European Anti-Fraud Office’s (OLAF)

Govt publishes OLAF report, blames previous cabinets for corruption scandal

Budapest, February 3 (MTI) – Findings of an investigation by the European Union anti-fraud office (OLAF) “clearly shows” that the previous, Leftist governments and Budapest’s earlier management are to blame for the corruption scandal around the construction of the city’s fourth metro line, state secretary Nándor Csepreghy said on Friday, after the government published the OLAF report on its website.

Csepreghy noted that publication of the English-language document had been delayed by data protection considerations.

The state secretary called the cases of alleged corruption identified in the report the “largest corruption scandal of the past 13 years” due to which the country will probably have to repay a total 59 billion forints (EUR 191m) to the European Union, which the community had contributed to the project.

The M4 project, completed in 2014, cost a total 452 billion forints, of which 272 billion is suspected to have been used illegally, while another 166 billion forints “were stolen”, he said.

Csepreghy insisted that “all but one” of the suspicious contracts involved in the project had been signed before 2010, and concluded that “the most corrupt project of all times” is linked to Leftist governments.

The government is seeking ways to reclaim the amount to cover the possible European fine from “affected politicians and companies,” Csepreghy said.

The opposition Socialists welcomed publication of the report and voiced hope that “the document is authentic”. In a statement, the party called for an “unbiased and impartial” investigation. “Those proven guilty should go to jail and repay the money,” the Socialist statement said.

Jobbik said that perpetrators of the alleged graft should be identified. Municipal Jobbik representative Marcell Gergely Tokody said it should be ascertained who signed the contracts with the companies in question, and called it “outrageous” that nobody has been indicted yet.

You can read here the English-language document! 

UPDATE

Green opposition LMP urged immediate public investigations into the case.

“I can honestly say that I want to see heads roll into the dust,” Budapest councillor Antal Csárdi said, calling the case “Europe’s biggest corruption scandal”. He said political players presented in a negative light in the report should draw the necessary conclusions from the scandal and accept political responsibility. Hungary cannot continue to be a country where nothing has consequences, he said. Csárdi said LMP would review the report and file the criminal complaints it deems necessary if the municipal council leadership failed to do so.

The leftist opposition Democratic Coalition (DK) commented on the report saying that “those who steal belong in prison, regardless of their political party.” DK spokesman Zsolt Gréczy said in a statement that the data the party had reviewed thus far indicated that both the pre-2010 leadership and the one in charge since 2010 were implicated in the scandal. The report also names former Socialist Prime Minister Péter Medgyessy as a person concerned in the case, he noted. Gréczy said the current government could also be held accountable for its alleged role in the case.

Medgyessy, who was prime minister between 2002-2004, confirmed on Friday to news portal index.hu that OLAF had contacted him in connection with the metro 4 case.

He told the portal that after having been contacted by OLAF he had responded as stating that he had never been in either direct or indirect contact with Alstom at all.

He called it “incomprehensible and beyond rational thinking” to suggest that he could have had any influence on the Budapest city assembly on the conclusion of a contract with Alstom, arguing that it had been known that he had maintained “rather bad relations” with his successor, Ferenc Gyurcsány and politicians of the allied ruling Free Democrats at the time.

“It is utter nonsense [to suggest] that I could have had any role to play in concluding the contract with Alstom considering that I was not serving as prime minister any more in 2005 when the first tenders for the metro 4 projects were announced, nor in 2006 when the first bids were invited,” he told the portal.

Medgyessy said he had not been either owner or associate of AssistConsult Kft when the company concluded a contract with Alstom.

He said he had bought the company back in 2006 after his parliamentary mandate expired, but had no authority to cancel the existing contract.

Prosecutor: Hungary investigates all OLAF reports

Daily News Hungary

Budapest, January 25 (MTI) – The prosecutor’s office said on Wednesday that it had launched investigations into every report it had received from the European Union’s anti-fraud office (OLAF).

The prosecutor’s statement came after Democratic Coalition MEP Csaba Molnár said earlier in the day that Hungary was the only EU country that had never investigated any reports from OLAF. Molnar called it “suspicious” that the Hungarian government had ordered an investigation into irregularities recently uncovered by OLAF in connection with Budapest’s fourth metro construction project.

The prosecutor denied Molnár’s claims, describing them as “falsehood”. The office said it had forwarded OLAF’s findings to authorities that had already been investigating various aspects of the metro construction project. OLAF also took into account the findings of those investigations for its own report, the office added.

The office said it had received a total of 28 reports indicating suspected criminal activities from OLAF between 2012 and 2016, all of which had been or were being investigated.

Budapest mayor urges publication of OLAF report on Metro 4

Budapest, January 24 (MTI) – Budapest Mayor István Tarlós has called it “unfortunate” that a report by the European Union’s anti-fraud office (OLAF) concerning suspected corruption involved in the construction of Budapest’s fourth metro line has not yet been published, daily Magyar Idok reported on Tuesday.

