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Details: Rule of Law Mechanism Launched over Suspected Corruption in Public Procurements

Péter Cseresnyés 2022.04.29.

There are concrete cases in the letter sent to Hungary over the launch of the rule of law mechanism, Gergely Gulyás admitted at a press conference on Thursday morning, but he did not know whether it could be made public, so he refused to give details. News site 24.hu has now obtained the document, which contains several cases of suspected corruption, mainly related to public procurement.

Johannes Hahn, the Budget Commissioner of the EC on Wednesday sent a formal notification to the Hungarian government stating that the rule of law mechanism is being launched against Hungary.

Liberal news site 24.hu has now obtained the 44-page letter in question, which mostly lists cases of suspected corruption in public procurements, explaining why they violate the EU budget and the rule of law.

The Hungarian government has repeatedly suggested that the EU procedure was (partly) triggered due to Hungary’s controversial child protection law. However, the European Commission’s notification does not mention the legislation at all.

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On the other hand, systemic irregularities have been found in the allocation of cohesion funds, according to the letter from the European Commission. The document also cites an investigation by the European Anti-Fraud Office (OLAF), into 35 EU-funded streetlamp projects won by the former company of István Tiborcz, the prime minister’s son-in-law, where the Hungarian state ended up financing the projects from Hungary’s own budget rather than repaying the money to the Commission due to the irregularities found. (The letter does not name the company or Tiborcz, however, it is clear which cases are being cited.)

In another case highlighted, EU funds were obtained through fictitious offices in Hungary, Latvia, and Serbia, and later these projects were withdrawn from EU funding so as to avoid losing the funds.

The letter also identifies the proportion of single-player public procurement and flaws in the system of framework contracts as serious problems (The government has recently pledged to reduce the number of single-player procurements to below 15%.)

The letter also notes that a small group of people has acquired a fifth of EU money since 2010 in Hungary.  According to the document, there are serious problems in Hungary with conflict of interest investigations.

Rule of Law Mechanism Launched against Hungary
Rule of Law Mechanism Launched against Hungary

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There is also a separate chapter on public foundations, where the management and ownership structure of foundations is seen as being incompatible with EU funding.

The letter then goes on to provide legal arguments to explain why these cases violate the rule of law, and then describes why these cases cannot be dealt with through other procedures, for example, because Hungary is not a member of the European Public Prosecutor’s Office.

The Commission also finds it concerning that the Hungarian government does not have a comprehensive anti-corruption plan, nor is there an anti-corruption framework in place.

The EC then goes on to ask the Hungarian government dozens of questions, asking for details of specific cases, and for basic and comprehensive data on public procurement and control systems.

According to the letter, the Hungarian government has two months to respond to the questions and has the opportunity to propose and adopt changes in the cases raised.

Featured photo illustration via Pixabay

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