Office of the Prime Minister implicated in criminal conspiracy involving Elios Zrt.

February 20, 2018

The Prime Minister's Office assumed the downpayment of the Elios contracts
Minister Overseeing the Prime Minister’s Office János Lázár | Photo: MTI/Noémi Bruzák

The Office of the Prime Minister assumed down payments totaling HUF 881 million (USD 3.5 million) in the case of public lighting contracts awarded to Elios Zrt., a lighting company owned at the time by Prime Minister Viktor Orbán’s son-in-law, István Tiborcz, reports 24.hu. In some cases, the funds were remitted to municipal city councils well in advance of Elios Zrt. starting work, reports the daily online.

The latest revelation would appear to directly implicate the Office of the Prime Minister in what the European anti-fraud authorities claim was a criminal conspiracy to defraud EU taxpayers of EU development funds.

While owned by Orbán’s son-in-law Tiborcz, Elios Zrt. won tens of billions of forints of contracts from municipalities to modernize public lighting between 2011 and 2015. The grossly overpriced projects were funded in large part with EU development grants. After a two-year investigation, the European Anti-Fraud Agency (OLAF) determined that the public procurement application scheme of Elios Zrt. involved criminal conspiracy and recommended Hungarian authorities investigate the possibility of organized crime.

Up until now, it has been supposed that the municipalities contracting with Elios Zrt. paid for the significantly overpriced investments from their own budget. However, according to 24.hu’s information, between March 2014 and July 2015, the János Lázár-led Prime Minister’s Office gave state grants to 14 projects whose EU funding exceeded 85 percent of the total price. Out of the 35 contracts awarded to Elios, 17 fell into this category.

The Prime Minister’s Office used the EU Down Payment Fund, originally established to help municipal councils qualify for EU development funds, to help councils contract with Elios. The online daily has found cases where the Prime Minister’s Office assumed the cost of the down payment long before Elios even started to work. For example, in the Bács-Kiskun county town of Kalocsa, the municipal council received a payment of HUF 86 million (USD 345,000) in 2014, 15 percent of the HUF 567 million (USD 2.27 million) public lighting investment that was undertaken the next year by Elios.

The Kalocsa council wanted to award the public lighting modernization contract to Elios as early as 2013. However, the council was still indebted to the local energy provider Démász which had previously modernized the town’s public lamps. For some reason, the council could not wait for its contract with Démász to expire, so in April the town took out a loan to cover future Elios-related expenses. In July, the Prime Minister’s Office assumed the down payment of the Elios contract, effectively paying off the town’s bank loan.

According to 24.hu, out of the 17 contracts that required 15 percent equity awarded to Elios in February 2013, the Prime Minister’s Office assumed down payment in 14 cases. Altogether, the Prime Minister’s Office spent a total of HUF 881 million (USD 3.5 million) from the central budget on paying the Elios contracts’ down payment.

24.hu contacted the Prime Minister’s Office to find out whether those councils that put out tenders that were eventually won by Elios knew that they would be financially aided by the government. However, the János Lázár-led office has yet to provide an answer.