Europe’s anti-fraud office identifies metro 4 fraud

Budapest, January 16 (MTI) – Around 167 billion forints worth of damages have been identified by Europe’s anti-fraud office OLAF in connection with Budapest’s fourth metro construction project, and the European Commission could levy a fine on Hungary of 76.6 billion forints (EUR 249m), a government official said on Monday.

Nándor Csepreghy, parliamentary state secretary for the prime minister’s office, told a news conference that the metro project had been the most corrupt case in the history of Hungary’s 13-year European Union membership. He said that OLAF had identified almost 167 billion forints had been either “stolen or squirrelled away”, and this money should be recovered for the European and the Hungarian authorities.

The total cost of the project was just over 452.5 billion forints, he said, adding that OLAF had identified irregularities and corruption around contracts worth more than 272.8 billion forints.

Out of this sum, 76.6 billion forints was handed over by the EU in development funds, and Brussels could demand it back, he said.

The Hungarian government received OLAF’s report on its investigation into the project on Dec. 14 last year. The anti-fraud office questioned around 50 people over the course of its investigation, mainly former leading officials of Budapest public transport company BKV and the mayor’s office. It also looked into money trails associated with the private individuals and legal persons tied to the case, Csepreghy said.

The report identifies several private individuals and companies accordingly. The companies include DBR Metro Project Igazgatosag, Euro Metro, Strabag, Siemens, Alstom, Hidepito, the Bilfinger-Porr-Vegyépszer consortium, Swietelsky and the Bamco consortium. Out of the private individuals tied to the case, two are named in connection with the interior design of the metro stations. One of them was a deputy mayor of Budapest before 2010 and the other is the former CEO of BKV, Csepreghy said. The contracts associated with this part of the project were worth 40 billion forints, he added. Individuals named in connection with contracts dealing with the metro’s power supply include the supposed owner of Media Magnet, the former head of Hungarian rail company MAV and a leading staff member of Eurometro. Contracts concerning this part of the project were worth 32 billion forints, Csepreghy said.

OLAF identified irregularities and signs of corruption in connection with 57 contracts concerning the project, the state secretary said, adding that 96 percent of the damages identified can be tied to just five of those contracts. Twenty-eight of the contracts in question were financed by EU funds and 29 by loans taken up by the government and the mayor’s office from the European Investment Bank.

The irregularities in question also concern the procurement of the Alstom metro trains, and therefore the capital’s second metro line, as well, which runs the same type of trains, he said. If Brussels were to modify its findings in the future, the value of the damages may rise by tens of billions of forints, he added.

He said the government’s legal advisors were assessing the possibility of releasing OLAF’s report to the public in full, adding that the government was “fully committed” to publishing it.

Csepreghy told today’s news conference that the government would file a criminal report and it expected to hand it to the public prosecutor by the end of this week. The aim is to try to get those who are responsible for the damages to pay them, he said.

From receipt of the Hungarian-language version of the OLAF report, the government has two months to provide a substantive response, he said. The commission will then have a maximum of four months to form its standpoint and decide on any future action.

An MEP of the opposition Dialogue party called for the full disclosure of the OLAF report. Immediate responsibility should be declared, regardless of party affiliation, Benedek Jávor said in a statement. The gravity of the scandal surrounding the fourth metro was such that “there should be no further room allowed for cover-ups”. He said he agreed with Csepreghy that the project “reeked of corruption”, citing massively inflated construction costs mounting throughout and the opacity of the project’s procurement process.

The opposition Democratic Coalition said today that it demanded the government immediately release the OLAF report. The party’s city council representative Erzsébet Gy Németh said she could not understand why it would be in the cabinet’s interest not to release the document. She insisted that the government had already disputed the outcomes of European investigations into “earlier corruption” cases, yet now they would be prepared to pay the fine in order to “make an example of the previous city leadership”.

Were it the case that the report related to the project under the governments prior to 2010 rather than to the ruling Fidesz party, then the document would have formed the basis for “Fidesz propaganda”, she insisted. The corrupt individuals, regardless of whether they happen to be Fidesz politicians or not, should be the ones punished, Gy Nemeth said.

The opposition Együtt party said the case surrounding the metro 4 project highlighted the need for an EU public prosecutor’s office. If the Hungarian authorities are incapable of protecting Hungarian and European taxpayers, there is a need for a new institution, Márton Pataki, head of the party’s Budapest chapter, told a press conference. The news surrounding the fourth metro line indicates that the Hungarian prosecutor’s office led by Péter Polt, along with the country’s justice system, are “near collapse or have already failed”, he said.

Photo: Daily News Hungary

Source: MTI