The European Anti-Fraud Office is a bit slow: The case of the Heart of Budapest project

Well, we are back in Budapest’s District V, which is known by many names: Lipótváros (Leopoldstadt), Belváros (Downtown), or lately for a little political propaganda “The Heart of Budapest.” At least this was the name of the mega-project undertaken within the boundaries of the district that made the historic district mostly traffic-free and repaved the streets between Kálvin tér and Szabadság tér, stretching 1.7 km, with fancy cobble stones. Like everything else, the project was largely financed by the European Union.

It was Antal Rogán, the newly elected mayor of the district, who came up with the idea of revamping downtown Pest shortly after the municipal election of 2006. He convinced the City Council of Greater Budapest to apply to Brussels for a grant, and it seemed that at least on the surface the SZDSZ-MSZP city and the Fidesz district were of one mind. We mustn’t forget that at this time Antal Rogán was considered to be a moderate and reasonable man. Later the Fidesz media praised him as a truly remarkable Fidesz mayor who managed, despite the fact that the city of Budapest and the government were in SZDSZ-MSZP hands, to receive a huge sum of money for the development of his district. Well, the Heart of Budapest project really was impressive. A good portion of District V became something of a showcase.

The renovated Károly körút - Photo András Földes

The renovated Károly körút – Photo András Földes

As we know, Antal Rogán has had his share of his political trouble ever since Péter Juhász, who was Együtt’s candidate for mayor last October, decided to investigate shady real estate deals during Rogán’s tenure. I wrote about corruption in the district in December and again in January. Juhász, unlike most Hungarian politicians, doesn’t give up. Whether he will succeed in putting Rogán in jail remains to be seen.

What Rogán did not need was another scandal. But he’s under attack yet again, this time in connection with the Heart of Budapest project. The internet site reported yesterday that OLAF, the European Anti-Fraud Office working under the aegis of the European Commission, found serious irregularities in connection with Rogán’s project. According to, OLAF finished its investigation at the end of last year and called upon the Hungarian Chief Prosecutor’s Office to begin an investigation of the case. Naturally, OLAF’s findings were also sent to the European Commission. The Chief Prosecutor’s Office admitted that they received the documentation that supports OLAF’s case but said that “currently work is being done on the translation of the material.” Knowing the Chief Prosecutor’s Office, they will work on that translation for months if not years. Moreover, some opposition politicians learned that in the last few years the Chief Prosecutor’s Office received several dozen such complaints, but as far as we know Chief Prosecutor Péter Polt’s crew did nothing about them.

This is not the first time that questions have been raised about the project. At the end of 2012 OLAF found that not everything was in order. There was a good possibility that both District V and the city of Budapest would have to pay sizable fines: about 900 million forints each. The charge? The officials of the district and the city who were handling the bidding process demanded such unnecessary qualifications from the applicants that only one combined firm, Reneszánsz Kőfaragó Zrt and Bau Holding 2000, forming the Heart of Budapest Consortium, could possibly undertake the work. The bidding was theoretically open to foreign firms as well, but I doubt that much effort was put into finding non-Hungarian companies for the job.

What kinds of unreasonable demands did the authorities insist on? To qualify, a company had to have references for 1.2 billion forints worth of work on historic buildings even though the new project focused on repaving streets. There was absolutely no restoration of historic buildings. This ploy is commonly used in Hungary to make sure that the “right” company is the successful bidder. In Hungary 40% of all projects end up with a single bidder. Every time such a thing happens we can be pretty sure that corruption is not far away.

In 2012, when this story broke, Rogán and his deputy András Puskás, who has since left the district under the cloud of possible corruption, argued that there was nothing wrong with the project. It was done properly. The problem, they countered, was that the European Commission didn’t like the Orbán government and concocted this case to attack Viktor Orbán and his politics.

