The Budapest transport company’s (BKV) bus rental contract with a company with a dubious background has been taken off the table, the Budapest mayor announced, after it had been revealed that a suspicious offshore company won the tender, linked to Socialist deputy mayor Kata Tüttő’s former partner, billionaire businessman Tamás Leisztinger. As the case raised corruption allegations, Karácsony now insists that further contracts would not be made with companies with offshore backgrounds.
Back in April, the Budapest Transport (BKV) announced a bid for the rental of six low-floor, diesel-powered buses for 12 months. The tender was eventually won by a company called CR-Facilities Ltd., that reportedly made the best offer.
Economic investigative site Mfor was the first in mid-November to reveal the dubious background of this company. It has been unearthed that it has had one single employee registered just a week before the tender was announced. Moreover, it was registered just one week before the tender’s deadline.
In fact, according to the registers, there are three companies standing behind CR-Facilities. One of those, the actual majority owner, belongs to a Cyprus-based offshore company linked to Tamás Leisztinger and his circle, the former partner of Tüttő, one of the mayor’s deputies. Pro-government HírTV additionally revealed that these companies do not have any buses to rent- they would probably have rented buses under subleases, from no one else than from the company that they overcame in the tendering.
FactTamás Leisztinger is a well-known businessman, an ally of the former left-liberal governments, allegedly with a number of suspicious dealings back then. Soon after the government change, however, he reportedly managed to develop a normal relationship with the Fidesz-led government as well, supposedly in large part due to his decision to get involved in supporting football (now backing one of the most popular Hungarian football clubs Diósgyőri VTK).
As a matter of course, right after the dubious backgrounds were revealed, Karácsony and the capital’s leadership came under severe criticism from Budapest Fidesz, and the central government alike, who smelled corruption. Budapest Fidesz’s faction leader Zsolt Láng called on the mayor to take swift action, “because if the leadership of the capital goes off in this direction…the consequences would be very serious.” According to PMO Chief Gergely Gulyás, “…this is such a transparent and open form of corruption that is unacceptable.”
Meanwhile, Kata Tüttő denied any wrongdoings and called on BKV to examine the case.
It was on Tuesday that Karácsony eventually stepped up and announced that BKV was not signing a bus rental contract with an offshore company. He also explained that audits showed that public procurements had been carried out in line with the relevant regulations, and the best offer was selected in an open procedure. “It is right that BKV will not sign a contract with any such company,” he commented.
Karácsony also referred to a law brought in by the Fidesz government which states that no applicant can be excluded due to an offshore background, adding, however, that he had instructed the metropolitan companies to exclude any offshore company from public procurements.
“What’s even more important is that all members of my team must be incorruptible and spotless,” he added, defending his deputy mayor. He explained that he couldn’t judge the relationship between Kata Tüttő and the father of her children, “…but I know that she has never represented…any interest other than her city’s and those of the people of Budapest.”
The story and the war of words, however, hasn’t ended there. Fidesz politicians then showed proof of the signed contract (which Karácsony said they wouldn’t sign); as a result, both BKV and the Mayor’s Office were forced to make further explanations.
According to BKV’s statement, although the public procurement procedure for renting six used buses had been handled lawfully, the contract had been canceled. Having reviewed the documentation, the transport company’s supervisory board determined that the entire procedure had been carried out in line with the relevant laws as well as the company’s own procurement regulations, BKV said. However, an agreement signed with the winning bidder, CR-Facilities on Oct 30th has been canceled and the BKV will not be signing further contracts with the company, they added.
This is pretty much congruent with the position of the Mayor’s Office, who said that the winning company officially withdrew from the agreement, thereby invalidating it. As a result, according to the mayor’s announcement, the BKV will not enter into a contract with the company. In addition, the contractual penalty due for BKV was also already paid by the company.
featured photo illustration by Zsolt Szigetváry/MTI