Guide book to embezzlement of European Union subsidies. Part II

Benedek Jávor (PM-Együtt) is the most active Hungarian opposition member of the European parliament and therefore perhaps the most hated by the Orbán government. Being the target of the mafia government carries risks. His office has been broken into and his telephone conversations are being tapped.

Jávor is indeed a dangerous man for the current regime because he is in constant touch with the European Commission’s Anti-Fraud Office, better known as OLAF, which has been investigating a large number of suspicious cases. The investigations sometimes take years, but in several cases OLAF investigations have been concluded and the Hungarian government notified of its findings. Jávor has been following several OLAF investigations. For example, István Tiborcz’s business venture, Elios. Frightened by the prospect of a serious investigation, Viktor Orbán’s son-in-law “sold” his street-lighting firm in a great hurry. Jávor has also kept an eye on the OLAF investigation into Antal Rogán’s pet project, “The heart of Budapest,” an expensive renovation project in downtown Pest.

Here I would like to write about two other grants to which Jávor called attention: first, the fraud that was committed in a project earmarked by the European Union for the more effective oversight of subsidies coming from Brussels and, second, money received to improve the energy efficiency of private homes that is instead being diverted to insulate government buildings.

Benedek Jávor (PM-Együtt), member of the European Parliament

Benedek Jávor (PM-Együtt), member of the European Parliament

First, the story of the guardians of public morality who turned out to be common thieves. The case goes back to 2012 when almost a billion forints that were supposed to be spent on hiring extra staff to uncover fraud involving EU subsidies were stolen by a number of men, among whom was a former employee of the government’s Nemzeti Fejlesztési Ügynökség (NFÜ / National Development Agency). OLAF closed its investigation in June 2015, but it was only in October that the case was reported in the Hungarian media. Since OLAF cannot conduct criminal investigations in the member countries, it turns the job over to the local authorities, assuming that they will do a creditable job in going after the guilty ones. After hearing nothing on this front, Jávor turned to Péter Polt, prosecutor-general, and András Tállai, the new chairman of NAV, the Hungarian equivalent of the Internal Revenue Service. Polt claimed that his office is investigating; Tállai seemed blissfully ignorant of the case.

What happened that attracted the attention of OLAF? At that time NFÜ was the highest government authority handling the allocation of EU subsidies. (Now the prime minister’s office decides their fate and, thanks to Ákos Hadházy, we know what a terrific job it does.) A consortium was formed to advise NFÜ on more efficient oversight. Instead of doing the work themselves, the members of the consortium hired subcontractors who received large sums of money for doing nothing. The fraud seemed so serious to OLAF that a team actually went to Budapest to investigate. They found that millions of forints had been paid, in cash, to phony subcontractors. After four years of investigation, OLAF recommended that all the money spent on the project should be paid back by the government.

One would think that after this debacle the members of the consortium would lie low but, according to a recent news story, some of them are now vying for a new job that would bring 5 billion forints of EU money to those who win the tender. As HVG put it, “there are four royal warrant holders and two dark horses competing for the tender.” Warrant holders are companies that can supply goods and services to Elizabeth II, the Duke of Edinburgh, and the Prince of Wales. Of course, in this context the four companies are the ones that are “approved” by the Orbán government. At least two of those described as “royal warrant holders,” CEU Tender and Szilárd Nagy’s law firm, were members of the consortium responsible for the earlier mega-fraud.

The second case is also outrageous. In December 2015 János Lázár announced that the European Union will not allow the Hungarian government to use EU money for the purpose of improving the energy efficiency of private homes during the 2014-2020 budget period. Therefore, the Orbán government will use the subsidies allocated to energy efficiency on public buildings only.

Everyone in the energy sector was stunned because the European Union had specifically urged the member states to support investments in energy efficiency projects for the benefit of the population. As a result, in 2014 the Hungarian government asked the EU for funds to be spent on outright grants to homeowners. Between now and 2020 perhaps as many as three million residences could be insulated from a grant of 150 billion forints. The insulation of 40,000 apartments a year would create several thousand jobs. As the result of such a project, Hungary could save 4% in natural gas consumption by 2020.

Yet the government decided against the project and opted to use the amount granted to ordinary citizens on government and other public buildings. A day after this announcement the government proclaimed that the amount of money designated for improving the heating of TEK’s headquarters was to be raised fourfold. TEK is the infamous anti-terror unit created by Viktor Orbán practically the day after he took office in 2010.

And here comes Benedek Jávor again. He asked the European Commission about its stance on the issue. The answer was clear: the Hungarian government had specifically asked for money for work to be performed on 50,000 private homes to make them energy efficient. If the government cannot show proof of the work done on 50,000 homes, it will have to pay back the money it received for the project.

