Bulgaria stripped of EU funds over graft

EU newcomer Bulgaria on Tuesday lost €220 million of European Union funds for failing to deal with corruption, the first time the EU executive has stripped a member state of funds in this way.

The European Commission urged Bulgaria - described by the watchdog Transparency International this year as the EU's most corrupt country - to take urgent corrective action or risk losing hundreds of millions more.

Bulgaria's Socialist-led government said the move was an "unexpected disappointment" and one government minister denounced it as "extremely unfair".

The Commission decided earlier this year to suspend €500 million in farm and road aid to Sofia over suspected fraud following its entry into the European Union in January 2007.

Yesterday's decision maintains the suspension, meaning Sofia will lose any uncontracted funds. "The contracting deadline is on November 30. The problem is that (the) 220 million can no longer be contracted," the Commission said.

EU Enlargement Commissioner Olli Rehn told a news briefing another €340 million of EU funds already committed to projects would be available for Bulgaria to use up until the end of 2009 - provided it tackled remaining shortcomings.