Budapest, November 9 (MTI) – Projects financed from European funds are “routinely overpriced”, said a report presented by Transparency International Hungary on Monday.

TI Hungary director Jozsef Peter Martin told a press conference that 60 percent of Hungary’s public procurement projects and 95 percent of state investment projects were financed from EU sources, adding that Hungary receives EU funding amounting to 1,000 billion forints (EUR 3.2bn) a year. He insisted that without those subsidies “Hungary would have neither growth nor public investments”.

Gabriella Nagy, TI’s programme chief, noted that the management of public procurement projects had been diverted from a national agency to ministries in 2014, and were supervised by the Prime Minister’s Office. Those changes, she insisted, had “centralised opportunities for corruption”.

According to TI, project budgets are over-planned, reimbursable costs are handled generously and authorities are not interested in rigorously checking disbursed amounts.

Laszlo Kallay, a university teacher and TI’s external expert, said that corruption “takes away resources from important projects” and “creates examples suggesting that success does not depend on actual performance”.

Areas financed from EU subsidies often have “abundant resources”, while the government’s communication suggests that “the primary goal is to spend those funds” and “cost efficiency hardly matters”. Monies spent through underhand practices will contribute to that tendency because it will increase the ratio of funds utilised, he insisted.

Overpricing is an “all-pervading corruption problem”, a “characteristic feature of the system”, the expert said. Fully 90 percent of the 63,000 projects implemented between 2007 and 2013 were probably overpriced, he said.

Referring to the most frequent corruption techniques, Kallay mentioned setting “meaningless” goals for projects or tailoring bid criteria to suit one specific bidder.

Nandor Csepreghy, state secretary at the prime minister’s office, said in a statement that there was “nothing new” in Transparency’s latest report. What TI has established is nothing more than what the government office chief, Janos Lazar, has emphasised ever since taking over the “state within a state”, the National Development Agency which he abolished in 2014.

“The development system established in 2007 was opaque, corrupt and left aside the interests of the Hungarian economy,” Csepreghy said, adding that what the government had been able to correct only to a degree in 2010 due to Brussels regulations had now been fundamentally overhauled in 2014.


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