The Hungarian government decided to set up an anti-corruption authority that will work together with non-government organizations to oversee the spending of European Union funds. The move comes as Budapest seeks to unlock billions of euros in EU development funds that Brussels suspended on claims of state-level corruption and a decline in the rule of law.
The government of Prime Minister Viktor Orbán has been locked in a stand-off with the EU for years over accusations of corruption and the erosion of democratic standards. Hungary also refused to join the European Public Prosecutor’s Office (EPPO), an EU body set up to investigate and prosecute fraud against the budget of the EU and other crimes against the EU's financial interests. The body is intended to be decentralised, based around European Delegated Prosecutors located in each participating Member State.
In an unprecedented move, the European Commission in April launched a procedure against Hungary, which links the disbursement of EU funds to the respect of rule of law and could lead to financial penalties. The EU executive has refused to grant access to Hungary to the bloc’s pandemic recovery fund.
As part of the ongoing negotiations with Brussels, the government in Budapest agreed to set up an independent anti-corruption body and an anti-corruption task force, according to an announcement published in the Hungarian Gazette this week. The resolution states that the independent authority will be established to "prevent, detect and correct illegalities and irregularities" in the management of EU funds. The new anti-corruption authority will be able to intervene in cases where other competent authorities "have not taken the necessary steps to prevent, detect and correct fraud, conflict of interest, corruption and other irregularities or infringements which could harm the sound financial management of the EU budget or the protection of the financial interests of the Union, in particular in cases of EU financial assistance in the framework of public procurement procedures" the resolution states. The government will also create an anti-corruption working group to advise the authority. Half the members of the group will be government delegates and the others will be representatives of non-governmental organizations. Analysts see the move as a concession to the EU in bid to gain access to thousands of billions of forints in EU funds.
Plans under appraisal
Hungary also faces financial penalties from the EU over the same rule of law issues, including public tender procedures that fall short on anti-corruption safeguards.
The EU Commission said the assessment of Hungary's replies to its rule-of-law concerns is ongoing. The comment came after Hungary published plans to create a new anti-corruption authority. The EU executive, which has withheld EUR5.8 billion from the Covid-19 recovery fund, said it was studying the decree.
Hungary sent its latest legal arguments to Brussels on 22 August and the EU executive has one month to respond. "The analysis is ongoing," a commission spokesperson said earlier this week. The commission's most recent rule-of-law report in July stated that "independent control mechanisms remain insufficient to detect corruption." It added that the "lack of judicial review of decisions not to investigate and prosecute corruption remains a cause of concern, in particular in an environment where risks of clientelism, favoritism and nepotism in high-level public administration remain unaddressed."
According to Transparency International's Corruption Perceptions Index, Hungary now ranks lowest in the EU after Bulgaria.
Orbán’s chief of staff said in August that Hungary would amend several laws criticized by the European Commission by the end of October if an agreement on financial aid is reached with the EU executive. Gergely Gulyás also said Hungary would create a “stricter than ever” and most transparent system for overseeing the use of EU funds and procurement contracts.
The government in Budapest has come under increased pressure in recent months to strike a deal with Brussels as it tackles decades-high inflation, a record weak currency, skyrocketing energy prices and the prospect of recession.
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