articleimg-1
Feb 13, 2017

Metro 4 corruption scandal is a 'textbook example of fraud'

The Prime Minister’s Office has launched an investigation to determine whether the alleged misappropriations also concerned government money contributed to the metro 4 project

The Hungarian government has said that the OLAF report identifying corruption surrounding the metro 4 construction project reveals a “textbook example of fraud".

János Lázár, the minister heading the Prime Minister’s Office, said the total cost of the metro project was 430-450 billion HUF, of which 380 billion had been paid out.

According to MTI, the project is still in its closing phase, as the capital is still receiving government support for it, he said.

The government is due to transfer the final 20 billion HUF to Budapest this year, but that transfer is being suspended, Lázár said. Given that criminal activities are suspected in connection with the project, under Hungary’s budget law, the government cannot spend taxpayer money on it until the OLAF investigation of the case is closed and it becomes clear who is legally responsible for what had happened, Lázár said.

He noted that the Prime Minister’s Office has launched an investigation to determine whether the alleged misappropriations also concerned government money contributed to the project.

“It appears that they did,” Lázár said, citing the OLAF report which he said indicated that the “frauds” suspected in the case involved not just the misappropriation of European Union funds but also funds transferred directly from state coffers.

If the suspected irregularities are confirmed, Budapest will have to be asked to repay the misappropriated funds to the government, Lazar said.

He said that “in simple terms” what had happened was that international corporations involved in the project “such as Siemens or Alstom” had “joined forces” with the municipal council leadership at the time, the various technical supervisors and designers and “robbed Brussels and the Hungarian budget”.

He said the reason why the current municipal council leadership was now in “a difficult position due to [former liberal Budapest mayor] Gábor Demszky’s activities” was because the EU was expected to demand that Hungary pay back the misappropriated funds and the Hungarian state can do so as well.

He said the EU would not wait for the case to be wrapped up in the Hungarian justice system before issuing its reimbursement demands, adding that this would have serious financial bearing on the capital.

Lázár added, at the same time, that Prime Minister Viktor Orbán had instructed members of the government to provide any assistance they can to the capital in resolving the matter.

On another subject, Lázár praised Hungary’s management of its EU funds, declaring the country the “winner” of the 2014-2020 funding cycle. He said the government would call tenders for all EU funds available for the current funding period by March 31. Of the 9 trillion HUF available, 2,200-2,700 billion HUF will be spent on development projects, he said. The government aims to disburse all of the available funds by March 31, 2018, he added.