* Eager to lose image as one of EU's most corrupt countries

* Agencies expected to be operational in 2011
* New specialised court being considered

By Irina Ivanova and Sam Cage

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)