Prosecutors in Hungary have been asked to launch a criminal investigation into suspected corruption and fraud linked to the construction of a Budapest metro line.
The Hungarian government requested the probe after EU anti-fraud agency OLAF found evidence of graft when it examined the €1.7 billion Metro Line 4 project last year. Construction of the new line was partly funded by the EU.
Speaking with reporters yesterday, Prime Minister Viktor Orban’s Chief of Staff said the government had a responsibility to investigate the claims made by OLAF, alleging that members of the previous leftist administration may have been involved in fraudulent activity related to the project.
Janos Lazar suggested Hungary might have to pay a €250 million fine, after OLAF recommended that the EU should seek to recover the close to €300 million it contributed to the project. OLAF also advised that the EU’s European Investment Bank should seek to claw back €55 million in loans that were provided for construction of line.
During a press conference, Lazar said: “[I]t transpires from OLAF’s report that… public procurement legislation was breached in the case of almost every major public procurement element, and the contracts for the performance of the construction works were concluded through obvious fraud.”
He went on to say that investigations into the alleged fraud are currently taking place in a number of countries, including Austria, Denmark, France and the UK, and pointed a finger of blame at the past “left-liberal city leadership” of Budapest.
In December, OLAF announced that it had discovered “serious irregularities”, specifically possible corruption and fraud, during its investigation into the project. The anti-fraud agency said the irregularities it had identified related to a period between 2006 and 2007, and as such would likely not involve any of Budapest’s current management team.
Officials planned construction of the line before Orban’s Fidesz right-wing party came to power in 2010.
On Monday, Hungarian Parliamentary State Secretary for the Prime Minister’s Office Nándor Csepreghy said OLAF found nearly half of the funds spent on the metro line were improperly spent. He told state broadcaster MTI that the scandal is biggest corruption case the country has seen since it joined the EU nearly 13 years ago.
Transparency International’s Corruption Perceptions Index (CPI) last year found that Hungary is plagued by a lack of transparency and nepotism. The organisation said corruption affected Hungary’s government, judiciary, press and civil society.
Commenting on an earlier Transparency International report on the country’s weak checks and balances for fraud and corruption, academic Noémi Alexa said: “Hungary’s weak integrity system undermines economic stability, and blocks efforts aiming to rebuild confidence among the players of economy.
“The government should implement a systemic and effective anti-corruption programme besides the one focusing on integrity in the central administration.”