Publication of the document would put an end to the “chaos, double-talk, and attempts to shake off responsibility”, the paper quoted Tarlós as saying.

In the document, OLAF listed 78 instances in the metro project in which criminal activities were suspected, Tarlós said, insisting that all but one had been committed before 2010.

On the subject of Budapest’s 2024 Olympic bid, Tarlós was asked why he had changed his mind from a negative to a positive stance. He noted that the International Olympic Committee had changed bid conditions in 2015, improving the chances of cities like Budapest to successfully host the Games. He added that many people were mistaken to believe that Hungary and Budapest would foot the bill alone, and the IOC would contribute large amounts of funding to help Hungary finance the games. He also noted the potential in sponsorship and private investment. “Budapest can only do well out of it,” Tarlós insisted.

Photo: Daily News Hungary

Budapest mayor: Fine for metro 4 fraud could be lower than first projected

Budapest (MTI) – The fine Hungary is expected to receive from the European Commission for irregularities uncovered by Europe’s anti-fraud office OLAF in connection with Budapest’s fourth metro construction project could be lower than originally projected, Budapest’s mayor said on Friday.

The 76.6 billion forints (EUR 250m) initially projected by the government is “an extreme”, and is unlikely to be the actual fine, István Tarlós told a press conference. The fine will likely end up being “more like 59 billion”, he added.

 

The government has the full support of the capital and is prepared to assist in “any legal action aimed at reducing the sum that will have to be paid back”, Tarlós said. The EC has yet to issue a decision on the matter, Tarlós said.

Budapest public transport company BKV and DBR Metro Project have a case to get the EC to lower the fine, Tarlós said. Hungary “cannot miss out on this opportunity” and should challenge the fine regardless of how big it is, he added.

Commenting on an ongoing initiative to hold a local referendum in connection with Budapest’s bid to host the Olympic Games in 2024, Tarlós urged those “who love the city” not to support the initiative to drop the bid, arguing that the capital would benefit from staging the event.

Photo: MTI

Orbán’s cabinet: Socialist-Liberal city leaders bear responsibility for metro 4 scandal

Budapest, January 20 (MTI) – It is clear that the previous Socialist-Liberal leadership of Budapest’s municipal council bear political responsibility for the corruption scandal surrounding the construction of the city’s fourth metro line, the government spokesman told public radio on Friday.

Zoltán Kovács said it was “absolutely clear” that the city leadership at the time, the then national government and international companies had conspired together in a crime, and all elements of the case must be explored. “But this is not the job of the government,” he insisted.

Due to the half a dozen or so crimes and regulation violations identified by Europe’s anti-fraud office (OLAF), however, the government had no other option than to file a criminal complaint, he added.

Asked about whether the Hungarian justice system should be seen in a critical light given the results of the OLAF report, Kovács said: “Perhaps several issues should be considered in terms of the extent of internal investigations and the rigour of controls.”

On the topic of illegal migrants, the spokesman said the migrants systematically abuse European laws and it was important to find a legal solution to ensure that in the period during which migrants await a legally binding decision concerning their status, they should not be able to move about freely in Hungary. In between the initial and final court ruling, migrants often illegally move on to western Europe, he added.

Photo: WikiCommons

Central prosecution investigating Alstom case

Budapest, January 19 (MTI) – The central investigating chief prosecutor’s office (KNYF) is conducting a full-scale investigation into the case concerning French engineering company Alstom’s contracts for the Budapest metro, based on recommendations by Europe’s anti-fraud office OLAF, the chief prosecutor said on Thursday.

OLAF launched a probe into the case in February 2012, in which a criminal investigation had been started by Hungary’s bureau of investigation in January 2011 on charges of fraud, Imre Keresztes said in a statement.

OLAF submitted its report with recommendations to the Hungarian chief prosecutor in November last year which was then referred to the KNYF, he said.

Keresztes noted that the Hungarian authority had questioned several suspects in connection with the case in October 2016.

The deadline for the KNYF to conclude its investigation is April 3 this year, he said.

Nándor Csepreghy, parliamentary state secretary for the prime minister’s office, announced on Monday that around 167 billion forints worth of damages had been identified by 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).

He said the metro project had been the most corrupt case in the history of Hungary’s 13-year European Union membership. Irregularities had occurred during the period of former Socialist-liberal governments of the country and the city of Budapest before 2010, he said earlier.

Photo: Daily News Hungary

Budapest Mayor: Metro fraud probe concerns pre-Fidesz period

bkk-m2-metro-budapest alstom

Budapest (MTI) – The investigation by Europe’s anti-fraud office OLAF into the construction of Budapest’s fourth metro line almost exclusively concerns the period before Fidesz took over the local council, Budapest Mayor István Tarlós has said.

