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OLAF Report: Hungary Continues to Pose a Threat to EU Budget

Hungary continues to pose a prominent risk to the European Union through its use of EU funds, according to the newly-published 2021 report by the European Anti-Fraud Office (OLAF).

The report gives a rather damning indictment of Hungary’s willingness to pursue corruption cases: OLAF asked the Hungarian Public Prosecutor’s Office to investigate specific matters in 18 criminal cases, but 12 of the cases were not dealt with at all by the Hungarians and only four cases in total led to charges being filed.

The report notes that the European Public Prosecutor’s Office (EPPO) could play an important role in Hungary’s law enforcement, but the country is not an EPPO member. Chief Prosecutor Péter Polt told EU public prosecutors at a meeting in Vienna last month that Hungary “has not joined the organization for reasons of principle.”

A report by the Council of Europe’s Group of States Against Corruption (GRECO) was also recently published, similarly grading Hungary as “globally unsatisfactory” in the fight against corruption. GRECO’s report notes that only five of their 18 proposed recommendations were fully implemented by the Hungarian government. [Népszava]

Latest GRECO Report Finds Hungary’s Anti-Corruption Efforts “Unsatisfactory”

The Group of States Against Corruption (GRECO) has assessed Hungary’s performance in its most recent anti-corruption report as “globally unsatisfactory.” The GRECO report examines the prevention of corruption in matters involving parliamentarians, prosecutors, and judges in 49 European countries and the United States.

The report notes that only five of its 18 proposed recommendations have been fully implemented by the Hungarian government, with four having been partially implemented.

This proportion is in line with the results of last year’s report, which were also published in detail at the time. This year, however, its complete publication has yet to be approved by Hungarian authorities.

GRECO is an anti-corruption body set up by the Council of Europe that makes regular recommendations on how to reduce corruption risk in its member countries and monitors the implementation of these recommendations. [Telex]

“Everyone Knows” Hungary is an “Openly Corrupt Regime,” Says European Parliament VP

Katarina Barley, Vice President of the European Parliament, said that the request by the Hungarian state for billions of euros of aid in exchange for supporting the Russian oil embargo was “brazen.” She thinks that the European Union will have to decide on the sixth round of sanctions against Russia, which includes an embargo on oil, without involving Hungary.

In an interview with Deutschlandfunk, Barley said that there were four countries in the European Union that would be particularly hard hit by the effects of the oil embargo, the Czech Republic, Slovakia, Hungary, and Bulgaria, but she believes the European Union is trying to find a solution to the problem.

She stated, however, that Hungary was taking advantage of this situation to “get more money,” since recovery funds to Hungary have been blocked “because of the lack of the rule of law.”

The money should now be provided to Hungary in a different way, which will land in the pockets of Orbán’s family and his organization.

-said Barley, adding that the other three countries were willing to cooperate.

The Vice President pointed out that Foreign Minister Péter Szijjártó said that it would cost €15-18 billion (US $15.9-19.0 billion) for Hungary to develop its infrastructure to exclude the use of Russian oil. “It would be nice to know how they came up with this bill,” she added.

Just this month, we saw that the expansion and development of the entire highway system was once again given to Orbán’s best school friend, Mr. Mészaros, who is a plumber and the richest man in Hungary today.

-she stated, although Lőrinc Mészáros was in fact a gas-fitter before he became enriched by government contracts since Viktor Orbán came to power for the second time in 2010.

Barley noted that the highway tender was for 35 years and worth €14.4 billion ($15.2 billion), “so it is really an openly corrupt system. Everyone in Hungary knows this, and everyone in the EU knows it too.”

I find it brazen that they want €15-18 billion now, so that everyone knows where the money is going and who will be winning the tenders.

-she added. [Index]

EU Launches New Infringement Proceedings Against Hungary for Weak Anti-Corruption Laws

The European Commission has identified another corruption risk in the Hungarian legal system and has initiated infringement proceedings against Hungary, writes HVG‘s Eurologus.

