrepreneurship as well as the risks that reduce the chances for nongovernmental organisations to effectively impact the democracy and well-being of Bulgaria.

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Countering police corruption: European perspectives

Европейският опит в противодействието на корупцията в полицията

Author(s): Rositsa Dzhekova,Philip Gounev,Tihomir Bezlov / Language(s): Bulgarian

This publication reviews the policies and institutional mechanisms for countering police corruption in several EU member states. To be effective, anti-corruption efforts should be based on a system of independent and mutually accountable institutions which are sufficiently empowered to implement their objectives. This report emphasises the last two decades of experience in the UK, Belgium and Austria in modernising their anti-corruption policies and institutions. In addition to the institutional and legal framework, concrete measures and methods (risk assessment, integrity tests, etc.) are also examined. The Bulgarian and Romanian experience in countering corruption in law enforcement institutions is also reviewed with an emphasis on some of the main problems and gaps that undermine effective counter measures.

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Countering Organised Crime in Bulgaria: Study on the Legal Framework

Противодействие на организираната престъпност в България: оценка на правната рамка

Author(s): Maria Yordanova,Dimitar Markov / Language(s): Bulgarian

The publication analyses and assesses the legal framework on countering organised crime and examines the problems, which arise in its practical application. On this basis, recommendations are made to improve the legislation and bring it into conformity with international standards and the existing good practices, as well as to overcome the weaknesses in the application of law which impede the detection and punishment of organised criminal activity or infringe fundamental principles of criminal procedure and the rights of the participants in it.

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The Hidden Economy in Bulgaria and the Global Economic Crisis

Динамика на скритата икономика в България по време на криза

Author(s): Andrey Nonchev,Denitsa Mantcheva,Evgenia Vassileva,Ruslan Stefanov,Todor Yalamov / Language(s): Bulgarian

This publication provides an overview of the hidden economy dynamics in Bulgaria. The authors make an analysis of the effects of the crisis on the labor market and undeclared work based on the results from the Hidden Economy Monitoring System. After examining the European and the Bulgarian experience of the last five years, they make recommendations to the improvement of the public policies for reducing the hidden economy. The authors also justify the necessity of combining administrative control, socio-economic measures and structural reforms in the control administrations and the law enforcement agencies.

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Green Energy Governance in Bulgaria at a Crossroads

Управлението на зелената енергетика в България на кръстопът

Author(s): Ruslan Stefanov,Denitza Mantcheva,Nikolay Tagarov,Dobromir Hristov,Valentina Nikolova / Language(s): Bulgarian

The current report reviews existing policies for energy sustainability in Bulgaria and the EU, the main achievements and challenges in their implementation, and discusses the central issues to Bulgaria’s sustainable development agenda. The report presents a summary of the transition to sustainable development in Bulgaria, and offers policy recommendations for improving the governance of the Bulgarian green energy sector. Achieving security, sustainability, and competitiveness in the energy sector is a daunting task for a union of twenty-seven states, especially since the issue of securing the supply of energy has traditionally been a national matter. In their drive to reach climate change and energy targets during the past decade, European governments have utilized quick fix solutions like turning to nuclear power or replacing coal with gas, thus burdening future generations with nuclear waste disposal and increasing EU’s energy dependence on Russia. Yet, two major events – the gas crisis of January 2009 and the Fukusima nuclear disaster of March 2011 – have reshaped the thinking and rekindled the debate on the ways of achieving energy security and stability of supply in Europe.

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Penitentiary Policy аnd System in the Republic оf Bulgaria

Пенитенциарната политика и система в Република България

Author(s): Maria Yordanova,Dimitar Markov / Language(s): Bulgarian

The report explores to what extent Bulgaria has introduced the European standards in the legal regulation of the prison system and the execution of the penal sanction of imprisonment, how are they implemented in practice, what is the State’s penal policy and strategy in this area in general and in respect to drug-addicted prisoners in particular, and what is the opinion of the people working in the penitentiary system and the non-governmental organizations monitoring the activities of penitentiary facilities.

