OLAF says defrauding EU taxpayers in Hungary is child’s play

June 17, 2015


In April a government decision allocating HUF 1.789 billion (USD 6.5 million) to various local governments was published in the national gazette.  According to the decision, the support was necessary to protect “the ability of certain local governments to operate”.

Left-wing news portal Nol.hu reports that this money was used to repay EU countryside development grants on behalf of some 140 local governments after the European anti-corruption office (OLAF) found they had systematically overpaid for playground equipment, most of which was supplied by a single contractor.

According to OLAF local governments applying for EU countryside development funds in 2008 and 2009 with which to build playgrounds overpaid by an average of 35 percent for playground equipment.  Certain local governments allegedly overpaid by a factor of two or three times the actual market value of the equipment.

In order to be able to reclaim the VAT, participating local governments established a public non-profit for the purpose of building the playgrounds.  These, in turn ordered playground equipment built from “roughly cut pine timbers” from the same company.

Screen Shot 2015-06-17 at 11.58.45 AM

In the case of Cún, the town spent HUF 10,542,761 (USD 38,000) on a playground which, according to OLAF, should not have cost more than HUF 3 million (USD 11,000).  The town was required to repay the full amount plus interest (HUF 12.2 million/USD 44,500).  Nol.hu reports that a 600-square-metre rest area covered in pavers featuring 9 benches, 2 tables, two flower holders and a billboard was build next to the playground at a cost to EU taxpayers of HUF 11.8 million (USD 43,000).  OLAF has yet to investigate the latest (ab)use of EU taxpayer money, reports the news portal.

According to LMP parliamentarian R. Benedek Sallai the “playground” scandal was actually a large conspiracy to defraud EU taxpayers of money involving the participation of hundreds of local and national government actors. He points out that local governments were responsible for verifying that the work was completed.  Inspectors from the then Ministry for Agriculture and Countryside Development were responsible for inspecting the work prior to authorizing the disbursement of EU funds.

Sallai believes that, as in the Quaestor case, the government prefers to nip the scandal in the bud by settling the local governments’ debts to Brussels rather than properly investigate the matter.  The Ministry for Agriculture has steadfastly refused to disclose the name of the contractor, prompting LMP to sue it for information.  The left-wing party has also formally posed questions to Hungary’s chief prosecutor, Péter Polt.

It is not known at this time whether any public officials, current or former, are being investigated for their role in defrauding the EU and ultimately Hungarian taxpayers of well over one and a half billion forints.