According to the site, every year the Commission sends country-specific recommendations to the Hungarian authorities on the types of corruption risks can arise through the use of EU funds. However, the Hungarian government generally does not take the appropriate steps to comply with these recommendations.

The Commission decided to send a letter of formal notice to Hungary for failing to properly entrenching EU rules on the protection of the EU’s financial interests, which form a part of the Commission’s anti-fraud strategy.

HVG reports that there are issues in the Hungarian legal system regarding the provisions of the EU directive that define the concepts of criminal offenses (such as fraud, corruption and misappropriation), as well as sanctions and statues of limitations.

Hungary now has two months to respond, and if the concerns by Brussels are not resolved, the procedure will then proceed to the next stage. Apart from Hungary, Estonia, Malta, and the Netherlands also received letters warning them of similar concerns.

Four other infringement proceedings against Hungary have been initiated by the EU in addition to the current one, and are still in process. [Telex]

DK Turns to EU Anti-Fraud Office Over Suspected Corruption by Officials

The Democratic Coalition (DK) has lodged a complaint with the EU’s anti-fraud office, OLAF, over the abuse of funds among staff in the Ministry of Finance and Prime Minister’s Office, the party announced on Saturday morning.

The Central Investigating Prosecutor General’s Office launched an investigation at the end of April into suspected bribery and other crimes, including misuse of tenders. Certain employees at the Ministry of Finance and the Prime Minister’s Office have been connected with the scandal, in which they were able to obtain 10 billion Ft. (US $27.6 million) in aid from EU and Hungarian sources through corrupt criminal activities.

On Friday, it was revealed that the prosecutor’s office conducting the investigation had questioned 20 suspects, 12 of whom represented a company, and seven of whom were current or former ministry officials.

Sándor Rónai, DK’s representative in the European Parliament, called it shocking that:

In Hungary today, on the 18th anniversary of our joining the EU, money from the European Union intended for Hungarians can disappear in the depths of official rooms, and which could have been used to develop hospitals, schools, and roads, renovate buildings, or build playgrounds.

[Magyar Hang]

European Parliament Report on Fight Against Oligarchs Names Orbán and Inner Circle

picture of Viktor Orbán

Along with other EU members, Hungary’s name appears several times in a European Parliament report on combating oligarchic structures and protecting EU funds against fraud. The representative body approved a non-legally binding resolution proposed by Finnish People’s Party MEP Petri Sarvamaa by a large majority on Thursday.

[M]embers of national governments and other holders of political positions are part of the oligarchy in some Member States and have actively sought to use EU funds to benefit themselves financially

-reads the report, adding that “the occurrence of such oligarchic groups … has reached an unprecedented magnitude in the past several years,” and that the European Parliament “notes with extreme concern that politically connected oligarch networks can capture national media markets and interfere with the workings of democratic public spheres.”

Referring to “several exposes, surveys and investigative articles,” the report states that Viktor Orbán (pictured) has centralized and redistributed wealth to his inner circle through agricultural subsidies.

It also notes severe systemic weaknesses in the functioning of public procurement in Hungary, and points out that “during the period 2015-2019, Hungary was subject to the highest number of OLAF investigations closed with a financial recommendation of all the Member States.”

In a Wednesday evening debate on the report, German Green MEP Daniel Freund raised the issue of not only freezing the assets of Russian oligarchs, but also EU funds that go to the EU’s own oligarchs.

If we continue like this, Orbán’s oligarchs will even buy the last independent daily in Hungary.

-warned Freund on the dangers of doing nothing.

Sándor Rónai from the Democratic Coalition spoke about the fact that in view of the war taking place in Europe, the EU cannot eliminate its most cherished values ​​and aspirations:

We must work with all our might to stop government corruption, crack down on oligarchs, and above all, stop Putin’s servants, the destroyers of Europe.

-said Rónai.

In the report, MEPs urge EU institutions to take all possible measures to prevent oligarchs from taking over economic, financial, and political control.

The report also calls for more efficient data collection on the beneficiaries of EU funds, stricter rules to prevent conflicts of interest, and stronger measures against the misuse of agricultural subsidies.