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Energy and Good Governance in Bulgaria. Trends and Policy Options

Енергетика и добро управление. Тенденции и политики

Author(s): Ruslan Stefanov,Valentina Nikolova,Dobromir Hristov,Assen Dyulgerov,Kiril Gegov,Georgi Kaschiev / Language(s): Bulgarian

The report explores the major deficiencies in the strategic, institutional, and legal framework of the Bulgarian energy sector. The analysis of the management of state-owned energy companies and large energy infrastructure projects reveals the disregard for even the most fundamental principles of accountability and control in their planning and implementation. This has affected negatively the Bulgarian taxpayers and consumers, has jeopardized the financial stability of the state-owned energy companies, and, ultimately, has reduced the energy security of the country. The report recommends that the implementation of the large energy infrastructure projects be reconsidered and be based on a sound cost-benefit analysis with regard to Bulgaria’s energy security.

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Civil Society in Bulgaria: Trends and Risks

Развитие на гражданското общество в България: Тенденции и рискове

Author(s): Emil Tzenkov,Todor Yalamov,Todor Galev,Pavel Antonov,Svetla Encheva / Language(s): Bulgarian

The current analysis depicts the major trends in and risks to the development of civil society in Bulgaria. Three groups of risks are identified related to the establishment of public-private partnerships, the capture of civil society by politicians at local and national level, and the nature of commercial activities performed by non-profit organizations. The suggested legislative changes and measures target state and municipal structures related to non-profit organizations. In addition, this paper outlines measures aimed at self-regulation and greater transparency in the "third sector".

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Organized Crime in Bulgaria: Markets and Trends

Организираната престъпност в България: Пазари и тенденции

Author(s): Author Not Specified / Language(s): Bulgarian

The report Organized Crime in Bulgaria: Markets and Trends summarizes the analyses carried out by the Center for the Study of Democracy throughout the last decade which have focused on specific aspects of organized crime in Bulgaria (contraband, the drug market, tax fraud, human trafficking, arms proliferation, etc.), the systemic spread of corruption, and the linkages between the two. The report presents the latest trends and manifestations (or market niches) of syndicate crime and its particularly damaging effects. It goes further to offer a historical review of the facts and available expertise in the area, and to draw conclusions about the origin, characteristics and developmental features of organized criminality in Bulgaria in the context of the transition to democracy.

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Corruption in the Healthcare Sector in Bulgaria

Корупцията в здравеопазването в България

Author(s): Konstantin Pashev / Language(s): Bulgarian

At a time of heightened social sensitivity to persisting problems in the Bulgarian healthcare system, the report examines the causes and consequences of corruption in the Bulgarian healthcare. In the context of slow institutional reforms the analysis reveals the incentives of medical personnel for corruption, as well as the size and scope of corruption in the Bulgarian healthcare sector.

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The Drug Market in Bulgaria

Пазарът на наркотици в България

Author(s): Author Not Specified / Language(s): Bulgarian

The Center for the Study of Democracy has undertaken a special inquiry into the topic of drug abuse - which was fueled by the drug epidemic of the late 1990s and has grown to become a real social threat - and the problem of drug dealing, which is a major mechanism for the generation of organized crime in Bulgaria. This report addresses drug supply and demand in Bulgaria with the ambition of mapping a vast information void and identifying the basic mechanisms and stakeholders of the drug market. However, the peculiarities of drug diffusion and consumption do not allow the use of the standard suite of economic research tools and vehicles throughout the study. This analysis has been divided into three sections. The first addresses the genesis of drug distribution, while the second describes its structure and functioning. The findings about supply presented in the first two parts are based on a series of in-depth interviews with dealers of different groups of drugs, long-term drug users, with police and security officers (experienced in combating drug traffic, drug production, and drug dealing), doctors, and civil organizations engaged in treatment services to drug addicts. Section 3 highlights drug demand, and brings into play the findings of the First National Population Survey on Drug Consumption in Bulgaria conducted by Vitosha Research. For the purpose of this study, CSD and Vitosha Research used the research tools of the European Monitoring Center on Drugs and Drug Addiction (EMCDDA).

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Corruption, Trafficking and Institutional Reform: Cross-border crime in Bulgaria and activities of Customs and the Ministry of Interior for its crossing (2001 - 2002)

Корупция, контрабанда и институционална реформа: Трансграничната престъпност в България и дейността на митниците и МВР за нейното пресичане (2001 – 2002 г.)

