Viktor Orban’s nominee for Minister of National Development, Miklos Sesztak, plagued by scandal

June 1, 2014

szesztek

Prime Minister Viktor Orban’s nominee for Minister of National Development, Miklos Sesztak, has been accused of complicity in defrauding EU and Hungarian taxpayers of many billions of forints.

Sesztak (KDNP) was elected to parliament in 2010 from Szabolcs-Szatmar-Bereg County’s 7th electoral district on the Fidesz-KDNP ticket.  Thereafter he served as a member on the Hungarian parliament’s Economics and Information Technology Committee, chairman of the subcommittee on Public Procurements and Business Regulations, member of the subcommittee on Information Technology and Communication, and as a member of the subcommittee on Investigations of Government Actions in the Previous Eight Years. He also served as a member of the Committee on Consumer Protection.

Fraud or coincidence?

In 2012 the Hungarian government issued a call for a tenders as part of an EU-financed public procurement program to bring broadband internet to rural communities in Hungary. The European Union provided HUF 20 billion (USD 90 million) for the project.

In 2013 it was revealed that HUF 12.5 billion (USD 56.25 million) worth of contracts had been awarded to five companies incorporated (27 June 2012) and registered (4 July 2012) on the same days.  All five companies (Micronet Kft., Pannon Optikai Hálózatfejlesztő Kft., Pátria Optikai Hálózatfejlesztő Kft., PONET Optikai Hálózatfejlesztő Kft. and REGIO Optikai Hálózatfejlesztő Kft.) share the same address as PONET and REGIO part owner, EnterNet 2011 Kft. which, in turn, is owned by EnterNet Invest Zrt.

According to official documents on file at the company court, Sesztak has served as a member of EnterNet Invest Zrt’s supervisory committee since July 2008.   Sesztak claims he only served on the supervisory committee until 10 July 2012 and that his position with the company “officially ends when my replacement has been chosen or when my term expires on 15 January 2013” and that the last time he performed any work for the company was in May 2012.

Sesztak denies any knowledge that the companies had been awarded the tenders

Despite serving in Hungary’s parliament as chairman of the Subcommittee on Public Procurements and Business Regulation, a member of the Economics and Information Technology Committee, and as a member of the Subcommittee on Information Technology and Communication while sitting on the supervisory committee of EnterNet Invest Zrt., Sesztak insists there was no conflict of interest or that he had any knowledge of the tenders prior to February 2013.

Sesztak also claimed that as a member of the EnterNet Invest Zrt.’s supervisory committee his role was to supervise the company’s executives and that he personally had no say in any of the company’s business decisions.  He even claims his work for the company was performed pro bono…

Sesztak did not file legal action against any of the media outlets reporting his connection with the group of companies.  Nor did he ask them to retract any statements or make any corrections.

EnterNet Invest Zrt. told Hungarian news website Index.hu that Sesztak had been providing legal services for the company.

In 2013, Hungarian investigative journalism website Atlatszo.hu published official documents pertaining to contracts awarded through public tender to companies to construct the rural broadband internet network awarded by the Hungarian Economic Development Center (Magyar Gazdassgfejlesztesi Kozpont, or MAG Zrt.).  According to Atlatszo.hu many of the contracts were awarded to companies whose budget calculations contained errors or whose proposals were not as favorable as those submitted by other companies.

Tender love for Sesztak’s companies caught the eye of OLAF

Last month, shortly after the European Commission announced it was suspending payment of development grants to Hungary, 444.hu published an article on the subject listing numerous projects (and reasons) for which the EC had decided to suspend funding to Hungary. One such area included EU funds provided to help bring broadband internet to rural communities.

When notifying Hungary last month it was suspending payment of development funds, the European Commission specifically cited the scandal involving the companies connected to Sesztak after being notified by OLAF (The European Anti-Fraud Office) that the HUF 12.5 billion awarded to the the five aforementioned companies appeared to have been lost as no work has been performed on any of the 13 projects in question.

Janos Lazar, State Secretary for the Office of the Prime Minister, responded by thanking OLAF for investigating the matter and promising Hungarian authorities would investigate the matter and bring the conspirators to justice.

It is unknown whether Lazar has directed Hungarian investigators to question Minister of National Development nominee Miklos Sesztak regarding the missing HUF 12.5 billion (USD 56 million).

Referenced in this article:

Hungary’s frozen EU funds, BudapestBeacon.com; 22 May 2014.

Orbánnal nótázó, offshore-barát képviselőből fejlesztési miniszter: Seszták Miklós pályaképe, Atlatszo.hu; 31 May 2014.

MagyarLeaks: Több sebből vérzik a húszmilliárdos állami optikai hálózat projekt, Atlatszo.hu; 19 February 2013.

Ezeket a számlákat nem fizeti ki Brüsszel a magyaroknak, 444.hu; 21 May 2014.

Nyúl úr rokonai, barátai és üzletfelei, Atlatszo.blog.hu; 11 February 2013.

Utólag tudta meg a fideszes fb-tag, hogy milliárdokat nyert a cég, ATV.hu; 4 February 2013.