[Népszava]

MKKP Adopting New Platform to Fight Corruption in Public Procurements

picture of Zsuzsanna Döme and Gergely Kovács

The Hungarian Two-Tailed Dog Party (MKKP) has gained in notoriety since its official registration as a political party in Hungary in 2014. Co-chaired by Zsuzsanna “Suzi” Döme and Gergely Kovács (pictured), the party is certainly better known for its offbeat sense of humor, wicked mocking of typical political slogans, and grandiose promises of “free beer” and “eternal life” than for its sober policy proposals.

However, MKKP seems to be getting serious about at least one thing: combating public corruption. Party members were elected to local municipalities in the 2019 municipal elections, and since then the party has had an insider look at how public procurements are conducted in Hungary.

Although the state spends a significant portion of Hungarian taxpayer money on procurements, the party believes the process is a breeding ground for corrupt practices.

To counter this, MKKP has drafted a 36-page plan on implementing a clean procurement system to limit the theft of public money that takes place when overpriced work is given to “friendly” companies.

As the party writes:

The public procurement system is currently designed so that in many cases only a narrow sliver of applicants can compete. Centralized procurement needs to be open to smaller companies. We are developing a system that automatically identifies and authoritatively manages directed (manipulated) public procurement. We would end low value calls for tender. We would guarantee transparency and the ability to compare bids by publishing contracts with subcontractors and technical specifications.

We would use data sheets that analyze central prices, so that the state knows what the average market price is and can check to make sure that the procurement bid does not deviate from this amount by several orders of magnitude. The evaluation committee will be responsible for comparing the bids that come in with this market price level. In setting up a public procurement research institute, we are creating a professional basis for guaranteeing that it is efficient and verifiable in the long run.

[444]

Hungary Had to Repay €7.8 Million to EU for Misuse of Funds

picture of stacks of euros

Átlátszó has learned that Hungary had to repay €7.8 million (US $8.9 million or 2.8 billion Ft.) of EU subsidies after irregularities with funds directed to the Öveges Program and other grants provided by the European Social Fund were uncovered.

In May 2012, the National Development Agency announced tenders for a total of 14 billion Ft. ($45.2 million) to improve high school science education through the Öveges Program.

Independent MP Ákos Hadházy drew attention to the misuse of funds with the Öveges program in 2014, but now it has become clear that this is not the only project funded by the European Social Fund (ESF) that has had problems with its accounting, although Átlátszó does not name them.

The Öveges case was investigated for seven years under the suspicion of major budget fraud. The Prosecutor’s Office filed charges, but it is still not known when those charged will appear in court.

Hungary’s tax authority NAV began investigating the Öveges program but let it go stagnant for several years. The case finally reached the prosecution stage last year, during which it pressed charges against three suspects but recommended suspended prison sentences for them. [HVG, Átlátszó]

Two Days After Deadline, Hungary Responds to European Commission Corruption Concerns

picture of Ursula von der Leyen

The European Commission has received a response to the administrative letter it sent to Hungary, Commission Spokesperson Balázs Ujvári confirmed to Népszava.

The letter that the Brussels-based body sent to Budapest in November referred to suspected corrupt transactions and systemic irregularities. The Commission’s concerns could ultimately lead to launching a procedure that levies financial penalties against Hungary.

Among other things, the Commission inquired about real estate development projects around the Balaton region, state land auctions, public universities being taken over by foundations, the planned sale of Budapest Airport shares, as well as the lack of transparency in public procurements and the risks associated with conflicts of interest.

Although the Orbán government was given two months to reply to the letter, it did not send an answer to the European Commission until this Thursday, two days after the deadline.

The exchange of letters is not part of the rule of law procedure, and at the moment is only an informal inquiry to provide insight to the Commission’s decision-makers, but it indicates the fundamental problems that could lead to the imposition of a new sanctioning instrument against Hungary.

The law stipulates that EU Member States can be fined if their failures to uphold the rule of law are found to directly harm the common EU budget. One example of this could be when the Member State’s judiciary does not investigate or penalize the misuse of EU funds.

