By Tsvetelia Tsolova
SOFIA (Reuters) - Bulgarian prosecutors on Tuesday said former Interior Minister Tsvetan Tsvetanov had allowed employees in his ministry to commit crimes in a growing wiretapping scandal dubbed "Bulgaria's Watergate".
Analysts said the case was undermining public confidence in political institutions in the EU member state and was likely to dent support for the largest political party, the center-right GERB, ahead of parliamentary elections on May 12.
"Tsvetan Tsvetanov, as a minister of the interior, has deliberately allowed his subordinates, the directors of the wiretapping department, to commit crimes," state prosecutors said in a statement.
"This conclusion is consistent with the interior minister's obligation to control the use of special intelligence equipment," it said.
Tsvetanov has denied any wrongdoing and has repeatedly said he was not aware that interior ministry officials had wiretapped phones illegally or had not followed rules.
He declined to comment on the prosecutor's latest move before he had time to read through its findings, according to local reports.
Tsvetanov, GERB's second most senior politician, cannot be charged at present because he is immune from prosecution as a parliamentary candidate, even though Sofia City prosecutors said in a statement they had collected enough evidence against him.
After the vote, in which GERB looks set to be the biggest party but without a majority, prosecutors will see if Tsvetanov is still immune or if they can ask the new parliament to lift his immunity in order to press charges.
GERB resigned from the government after mass protests against low living standards in the European Union's poorest country in February, prompting next month's election.
HUNG PARLIAMENT MORE LIKELY
In an interview with the private Bulgarian BTV channel last week, former GERB Agriculture Minister Nikolai Naidenov said Tsvetanov had been tapping mobile phones of ministers in the GERB cabinet as well as of political opponents.
GERB's leader and former prime minister, Boiko Borisov, has stood by Tsvetanov and expelled Naidenov, charged with corruption last month, from the party ranks.
Prosecutors are also to question Borisov following leaked tapes of an alleged conversation between him, Naidenov and a senior prosecutor discussing the probe against Naidenov, which raised questions over the independence of the judiciary.
Sofia City Prosecutor Nikolai Kokonov resigned after the tapes were leaked to media and prosecutors.
The scandal, and its possible impact on GERB's popularity, makes a hung parliament even more likely than it was, and with the main parties reluctant to work together, Bulgaria may face months more of political instability and policy deadlock.
Bulgaria needs to keep its debt low and confidence in government high in order to sustain its currency peg to the euro, and questions over the next government may alarm investors already rattled by protests that toppled the last government.
(Reporting by Tsvetelia Tsolova; editing by Mike Collett-White)