Court declares TAO contributions “public money”

November 3, 2016

Puskás Ferenc ÍLabdarúgó Akadémia, Felcsút, Pancho Aréna
Puskás Ferenc Labdarúgó Akadémia, Pancho Aréna, Felcsút

A court in Székesfehérvár has declared that corporate funds donated to sports clubs in Hungary and used as tax writeoffs under the TAO program do indeed constitute public money, something Prime Minister Viktor Orbán has repeatedly denied, reports

The TAO program was launched by the Orbán government in 2011. To date, the single largest beneficiary has been the Felcsút football academy, in Orbán’s hometown. The club was founded by him in 2007 and is run by Lőrinc Mészáros, a man many hold to be Orbán’s strawman.

At the inauguration of the club’s stadium in Felcsút, Orbán responded to a reporter’s question of whether tax-deductible funds given to sports clubs were considered public money,

He replied: “Considering this public money is a communist habit, because these funds were produced by companies and they give it to whoever they want to. This is not public money.”

The Székesfehérvár court disagreed, and classified TAO donations as public money in response to an information request submitted last year by opposition party Democratic Coalition (DK). The party wanted to find out where the organization which owns the Felcsút soccer club, Felcsúti Utánpótlás Neveléséért Alapítvány, had spent the money it received from TAO between 2013-2015.

The court concluded that although TAO money is not in the national budget because companies sent that money in the form of tax-deductible funds to sports clubs, this money is still a part of taxes paid by the companies, taxes which belong to the state. Therefore, those donations given through the TAO program do constitute public money.

“The support received by the defendant on the basis of the TAO law is public money, and the defendant is required to supply data related to its use,” the court wrote.

The ruling requires the Felcsúti Utánpótlás Neveléséért Alapítvány to release all data related to contracts it paid through the TAO program, from jerseys and balls to professional commissions. The organization has filed an appeal. The decision does not require the organization or any other recipient of TAO money to reveal which businesses have made tax-deductible financial contributions, because the Hungarian parliament adopted legislation two weeks ago to legally obscure this information on grounds that it constitutes “tax secrets.”

In 2015, Transparency International Hungary issued a report which shines light on the serious corruption risks presented through the finely-tuned TAO contribution system. The suspicion raised by the NGO is that these contributions may be made to sports clubs tied to politicians in exchange for the donor being awarded lucrative public procurements.

Between 2011 and 2014 Hungarian soccer clubs received TAO contributions totaling HUF 74.5 billion (USD 276 million). Of this 28 percent (HUF 21 billion/USD 77 million) went to 13 clubs. And of the HUF 21 billion, HUF 9.2 billion (12 percent of all TAO contributions) went to the soccer academy in Orbán’s home town of Felcsút. This amount represents 44 percent of TAO contributions received by the 13 most privileged soccer clubs.