Budapest Airport loan faces OLAF investigation: Allegations of misconduct surface

OLAF, the European Union’s anti-fraud office, is investigating alleged serious misconduct involving European Investment Bank personnel regarding a EUR 200 million loan to Budapest Airport in 2018. Former Vice President of the European Investment Bank, Vazil Hudák, has been questioned by investigators examining the transaction.

According to Politico, OLAF officials raised concerns about whether the project fully complied with the European Investment Bank’s (EIB) social and environmental standards. Additionally, they questioned whether Hudák had influenced the bank staff not to consider certain criteria during the loan evaluation process. OLAF investigators questioned former EIB Vice President Vazil Hudák in Brussels regarding his involvement in approving the loan.

The former vice president was also asked about his election to the airport’s board of directors and concerns over a potential conflict of interest due to a lack of adherence to the required “cooling-off” period for job changes. These inquiries followed a complaint alleging that Hudák may have received personal benefits from approving the loan. Vazil Hudák denied these allegations describing them as untrue and misleading, while OLAF declined to comment on the investigation.

Complaints from Non-Government Organisations

Following complaints from two non-government organisations (NGO) in March 2020, the European Investment Bank‘s internal complaints procedure found shortcomings in the assessment of the project’s climate impact and the airport’s engagement with the local community.

In October 2021, the bank’s complaints department reported that Budapest Airport had not conducted a proper environmental assessment for parts of the project already under construction. Budapest Airport claimed it had a “block exemption” from such assessments but the bank found no evidence of this.

The complaint highlighted the project’s failure to consider climate-related impacts as required by EU law and recommended conducting due diligence and addressing noise pollution. Despite these complaints, the EIB continued funding the project.

When questioned about the EIB’s decision to proceed with the loan despite the absence of environmental assessments, Hudák stated that the loan had been “drafted by EIB staff and endorsed by both the EIB management committee, functioning as a collective decision-making body, and the board of directors” in an e-mail.

The board of Budapest Airport

The European Investment Bank faces controversy due to Vazil Hudák’s announcement of joining the board of Budapest Airport in January 2020 just three months after leaving the EIB. This move raised concerns because EIB’s internal rules required a 12-month “cooling-off” period for vice presidents before taking positions with potential conflicts of interest.

Although Hudák claimed his appointment awaited EIB approval and later resigned from the board in April 2020 due to the EIB’s refusal to endorse it, the Ethics Committee’s decision prohibited the former vice-president from holding the position during his grace period. Even though Hudák has resigned, he plans to rejoin after the cooling-off period ends.

However, Xavier Sol, the former director of NGO Counter Balance, an investment bank watchdog, and Anna Roggenbuck, Bankwatch’s EIB policy officer, call for the freezing of further funding for the airport until the EIB clarifies the situation, but the European Investment Bank stated that it is bound by contractual obligations and will continue to allocate funds as long as contract conditions are met.

Budapest Airport Responds

The operator of Ferihegy Airport has not remained silent amidst the EIB’s investigation into the loan. Budapest Airport Zrt. has confirmed to Világgazdaság the approval of an EIB loan with approximately 2/3 already utilized for development, epmhasizing compliance with EIB and legal requirements, including permits. They clarified that the EIB investigation focused on internal procedures rather than subtantive issues with similar investigations ongoing in other European countries. Budapest Airport has cooperated fully in the investigation addressing all concerns raised during the audit. No specific comment was provided regarding Vazil Hudák’s role.

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