Author(s): Author Not Specified / Language(s): Bulgarian

The present report summarizes researches and discussions conducted by members of the expert group within the framework of the Bulgarian anti-corruption initiative Coalition 2000 established in 1997. The report is dedicated to one of the most serious problems of the Bulgarian transition towards market economy, stable democratic institutions and legal state. The exploding growth of trans-border crime during the last 12 years has led to the emergence of criminal infrastructure, developed and maintained by criminal groups and semi-legal "power groups," which have appeared in the mentioned period. The trans-border crime in Bulgaria is a part of the new network of international organized crime, which was established after the end of the Cold War and which is closely connected to the regional channels of smuggling and trafficking. Smuggling (including drug smuggling) and trafficking are in particular the main sources of income for organized crime in the country. It is impossible to successfully fight the trans-border crime in the country without a determined effort to counter systemic corruption within the law-enforcing and law-protecting institutions. Enormous part of the criminal acts and irregularities concerning import and export of goods, drugs and weapons, as well as illegal trafficking of human beings, is conducted through unlawful cooperation with customs officers, employees of the National Border Police Service and other state institutions, responsible for border control. Corruption networks are part of the systemic smuggling or of the so-called smuggling channels, and the funds for bribing state employees represent "production costs" for organizers of smuggling. Without doubt, it is difficult to present an accurate assessment of the discussed problems, due to the lack of information about the exact parameters of smuggling, in particular of the drug smuggling, and about the real scale of corrupt practices. Hence the huge importance of indirect indicators like marketing researches in regard with the presence of particular goods on the market, and methods for comparison of such data with official customs statistics for import and exports of the same goods. Apart from these methods, of particular importance is the role of export analyses, reporting on informal "price-lists" of corrupt services, as well as of the scope and value of the realized smuggling deals and operations.

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Smuggling in Southeast Europe. The Yugoslav Wars and the Development of Regional Criminal Networks in the Balkans

Контрабандните канали в Югоизточна Европа. Конфликтите в бивша Югославия и възникването на регионални престъпни мрежи

Author(s): Marko Hajdinjak / Language(s): Bulgarian

Smuggling in Southeast Europe analyzes and reviews the connection between the conflicts in the former Yugoslavia and the growth of the trans-border crime in the region, and also looks at the related issue of corruption. The paper highlights the decisive impact the Yugoslav wars had on the development of the regional criminal networks, which were often set up and maintained not only with the knowledge, but even with active participation of the highest state officials. The research also represents a contribution to the study of conflicts in the Western Balkans. The majority of existing interpretations of causes, course and consequences of the Yugoslav wars try to provide the answers through ethno-political explanations. They unjustly ignore the importance that interweaving of interests of political elites, the organized crime groups, which appeared in this period, and the "mediating class" of corrupt state officials had in this process. The paper is divided in three parts: • An analysis of the causes and course of emergence of Balkan smuggling channels in the context of Yugoslav wars and international sanctions; • A review of the recent developments in trans-border crime in Southeast Europe; • An overview of prevention efforts, undertaken both by the regional governments and the international community’ The first part analyzes the emergence of officially sanctioned "state-building" smuggling in those parts of the former Yugoslavia, which were involved in the war. The intermediary role of Albania, Bulgaria, Macedonia and Romania is also discussed. In these four countries, smuggling networks were not developed under open patronage of the governments, but the role of high-positioned politicians was nevertheless extremely important. The second part traces the evolution of the initial semi-official smuggling channels and their transformation into "classical" criminal networks. The so-called "suitcase trade," cigarette smuggling, smuggling of narcotics, and the trafficking in human beings are discussed in more detail.

