* Eager to lose image as one of EU's most corrupt countries
* Agencies expected to be operational in 2011 * New specialised court being considered
SOFIA, July 29 (Reuters) - Bulgaria plans to set up two agencies to fight graft and organised crime, in an effort to improve its tarnished image as one of the EU's most corrupt countries, the justice minister told Reuters.
Bulgaria, along with neighbours Romania and Greece, is under pressure from Brussels to push through reforms to quell mafia-style crime and corruption.
The European Commission this month praised Sofia for pushing ahead with reforms of the judiciary but said it still needed to improve police and courts and better protect public funds against fraud and conflicts of interest.
In an interview, Justice Minister Margarita Popova said two new agencies to crack down on conflicts of interest and corruption should become operational from the start of next year.
"All local bodies rely on their internal inspectorates. These inspectorates in ministries, for example, are subordinate to the respective minister which means their independence is not guaranteed when carrying out checks for corruption and conflict of interest," Popova said.
"The possibilities of an independent body are always bigger and guarantee objectivity and more strictness," said Popova, an experienced former prosecutor who has been in her current position for a year.
One of the units will carry out checks for conflict of interest and impose administrative punishments such as fines or removals from posts, while the other will concentrate on preventing corruption in its early stages.
The centre-right GERB government which took power last July is determined to strengthen legislation to allow confiscation of unexplained wealth without a conviction, rather than only after sentencing as current law stipulates. This could be a major weapon against organised crime and corruption, Popova said.
The state commission for property acquired from criminal activity has frozen assets worth 500 million levs ($333 million) but Popova said virtually nothing had gone to the state coffers as the commission is still waiting for court judgements.
BRAKE ON GROWTH
Corruption and organised crime are still a blight on the Balkan country, 20 years after the fall of communism. Favouritism and the need to grease palms to secure deals are a deterrent to foreign investors and hold back economic growth. Sofia, which has been criticised by Brussels for the delays to important trials and the lack of sufficiently tough penalties, is also discussing the establishment of a specialised court to deal with key cases.
Popova said this could provide higher-quality justice by concentrating on a specific legal field.
Bulgaria, the poorest EU state, hopes that by pressing ahead with reforms and ensuring they are irreversible, it can shed its reputation for corruption.
"Such opinions are quite easily taken over and discussed and if no measures are taken to react, this issue keeps growing and these opinions tend to become a label glued to a country," the minister said.
"It takes a lot of effort, a lot of persistence, to show that this country is cleaning up its image." (Editing by Andrew Roche)
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