Now that OLAF finally got to the point of calling on the Chief Prosecutor, the district is trying to shift the blame to the current opposition. After all, the argument goes, the first phase of the project was finished in 2009 when Gordon Bajnai was prime minister. And Gordon Bajnai was present at the official opening. I guess that, according to the brilliant logic of the editorial offices of Magyar Nemzet, Bajnai had something to do with passing on the job to an earlier designated firm just because he cut the tricolor ribbon at the opening ceremony. For good measure, Magyar Nemzet added that Viktor Szigetvári, co-chair of Együtt and then Bajnai’s chief-of-staff, participated in the negotiations. Szigetvári calls the accusation a lie.

In addition, Magyar Nemzet blames the SZDSZ-MSZP administration of the city of Budapest. “All this happened during the era of Demszky-Hagyó-Steiner.” Pál Steiner was the whip of the MSZP caucus on the city council while Miklós Hagyó was the MSZP deputy mayor. Hagyó was later accused in a vast corruption case, which is still pending. The lurid details of the case tarnished MSZP and helped Fidesz coast to an overwhelming victory, resulting in a two-thirds majority in 2010.

OLAF has been investigating for the last six years. Right now, the Chief Prosecutor’s office is busily, or not so busily, translating. When do you think we will know exactly what happened? If you ask me, never.


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January 25, 2015 4:18 am

OLAF is a joke. The bureaucrats there specifically don’t want to work or get results. The corruption is built in the EU subsidy system, the EU has been aware of that and is OK with it.

OLAF is a fig leaf, nobody wants conflicts within member states.

By the way it’s ridiculous to think that only this was the only corrupt EU deal. Practically every such procurement in the last I don’t know how many years was deeply corrupt. This must have been the 73rd case OLAF reviewed and cited for probably corruption. Come to think of it the fideszniks are rather good at creating phony paper trails which no European bureaucrat could ever figure out, let alone use in court.

EU:Fidesz 0:157

January 25, 2015 5:38 am

Well, my Dear Hungarian Spectrum, I would suggest that if the omni-lingual European institution will oblige and submit a Hungarian translation together with the original indictment, then the prosecutor’s office will lose one excuse. (I wouldn’t trust Polt Peter’s translation anyway.) And if the OLAF will practice what it preaches; engages in the transparency that it demands from others and publishes the document, well, then we shall learn the contents and all excuses will fall by the wayside.
I know this to be wishful thinking, because it is far too reasonable.

January 25, 2015 8:25 am
I am interested in what the commercial occupancy rate or conversely the vacancy rate is for real estate in District 5 since the collapse of 2008. I noticed some unoccupied space in December when I visited, but I do not have an objective picture of the situation. I have seen some data for the years immediately following the downturn, but data from 2012 forward seems difficult to come by. For retail in particular here in Chicago and in New York prime real estate in the downtown areas has really not recovered, part of the problem is that every year even at high end stores sales are declining and Internet sales are here growing. Without foreign tourists, particularly young Chinese ones, Chicago’s downtown retail sector would be in even worse shape. The downtown projects seem to have not fully paid off in the US, with a few exceptions. Does anyone out there have information relating to that bigger issue for Budapest distict 5? While the EU may find lots of corruption in District 5 the fundamental premise of the development projects that there would be big payoffs in terms of generated revenues may be flawed and the idea that retail in… Read more »
January 25, 2015 8:58 am

I can see how some Hungarian bureaucrat will try to launch a personal lawsuit for defamation, just like Ildiko Vida did against Goodfriend. How long it will be that Orban tells Rogan to start suing people? THis whole Hungarian corruption is becoming a joke. The legal system is in Orban’s pocket. I bet every judge is scared that they will land one of this corruption charges or defamation lawsuits.

January 25, 2015 4:45 pm

I do not know exactly but I can imagine that the non-compliance in such a case will make it easier to withhold money in the future. Then there is some very clear proof of non-compliance, and the other member states do not need to argue based on newspaper articles or hearsay.

January 26, 2015 9:05 am

Some1 – Rogan has already said he will sue Juhasz. And District 5 sources told HirTV that the municipality would sue anyone who even questions their decision to sell property to convicted killer Tamas Portik’s girlfriend.