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Hungary's government gives up HUF 18 billion

In contrast to the new point of view of the government, Péter Heil think thats the Government would be obliged to contest the EU's draft audit report in the matter of the development of the EMIR (Unified Monitoring Information System) underlying the management of ca. 50 billion euros EU structural assistance in Hungary. As he said, the issue was examined by 9 previous audits, and none of these suggested any corrective action.

"I do not agree at all that this case would be indefensible", Péter Heil, former vice chairman of the National Development Agency (NDA) declared to our paper. We contacted the specialist because the Government Information Center (GIC) gave the following information on Sunday: the Hungarian government had to repay 18 billion forints to the European Commission in relation to the development of the EMIR. This latter organization is the domestic information network for tendering and distributing the EU funds."
The "threads of irregularities lead to the Gyurcsány family", Gyula Budai, Fidesz member of the Parliament stated at his press conference yesterday. He called on Ferenc Gyurcsány and his wife, Klára Dobrev to explain themselves in the matter. At that time, Klára Dobrev was the vice chairperson of the National Bureau for Development Planning and EU Support Funds.
Now, Péter Heil pointed out that the system was checked by 9 audits, including an audit done by the European Commission. None of these reports suggested corrective action. Exactly in knowledge of that he thinks that the attitude of the Hungarian government is incomprehensible, unusual and misconducted when saying that this case is indefensible.
He also emphasized that there is no question of any corruption or criminal misconduct here. The debate is about a procedural error. In addition, when the issue arose that the procedure without any announcement may be problematic, the legal predecessor of the NDA, the National Development Office (NFO) itself turned to the court, requesting the clarification of the legal situation. The court kept the contracts in force and did not impose any fine. At the same time the court found that the NFO had made every effort to apply the regular procedure. The system was financed in the knowledge of that, he stated.
Péter Heil noted: it is known that the system continues to be in place even today and it is working well. EMIR is also behind the current EU grants system. Its very telling that even the current government did not try to replace it, but chose to buy it together with the company that developed it.
As we reported earlier the European Commission has found irregularities in three contracts for IT systems to distribute and register EU funding in the 2007-2013 budget period and could revoke 100% of the combined HUF 18 bn paid for the systems. Since Hungary failed to challenge the decision, the government would have to demand repayments from a software developer it owns. The amount would be hard to regroup to other projects, so the funding should be returned to Brussels.
The European Commission looked into contracts signed for the so-called unified monitoring information system (EMIR). Two projects have been under scrutiny (VOP-2.1.1-2007-0001 and VOP-2.1.1-2008-0001).
Government agencies including the Prime Minister's Office and the National Development Agency invited several tenders starting from 2003 under the project. The first two of these went fine and the development and operation of EMIR was awarded to Welt 2000 Kft.
Problems began when a third contract was awarded through a negotiated procedure without invitation to tender, even though the service in question could have been provided by other companies as well. A court subsequently found the procurement to have been illegal, but Hungarian authorities failed to react accordingly, the EC's letter points out. To make matters worse, ownership rights were gradually transferred to Welt 2000 Kft., which the Commission says was not the most cost effective solution.
Hungary signed three more contracts with Welt 2000 between 2007 and 2009, paying the company a combined HUF 25 billion, mostly after the then-new Fidesz administration after 2010. The European Commission's letter refers to these contracts when it envisions financial consequences, including a financial correction equal to 100% the contracted amount, or roughly HUF 18 billion.
Since the government did not challenge the decision, this funding will be lost to Hungary. The government should collect the amount form a company it now owns, and even if it succeeded without bankrupting the company, it would be hard pressed to reroute the funding to other EU projects, which means the amount should find its way back to Brussels.

Last Updated on Thursday, 18 May 2017 11:41



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