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Jan 17, 2017

OLAF uncovers losses of 167 billion HUF on metro 4 project

Implicating the Socialist-led government in the biggest corruption scandal since Hungary joined the EU, the OLAF report uncovered irregularities and the suspicion of corruption in connection with 57 contracts, with most losses tied to five contracts

The European Anti-Fraud Office (OLAF) uncovered losses of some 167 billion HUF in its report on the metro 4 project, and the European Commission may impose a fine of 76.6 billion HUF on Hungary, the minister of state at the Prime Minister’s Office has revealed.

Nándor Csepreghy said that Brussels has rendered a telling account of the performance of the governments led by the Socialist and Free Democrat coalition as well as their collegues who led the Budapest metropolitan government at the time. According to details revealed in the report, the metro 4 project was the largest development in Hungary’s thirteen-year history as a member of the European Union, and was at the same time Hungary’s biggest corruption scandal.

Confirming long-held suspicions about the project, OLAF’s investigation was conducted over the course of more than four years, between February 2012 and November 2016, he said.

The minister of state said that the total expenditure of the contracts for the metro project amounted to 452, 554, 224, 000 HUF, or approximately 1.47 billion EUR.

According to OLAF, the total of contracts affected by corruption and irregularities amounted to some 272, 823, 488, 215 HUF, approximately 887 million EUR. Brussels claims that some 166, 998, 258, 356 HUF, approximately 543 million EUR, 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 76.6 billion HUF was disbursed as EU development funds, and this is the sum that Brussels may reclaim from Hungary according to the investigation report.

Csepreghy said that the government took delivery of the English-language summary of OLAF’s investigation document on December 14, 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 percent 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.

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”.