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Corruption and Trafficking: Monitoring and Prevention. Assessment Methodologies and Models of Counteracting Transborder Crime

Корупция и контрабанда: мониторинг и превенция. Методики за ооценка и модели за противодействие на трансграничната престапност в България

Author(s): Author Not Specified / Language(s): Bulgarian

This is the second updated edition under the same title, published by the Center for the Study of Democracy of its Reports/ Analyses series to be distributed among participants in Regional Coordination Meeting of Subtable "Justice and Home Affairs" of Stability Pact Working Table III, held in Sofia on October 3rd, 2000. This latest analytical report is the outcome of the efforts of non-government organizations and state institutions, and of independent experts and journalists as well within the framework of the Coalition 2000 process. Launched in 1997, Coalition 2000 strives to support the restriction and curbing of corrupt practices in Bulgarian society, including regular monitoring of public perceptions and attitudes towards corruption. The illicit trafficking growth, as one of the most important sources of local "gray economy" throughout the 90ies, was caused by a number of international and internal factors, the most crucial of which being the weakening of the post-communist state and the spread of corruption practices among state officials. The threat on society posed by the interlacing of the interests both of crossborder crime perpetrators and the associated corrupt public officials (customs officials being the most alarming example according to public opinion), became a serious public concern. This initiated the necessity to analyze the phenomenon and to identify adequate monitoring and counteraction measures, moreover this type of crime finds further confirmation in experts' estimate that a large portion of the local gray economy is related to smuggling of goods and the proceeds of the respective unlawful activities. The report examines the processes of illegal trafficking and the related corruption in Bulgaria, identifying their typical manifestations and the practical assessment, prevention and control strategies and methodologies in three sections as follows: • an analysis of crossborder crime in Bulgaria during the 90ies; • a review of the sociological and statistical methods of measuring illicit trafficking; • Practically oriented proposals with the aim of curbing corruption and trafficking. The first section emphasizes on the combined impact of trafficking and corruption in the context of current criminological environment in this country and the increasing crossborder nature of crime. The problem has been deliberately set in the national context, seemingly isolated from global crime. The second section of the paper (Monitoring the illegal trafficking) proposes two relevant methods of measuring the contraband merchandises imported in the country and the sample survey methods for assessing of smuggling. One of them, the "mirror statistics" method, compares overseas and local official data regarding the export/import of this country. It is applied to assess the scope of the gray economy as a whole, and to locate the main "contraband markets" in Bulgaria. In addition, an original mechanism is developed, which combines monitoring through sample interviews, with exerting control over contraband goods. This mechanism is oriented towards future cooperation between local NGOs and public authorities (customs and police). The third section of the paper consists of proposed measures to be undertaken to curb illegal trafficking and corruption in this country. It is coined after the Coalition 2000 Anti-Corruption Action Plan and outlines the synergy of public sector reform and civil society anti-corruption initiatives. It also stresses on the importance of enhancing international cooperation in the framework of Bulgaria's EU accession. Statistical data provided by the Customs Agency have been used in this second updated edition of the paper. A number of recommendations by the Agency's experts have also been taken in consideration.

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Bulgaria’s Capital Markets in the Context of EU Accession: Status and Problems

Българският капиталов пазар в контекста на присъединяването към Европейския съюз: състояние и проблеми

Author(s): Stefan Petranov,Jeffrey Miller / Language(s): Bulgarian

The objective of this report is to contribute to the discussion on the capital market reform in Bulgaria in preparation for eventual integration into the European Union. The report views the accession issue on two levels. The first one is whether the necessary capital market institutions and legislation are in place, while the second one is whether capital markets function in a manner that supports economic growth and development. The impetus for the development of the capital markets in Bulgaria was the first wave of the mass privatization program. This program was similar to the program implemented earlier in the Czech Republic. At the same time the Czech Republic is among the first countries in transition that has been invited to negotiate accession with the European Union. For these reasons it is useful to compare the process of capital market developments in both countries. However, it should be taken into consideration that because of the problems that have surfaced recently in the Czech capital markets, the Czech example does not necessarily furnish solutions to the problems that are likely to arise. A large number of the companies are listed on the Bulgarian Stock Exchange-Sofia, but in practice the majority of the smaller ones have not been traded at all. While the unadjusted market capitalization figure amounts to roughly 0 million, this includes all investment funds, holding companies and all shares in partially privatized state owned companies. The actual figure for shares not held by the Government and available for trading on the BSE-Sofia is probably closer to 5 million. This works out to 1 per participant in the mass privatization program, which is a little above one-month’s salary. The market also has very low levels of turnover. Turnover figures at the individual company level are available only for trades on the BSE-Sofia. Most company shares have been traded very few times since the stock market opened. Only eight companies have traded shares in more than half of the sessions for which they were registered.

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