The regulation specifying the rule of law procedure has been in force for a year, but the European Commission cannot enforce it until the matter is taken up by the European Court of Justice, which is expected to issue a ruling on February 16. If the court strengthens the rule of law mechanism, the College of Commissioners may initiate the first steps toward sanctioning the rule-breaking country.

In addition to Hungary, the Commission also sent an administrative letter to Poland, which the Mateusz Morawiecki government has recently responded to.

[Népszava][Photo: President of the European Commission Ursula von der Leyen]

Transparency International: Hungary Second-Most Corrupt Country in EU

picture of infogram

According to Transparency International (TI), Hungary became slightly more corrupt last year than in 2020.

The NGO generates corruption scores for every country in the world through 13 different surveys and assessments, and releases the annual findings in its Corruption Perceptions Index report. States are scored on a scale from 0 to 100, with 100 indicating the least level of corruption in a country and 0 the highest.

Transparency claims that its corruption index “is the most widely-used global corruption ranking in the world. It measures how corrupt each country’s public sector is perceived to be, according to experts and businesspeople.”

Hungary scored 43 on the index for 2021, which is one point lower than the previous year’s number. Within the European Union, Bulgaria barely edged out Hungary with 42 points to claim the title of the most corrupt Member State in the EU, with Hungary in second place, as ranked by the anti-corruption organization. TI puts Hungary in 73rd place out of a total 180 countries surveyed, with Bulgaria in 78th place.

Transparency has been releasing its Corruption Perceptions Index results since 1995, and the latest report shows the lowest score they have ever given Hungary. But it wasn’t an historic year only for Hungary, as Switzerland (84), the Netherlands (82), Belgium (73), Slovenia (57), Poland (56), and Cyprus (53) also received their worst corruption scores since the group began tracking them.

Together with Luxembourg, Poland, and Cyprus, Hungary was also highlighted in the summary as a European country where the corruption situation has significantly deteriorated since 2012. TI states that the Hungarian government has used the epidemic to justify further consolidating its power and restricting freedoms, particularly media freedom and the freedom of expression.

By comparison, Austria, Estonia, Latvia, Italy, and Greece have made progress over the last ten years, although the last three years have seen a decline in Austria’s performance. Their research shows that the most corrupt country in the world is South Sudan with 11 points.

The world’s least corrupt countries are Denmark, Finland, and New Zealand with 88 points each, and Norway, Singapore, Sweden, Switzerland, the Netherlands, Luxembourg, and Germany rounding up the top ten. [444]

[Image: transparency.org]

Government Quietly Postponed Its Anti-Corruption Commitments Last Year

picture of arrested person

The government has postponed completing the anti-corruption measures it had committed to undertaking despite the fact that they weren’t all that ambitious in the first place, writes watchdog NGO K-Monitor. Just three days before Christmas, a number of deadlines in the government’s national anti-corruption strategy were extended without announcement.

On December 22, the deadlines for most of the measures intended for 2020-2022 were postponed to 2023. This means that creating a database of positions prone to corruption and launching an automated system to reduce administrative involvement in making aid-related decisions will have to wait a few more years.

According to K-Monitor, no justifications need to be attached to government decisions, so the reasons for the delay are not known. And the news section on the government’s anti-corruption website has not been updated since July last year.

The government decided to adopt a medium-term anti-corruption strategy in 2020, consisting of analysis, evaluation, and training measures to combat corruption risks.

At the strategic level, reducing the influence of public procurement, increasing transparency, and requiring public servants to declare their assets were addressed between 2015-2018. While no major progress has been made in these areas, K-Monitor writes that a large amount of effort has been put into “increasing the transparency of civil organizations,” which stigmatizes NGOs who receive financial support from abroad. [Magyar Hang]

MSZP Chair Suing European Commission Over Elios, Says the EU Is “Covering” for Orbán

picture of Bertalan Tóth

Bertalan Tóth, co-chair of the Hungarian Socialist Party (MSZP, pictured), announced on Facebook yesterday that he was taking legal action against OLAF, the European Commission’s anti-fraud office. Tóth’s grievance against the EU agency is over their investigation into Elios Zrt., which was previously owned by the Prime Minister’s son-in-law, István Tiborcz.

