Section 4. Corruption and Lack of Transparency in Government
While the law provides criminal penalties for corruption by public officials, and there were numerous reports of government corruption during the year, few such cases were filed or prosecuted during the year. The European Commission and NGOs contended that the government did not implement or apply these laws effectively and that officials and those with close government connections often engaged in corrupt practices with impunity.
In its July 20 Rule of Law Report, the European Commission found deficiencies in the country’s anticorruption policies and noted that the government did not sufficiently address clientelism, nepotism, and favoritism, noting specifically that although “some new high-level corruption cases involving politicians were opened since 2020, the track record of investigations of allegations concerning high-level officials and their immediate circle remains limited.” The report also stressed that, similar to the previous year’s report, “deficient independent control mechanisms and close interconnections between politics and certain national businesses are conducive to corruption.” The report noted a lack of transparency in political party financing, asset disclosure, and lobbying.
On April 27, parliament passed several legislative proposals establishing 32 “public interest asset management foundations” for the purpose of independently managing educational, cultural, health care, agricultural, and historical activities traditionally administered by the state. These asset management foundations took over the administration of most of the country’s higher education institutions and collectively received billions of dollars in state assets, including land, real estate properties, businesses, and corporate shares, in addition to annual state funding. Transparency watchdogs and opposition parties criticized the privatization of universities and the transfer of state assets and warned that most board members of the created foundations were linked to the government or to the ruling party. Critics asserted that the foundations enabled the channeling of public funds and assets as well as taxpayers’ money to government-aligned businesses and oligarchs. The ninth amendment of the constitution passed in December 2020 requires a two-thirds parliamentary majority to amend regulations governing the creation and management of asset management foundations, essentially rendering the privatization of assets irreversible even in the event of a change of government, critics warned.
Corruption: Anticorruption NGOs alleged government corruption and favoritism in the distribution of EU funds. In an August 2 research paper, the Corruption Research Center Budapest stated that the overall share of EU-funded public contracts won by construction companies with close links to the government increased from 22 percent in 2008 to 38 percent in 2020.
In its 2020 annual report released on June 10, the European antifraud office (OLAF) found 32 cases of potential fraud in the country associated with EU development funds received between 2016 and 2020. OLAF recommended that the government repay 2.2 percent of the funds it received during the 2016-20 period. Observers noted that OLAF’s limited resources allowed it to review only a fraction of the tens of thousands of EU cases in which EU funds were disbursed to member states.
On July 20, EU justice commissioner Reynders stated the European Commission would not back the country’s $8.5 billion COVID Recovery Plan until the government implemented judicial reforms and provided adequate assurances that corruption cases uncovered by OLAF were properly investigated. Reynders noted Hungary continued to resist accepting and implementing the European Commission’s recommendations made in country specific reports and pledged that the commission would again ask “Hungary to join the European Prosecutor’s Office, as without that, we cannot be sure of adequate protection against fraud and corruption.” On November 18, the European Commission sent a letter to the government warning that concerns regarding judicial independence, corruption, and deficiencies in public procurements could pose a risk to the EU’s financial interests. The European Commission asked the government to provide information regarding corruption concerns related to specific EU funded projects, recipients of EU agricultural subsidies, and conflict of interests in the boards of public interest foundations. At year’s end the European Commission had not approved the country’s COVID Recovery Plan, due to the plan’s shortcomings in dealing with transparency and judicial independence concerns.
On December 7, the Chief Prosecution Office stated it suspected deputy justice minister and Fidesz member of parliament Pal Volner of accepting bribes and abusing his official position for financial advantage. Volner resigned from his ministry position on the same day and on December 14, parliament lifted his right to immunity from prosecution. On December 15, prosecutors questioned him, but he was not put into pretrial detention. He retained his seat in parliament.
In Transparency International’s annual Corruption Perception Index released on January 28, Hungary retained a score of 44 of a possible 100; in 2012 its score was 55.