OLAF uncovered loss of funds in the magnitude of HUF 167 billion in Budapest metro 4 project
OREANDA-NEWS The European Anti-Fraud Office (OLAF) uncovered losses in the magnitude of some HUF 167 billion in its report on the metro 4 project, and the European Commission may impose a fine of HUF 76.6 billion on Hungary, the Minister of State at the Prime Minister’s Office said at a press conference.
Nándor Csepreghy told the press: Brussels has rendered a telling account of the performance of the socialist and free democrat governments and the socialist and free democrat Budapest city leadership. According to this account, the metro 4 project was the largest development of Hungary’s thirteen-year-history in the European Union, and was at the same time Hungary’s greatest corruption scandal as well.
The former suspicion of the Hungarian authorities has been confirmed by OLAF’s investigation conducted over the course of more than four years, between February 2012 and November 2016, he said.
The Minister of State told the press that the total expenditure of the contracts of the metro project amounted to 452 billion 554 million and 224 thousand forints.
According to OLAF, the total of contracts affected by corruption and irregularities amounted to some 272 billion 823 million 488 thousand and 215 forints. Brussels claims that some 166 billion 998 million 258 thousand and 356 forints was “stolen or embezzled”, and therefore the European authorities and the Hungarian Government must demand the repayment of this sum, he said, indicating that from this amount, a sum of HUF 76.6 billion was disbursed as EU development funds, and this is the sum that Brussels may reclaim from Hungary according to the investigation report.
Mr Csepreghy said that the Government took delivery of the English-language summary of OLAF’s investigation document on 14 December 2016. During the course of the investigation, OLAF heard some fifty people, including the competent executives and managers of the Budapest transport company BKV and the metropolitan municipality. The investigators further comprehensively investigated the domestic and international funds movements of the private individuals and legal entities concerned.
The OLAF report uncovered irregularities and the suspicion of corruption in connection with 57 contracts in total. Some 96 per cent of the loss of funds may be tied to five contracts out of the 57. Twenty-eight of the contracts were financed from EU grants, while the other 29 were financed from Hungarian fiscal funds and loans taken out by the metropolitan municipality from the European Investment Bank.
Mr Csepreghy said: the procurement of the Alstom metro carriages – which also extends to metro line 2 – also falls within the irregularities. If Brussels decides later on to make further adjustments in relation to Hungary, the loss of funds may increase by items of further tens of billions, he added.
He told the press that the Government’s legal advisors are currently looking into the possibility of disclosing the OLAF report to the public in its entirety, to which „the Government is fully committed”.
Mr Csepreghy said that several private individuals and companies have been named in the investigation documentation. Based on this, the document features, among others, the DBP Metro Project Directorate, Euro Metro Kft., Strabag, Siemens, Alstom, Hídépítő Zrt., the Bilfinger-Porr-Vegyépszer Zrt. Consortium, Swietelsky and the Bamco Consortium.
Regarding the interior design of the stations, he said that the contracts amounted to some HUF 40 billion in total, and the report recurringly mentions the names of two private individuals: one of them is a former Deputy Mayor of Budapest before 2010 and the other one is – with the initials A.A. – is the former Chief Executive of BKV. In the context of the power supply of the metro, which was contracted for some of HUF 32 billion, the report makes mention of the presumed owner of Media Magnet with the initials P.L., the former Chair of the railway company MÁV with initials T.I. and a senior executive of Eurometro with the initials Sz. L.
Mr Csepreghy cited examples for the forms of malpractices that were uncovered, including cases where those proceeding on behalf of the State and the metropolitan municipality received money in exchange for internal information. There were disbursements on the part of the State where there was no actual performance rendered, while there were instances when the same person verified the completion of the works who proceeded in the capacity of advisor to the business engaged to perform the given works. The report further uncovered: there were instances when the contracting agency disqualified valid, regular and cheaper offers in the procurement phase, and further where the awarded bidder “verifiably” had access to insider information. The individuals concerned “helped friendly companies” with a number of obvious public procurements or the omission thereof, the Minister of State said, who pointed out that these malpractices also constituted instances of abuse of administrative authority, bribery, embezzlement and conflict of interests.
In answer to questions, Mr Csepreghy said that the Government will file a report requesting a criminal investigation into the case, and as expected, it will be submitted to the prosecution service as early as this week. Wherever possible, they will seek to recover the lost funds from those responsible for the losses, he stressed.
He said that the Government has two months, effective as of the receipt of the Hungarian-language report, to respond to it on its merits. Following this, the European Commission will have maximum four months to formulate its position regarding further measures.
“There are dozens of actors mentioned in the report who were politicians, were associated with the realm of politics or operated as semi-public actors”, he said.
Mr Csepreghy stated: the Government will “collect the losses caused from those who committed the crimes in question down to the last penny”. In other words, he said, at most, the Hungarian budget will only have to pre-finance the items on a temporary basis.
He also said: they take the view that the Brussels claims are well-founded in this case. The question is what kind of financial sanction Hungary may incur as a result.