The MSZP politician has been trying for months to obtain OLAF’s files on their investigation into the Elios case through a public interest request, but to no avail.

The document, entitled “Rapport final de l’Office européen de lutte antifraude (OLAF) OF/2015/0034/B4 relatif aux activités d’éclairage public de Élios Innovatív Zrt.,” contains everything that EU fraud investigators have learned about the case, but they aren’t willing to share it.

Tóth requested the document in early September last year. The deadline for processing his request was then extended in October, and after that he hasn’t heard anything from Brussels one way or another. He believes the information should be released and that they should have at least provided justification for their passivity, and is launching a lawsuit against the Commission in the European Court of Justice to force the matter.

Investigative outlet Direkt 36 first wrote about the Elios case back in 2015. István Tiborcz’s former company had begun upgrading public lighting in several municipalities with EU money not only at vastly overinflated prices, but Elios personnel had also taken part in setting up the public procurements.

The scandal grew to such an extent that the Hungarian government finally withdrew the program from its list of EU-funded investments, and instead provided funding for it from its own resources to stave off Brussels from levying fines against Hungary.

Tóth stated that it was incomprehensible why EU bodies were “covering” for the Hungarian government over this matter.

[444]

Under Indictment for Corruption, Fidesz MP Simonka Declines Re-election Bid for 2022

picture of György Simonka

Fidesz MP György Simonka (pictured), recently caught nodding off during a Parliamentary session in October, has announced that he will not run for re-election in Békés County’s 4th electoral district next year.

“No proposal was made at the Fidesz electoral district meeting in South Békés tonight for the candidate to run in the 2022 Parliamentary elections,” Simonka wrote in a statement uploaded to his website, adding that the Electoral Ethics Committee will have to weigh in with a decision first.

The MP was indicted in 2019 for committing budget fraud and other crimes as part of a criminal organization causing serious monetary damages. According to the indictment, Simonka and his accomplices attempted to illegally obtain EU and domestic tenders for fruit and vegetable producers and their organizations. At a preliminary court date in January last year, eight of the 33 defendants pleaded guilty and four arranged plea bargains with the prosecution, but Simonka has denied all charges against him.

However, it appears that the case has worn the Fidesz MP down:

The polls show Fidesz can win the South Békés district, but not with me. Already at the beginning of last year, I asked not to run as a candidate, because the upcoming campaign would then be about nothing more than my ongoing court case. Neither my family nor the community needs this. My family also gave me an ultimatum … Although my name is among the candidates – which I again thank everyone for – I have chosen to meet the expectations of my family and party and will recuse myself from nomination.

At the end of the announcement, Simonka listed some of his achievements and wished much success to his successor.

According to weekly Magyar Narancs, Norbert Erdős, state secretary overseeing grocery chains in the Ministry of Agriculture, has the best chance to get the party’s nomination for Simonka’s seat in Parliament.

[Telex]

Hadházy: Criminal Investigation into Another “Big Fish” Underway

picture of Ákos Hadházy

Independent MP Ákos Hadházy (pictured) reported a “great disturbance in the force” on social media, referring to his recent correspondence with the Prosecutor General on their current investigations.

After Pál Völner resigned as State Secretary earlier this week when the Prosecutor’s Office requested revoking his Parliamentary immunity, the office now confirmed to Hadházy that an investigation into another “very big fish” was underway.

Prosecutor General Péter Polt told the opposition politician that not only were they investigating a certain public procurement case, but that they already had a suspect.

Since they admitted that National Tax and Customs Administration (NAV) was investigating “budget fraud committed in a business-like and criminal manner, causing significant damages,” Hadházy presumes that the case may be connected to SYS IT Services Kft. and a contract it won at the end of 2019, during the final months of the previous administration of Budapest Mayor István Tarlós.