OLAF identified 80 issues in its probe and only one falls beyond the 2005-2009 period in which the Socialist-Liberal coalition controlled the city, Tarlós told commercial broadcaster ATV late on Tuesday.

 

Tarlós said he hoped the government would publish the OLAF report which he said was not in his possession. He insisted, however, that he had access to authentic information.

Hungary could be fined almost 77 billion forints (EUR 250m) for violations based on the OLAF report, government officials said earlier.

The number four metro line was inaugurated in 2014 after eight years of construction. The 7.3km line with ten stops cost 452.5 billion forints to build and was supported with 180 billion forints in European Union grants.

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

Criminal proceedings under way in cases referred by OLAF

Daily News Hungary

Budapest, October 24 (MTI) – Criminal investigations are under way in 24 cases referred by the EU’s anti-fraud office OLAF to the Budapest prosecutor’s office. Most of the cases since since 2012 refer to tax fraud and embezzlement of state and EU funds, a spokesman for the prosecutor’s office said on Monday.

Géza Fazekas said the authority brought charges on Monday against two company directors who won 178 million forints (EUR 578,000) in a tender involving state and EU funding for upgrading forestry equipment on the north of Lake Balaton in western Hungary. An investigation by OLAF however revealed that the company had invested a much lower amount in the project and submitted false invoices, Fazekas told MTI.

In January the prosecution had already pressed charges in another case referred by OLAF involving 110 million forints in central funds won by a 49-year-old man for a project aimed at upgrading a “hydrotherapy treadmill” for dogs which never got off the drawing board, Fazekas noted. The suspect had submitted fictitious invoices with the involvement of two accomplices.

Another OLAF referral, in 2012, concerns the abuse of funds in connection with a project of printing machines, Fazekas noted. In this case charges were brought against two suspects in 2014 and a non-binding ruling handed down by a lower court in April 2016. The primary suspect was sentenced to a year in prison suspended for two years, while the accomplice was fined, he said.

Fazekas noted that Chief Prosecutor Péter Polt had met OLAF’s director general in Budapest in June last year. Giovanni Kessler presented final reports on OLAF’s investigations into several major cases. The sides deemed the cooperation of the two authorities excellent, Fazekas said.

DK complains to OLAF about referendum campaign leaflets

Budapest, September 28 (MTI) – The opposition Democratic Coalition (DK) has contacted the European Commission’s anti-fraud office (OLAF) to complain about leaflets “blackmailing” local residents to vote ‘no’ at the referendum on European Union migrant quotas by suggesting that otherwise the government would take away EU funding from their locality.

This “threat” came from the mayor of Győrújfalu, in northwest Hungary, László Varjú, DK’s deputy leader told a press conference on Wednesday, citing a report by online news portal 444.hu.

“It is hard to know whether this reflects desperation or political motives but it is shocking that the government wants to distribute EU development funds on the basis of loyalty to [ruling] Fidesz,” Varjú said. DK will investigate every “cash handout by Fidesz” in Hungary, he said, calling on voters “not to give in to Fidesz blackmail and threats” and stay away from the “sham referendum”.

Fidesz said in response that DK was promoting Brussels’ interests, “which is no surprise considering that the anti-Hungarian and anti-referendum campaign of Ferenc Gyurcsány’s party was financed by Brussels”. Their purpose is to thwart the Hungarian referendum and enable the “forced settlement” of migrants, the statement said. “DK has even admitted” that its posters are financed from their MEPs’ expense allocations and they show the logo of the European Parliament’s group of the Progressive Alliance of Socialists and Democrats on the posters, the statement said.

Photo: MTI

Fidesz wants EU anti-fraud office to investigate Altus contract

Daily News Hungary

Budapest, December 8 (MTI) – Hungary’s ruling Fidesz party wants the European Union’s anti-fraud office (OLAF) to examine a contract the European Commission awarded to Altus, a company owned by Ferenc Gyurcsány, a former prime minister who now heads the opposition Democratic Coalition (DK).

Commenting on the 383,000 euro contract to produce a study on the results of Poland’s cohesion policy, Fidesz MEP Tamás Deutsch said on Tuesday that Fidesz would do its utmost to put a line under a series of “corrupt deals” involving the opposition.

OLAF is holding a conference in Budapest on Friday and a Hungarian government representative will raise the issue then, he added.

DK said in response that Fidesz’s “threats” against Altus were “pathetic”. Hungary can be proud that one of its companies boasts internationally acclaimed experts and leads an international consortium which won the contract in an open and fully transparent competition called by the European Commission, the party said.

Nándor Csepreghy, parliamentary state secretary at the prime minister’s office, said the commission does not seem to have given up on “actively intervening” in the internal party financing affairs of an EU member state. The commission has been financially supporting a company with a single member, an active politician who spends the money to finance his own opposition party, Csepreghy added.