Hadházy writes that SYS IT Services received a contract for “computer development and operation tasks” for 19 billion Ft. (US $58.8 million) from the Budapest Transportation Company, which it then subcontracted out to 4iG and Magyar Telekom. However, he writes, “the subcontractors did not complete the work, or not completely, but still billed for it at taxpayers’ expense.”

However, 4iG told HVG that they were unaware of any NAV investigation against them, and T-Systems also claimed not to know any information of a case against them.

According to Hadházy, many details still need to be clarified, but this is again a good example of the fact that “a single decent detective or prosecutor who will not let the case slip away is enough to see it through.”

[Magyar Hang][Photo: Ákos Hadházy / Facebook]

Karácsony Will Give 1 Million Ft. of Own Money for Proof of Corrupt Tender

picture of Gergely Karácsony

I will give 1 million forints out of my mayoral salary to anyone who can find any trace of abuse of public tenders regarding the use of property in the capital

-announced Budapest Mayor Gergely Karácsony (pictured) on social media to commemorate World Anti-Corruption Day.

To win the money, you have to provide proof that a public tender was clearly anti-competitive or otherwise tailored to a specific applicant. Karácsony said that they had nothing to hide, and that pro-government journalists, ordinary civilians, and even political parties could all give it a shot.

The mayor’s offer stems from accusations in the pro-government press over the past few weeks that the opposition-led Budapest City Council would sell the City Hall building under corrupt circumstances, but the mayor said no such thing had happened. Nevertheless, a committee was set up to investigate the matter at the instigation of government parties in the city council.

The mayor recalled that State Secretary Pál Völner is now facing bribery charges while György Schadl, the President of the Hungarian Judicial Enforcement Office, has been arrested.

Now it’s Fidesz’s turn to set up a Parliamentary commission of inquiry on the matter, but they haven’t done so. However, it could uncover interesting connections in the capital. For example, how did the key figure in the Völner case get a valuable piece of property on City Hall Street from a decision by the Fidesz mayor of the 5th district under unclear circumstances? So we have here an actual City Hall case and a good reason for Fidesz to make a real effort at fact-finding

-said Mayor Karácsony.

“Meanwhile,” he said, “The Russian-style ‘kompromat’ continues – Fidesz oligarchs wanted to snatch City Hall, but we won’t let them have it.”

It shouldn’t only be said on World Anti-Corruption Day, according to the mayor, that:

It is in Hungary’s eminent interest that the elimination of corruption be a condition for the country’s prosperity. And we also have to say what is now quite clear after the Völner case: the eradication of corruption begins here and now by changing the government.”

[Magyar Hang][Photo: Gergely Karácsony / Facebook]

Facing Bribery Charges, Fidesz MP István Boldog Resigning to Spend More Time With Family

picture of István Boldog

I will not run in the 2022 Parliamentary elections, and will work to ensure that the candidate selected by the Fidesz executive and membership wins the election in the district.

-announced Fidesz MP István Boldog (pictured), who has been charged with bribery and other crimes by the Prosecutor General.

Boldog felt that the time had come to consider his family paramount. He thanked everyone for their support and said he would continue to help all who had worked on his behalf.

At the age of 55, after close to 30 years in politics and 12 years in national politics, I had to make the decision to put my family first, at my family’s request and for their benefit.

-said Boldog in a video posted to Facebook titled “Family is most important,” adding that his family had long been asking him to get out of national politics and find work in the private sector instead. Although he believes he has many supporters, Boldog said his family managed to win him over.

The Fidesz politician expressed pride in being the first politician from the Mezőtúr district to be elected to Parliament three times since the change of regime. Tamás Csányi from Jobbik would have faced off against Boldog in the general election as the candidate for the joint opposition.

At the end of June, István Boldog and eight of his accomplices were indicted for crimes that included accepting bribes in an official position. The Prosecutor’s Office asked the court for a six-year prison sentence and a 5 million Ft. (US $15,500) fine for the Fidesz MP, in addition to a five-year ban on public office and 6.6 million Ft. (US $20,400) of his assets confiscated.

Boldog has steadfastly denied the charges against him and maintained his innocence. In January, he claimed to be the victim of “an ugly political campaign.”

[Telex]