Opposition to turn to OLAF over L Simon family business grants

Budapest (MTI) – The opposition Dialogue for Hungary (PM) party will turn to the European Union’s anti-fraud office (OLAF) over government support given to family businesses of state secretary at the cabinet office László L. Simon, the party’s co-leader said on Monday.

On Monday, tabloid Blikk said that L Simon’s family businesses received 80 million forints (EUR 258,500) of government support over 2014. Blikk reported that the state secretary’s companies cover a total area of 80 hectares, with his business receiving 1 million forints per hectare.

Tímea Szabó said that if government support was given to L Simon’s businesses on a per hectare basis, the 1 million forint per hectare grant is 8 to 10 times as much as what farmers would normally receive.

Szabó noted that one of L Simon’s foundations in 2011 received 267 million forints of government support despite being ineligible, while his wife was “found to be running off-shore companies”. Szabó said that L Simon would not be eligible for any government support, adding that the state secretary is “very wrong” if he says that the matter “does not involve conflict of interest since there is nothing on his name”. The grants given to L Simon’s businesses “violate both Hungarian and EU rules on conflicts of interest,” she said.

Szabo called on L Simon to step down and government office chief János Lázár immediately to launch an investigation into the government support programmes of the past several years.

Opposition Jobbik party said the matter was “unethical” and that it will look into the grants given to L Simon’s companies. Zoltán Magyar said the state secretary’s businesses “were not successful” before 2010, but have since received 160 million forints in government support. Magyar said his party “wants to take back” public funds from businesses “close to the government that had obtained them unlawfully”.

The leftist opposition to turn to OLAF over railway upgrade project

Budapest, August 26 (MTI) – The leftist opposition Democratic Coalition (DK) will turn to the EU’s anti-fraud office OLAF suspecting corruption in connection with the EU-funded upgrade project of the Budapest-Esztergom railway line, the party’s spokesman said on Wednesday.

The project, getting 85 percent funding from the EU, was launched in 2012 to upgrade the 43-kilometre section in ten months with an originally planned budget of 2.4 billion forints, Zsolt Gréczy told a press conference.

The project has suffered several years of delay and, ib the meantime, its cost has jumped twenty-fold to 44 billion forints (EUR 140m), Gréczy said, noting that the upgrade has not been fully completed.

DK also claims that Vasútépitő Ltd, a member of the consortium carrying out the upgrade, was previously owned by the father of Foreign Minister Péter Szijjártó.

“DK suspects corruption surrounding the project which may have allowed channeling public monies and EU funds into private pockets,” Gréczy said, and demanded explanation from the government.

Photo: MTI

OLAF probes Budapest development project

Daily News Hungary

Budapest, January 23 (MTI) – The European Union’s anti-fraud office has screened public procurement deals connected to a refurbishment project of central Budapest, for alleged fraud and irregularities, the organisation told MTI on Friday.

OLAF also said that it had sent its recommendations to the European Commission, as well as to the Hungarian public prosecutor’s office, but did not disclose any details of its findings. As a general rule, OLAF does not publish its reports but sends them to relevant authorities with a recommendation to take further measures.

The local government of Budapest’s District 5 told MTI in a statement that they had provided OLAF with “all necessary information” about the Heart of Budapest programme, but they were not aware of any complaints about the scheme.

The opposition Socialists demanded that Antal Rogán, group leader of ruling Fidesz, who had been mayor of District 5, should “make a clear breast” and tell the public about the deals of the district council under his tenure.

Socialist deputy chair Zoltán Lukács referred to “several dozen instances” when OLAF had signalled its suspicion to the Hungarian prosecutor’s office, but insisted that the chief public prosecutor would not reveal what cases the European organisation had singled out. The public prosecutor “must not hide behind the excuse that they cannot provide information about investigations under way”, Lukács said, and argued that the cases involved “grave crimes of corruption”, which the public must be informed about.

The leftist Democratic Coalition (DK) called on Rogan to give up his lawmaker’s immunity and face an investigation.

Erzsébet Gy Németh, DK’s delegate in the Budapest Council, also called on Budapest Mayor István Tarlós to assist with the investigation, and argued that while Rogan’s district was in charge of one component of the 15-billion forint (EUR 41m) programme, the two other components were tied to the City of Budapest, controlled by Tarlós’s office.

The Together party urged an investigation by the chief prosecutor’s office.

Governing Fidesz said in response that OLAF had specifically screened parts of the project managed by the municipality of Budapest, which was then governed by a Socialist-Free Democrat coalition.

The party said that projects implemented at the time by the municipality of Budapest had exceeded the costs originally calculated, whereas the two parts carried out by District 5 under Rogan’s leadership had cost 300 million and 600 million forints less than planned, Fidesz said in a statement.