What can be behind this diversion of EU money from private residences to public buildings? Benedek Jávor is most likely right when he suspects that as long as ordinary citizens apply for individual grants, the homeowner will decide whom he will hire to do the job. With a public building, it will be the government that will pick the winners of the tenders. To make a large building energy sufficient is a huge job, costing billions. It can only be done by large companies, the ones that can be described as “royal warrant holders,” i.e. oligarchs close to Fidesz. (The Orbán government doesn’t hide the fact that one of its goals is to enrich people who can then be used for its own political purposes.) Individuals who would like to improve their houses will turn to some small local business owner outside the reach of the government. Their action will not directly benefit Fidesz. It is not an exaggeration to say that almost every major project in Hungary is undertaken for the enrichment of the present political elite and its business partners. The Hungarian public’s well-being is at the bottom of their priority list.

January 30, 2016
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January 30, 2016 6:09 pm

I am shocked, just shocked. This would never happen in the Russian Federation, Bulgaria, or Ukraine.

January 31, 2016 1:53 pm

Why not start comparing Hungary’s human rights situation with Pol Pot’s Cambodia, while you’re at it.

January 30, 2016 6:20 pm

@Istvan and so therefore it’s ok that it’s happening in Hungary? I expect a little more intellectual rigor from well-educated Hungarians.

January 31, 2016 11:17 am
Benedek Jávor can be seen as either heroic or nave, depending on ones perspective. By the way Eva I knew that the Russian Federation does not get EU development funds, it was included for the purpose of snark. If one believes that the Commission is really so vision impaired that it cannot see the massive corruption taking place with development funds in Hungary and numerous nations that meet the GDP requirements for aid that it requires Jávor or similar people in other countries to expose this corruption then he is heroic. If one believes that the developed nations actually tacitly accept corruption as the cost to complete projects seen as critical in the EU 2020 plan for development ( )then Jávor is nave. Let’s be clear here the United States in relationship to its own development aid around the world makes assumptions of overhead including corruption. The World Bank in 2005 estimated that each year US$20 to US$40 billion, corresponding to 20% to 40% of official development assistance, is stolen through high-level corruption from public budgets in developing countries and hidden overseas. It is hard to believe the EU does not effectively assume at least similar levels of corruption… Read more »
January 31, 2016 1:21 pm

“knave”, “nave” and “naïve” are not interchangeable – except on an English-language blog written by Hungarians (bless ‘em). Describing someone as the main part of a church (nave) does little to add to clarity in any discussion of the Hungarian government corruption question, but then Istvan would rather use ten words where one (appropriate) one would do.

Jávor a hero? Yes, in my view such a description is correct. The dreadful joke here is that it is simply not permissible to write how awful the thievery is in present-day Hungary, after all, one cannot write “Orbán is an embezzeler”, because that would be slanderous. You may be sure that those clever lawyers have been working over-time to give everything an aura of legality – after all, the government approved it (and the government is the voice of the Great Hungarian People”). It just can’t be done. So how can one discuss the question at all? And if all else fails there is Peter Polt the Puppet Prosecutor who Procrastinates while the Party Pillages.

Deeply, stomach-churningly corrupt.

January 31, 2016 1:59 pm

January 31, 2016 3:07 am

A small correction:
Not almost, but “EVERY major project in Hungary is undertaken for the enrichment of the present political elite and its business partners.”
I am familiar with many cases, some unreported. The swindle starts with the writing of application and takes definite shape when EU grants are confirmed. At lower local levels the money/jobs are distributed later, often for useless projects which are just a vehicle to reward/enrich a party soldier.

January 31, 2016 3:31 am

What shocks me is that the EU keeps pouring billions in Hungary as if nothing happens(ed).

January 31, 2016 5:37 am

London Calling!

Surely it’s important to maintain ‘energy dependency’ by the population to ensure their votes with a ‘voters’ premium’ dispensed just before the election?

If you give them insulation grants to make them less dependent they might consider putting their ‘x’ somewhere else on the ballot paper (but unlikely!).

In addition Orban wants houses to leak as much heat as possible to justify the expensive nuclear energy coming on stream in the future. The unique Hungarian ‘community’ heating – where central heat systems belch heat all day regardless of the outside temperature will ensure inefficiency for years to come.

He already has a problem because there will (should) be universal adoption of LEDs for lighting reducing energy use significantly.

It’s only space heating that will require the nuclear reactors.

If Orban uses EU monies to invest in renewables this will further reduce the justification for PAKs II.

When you drive into Hungary through Europe there is a noticeable drop in the number of wind turbines as you near Hungary.

No – God forbid that Hungarians start insulating their homes!



January 31, 2016 11:16 am

Charlie, I was horrified to hear from friends who had lived in Eastern Germany that in the panel blocks (Plattenbauten) there the situation was similar – heating always at full power, so if it got to warm you’d open the window …
Combine that with the fact that lignite (Braunkohle) was used in the system, combine that with those two stroke engines – the smell in the cities was unbearable when I visited once in the winter after 1989 …
I was also told that there were no meters for water consumption – so people let it run …

February 1, 2016 1:47 am

My personal experience regarding community heating at my in-law’s apartment in Budapest is that while 2 years ago it was still bloody hot inside, this time (late December 2015), the temperature had significantly dropped to 21 – 22 degrees — and it wasn’t very cold around Christmas. Could it be that for social-economic reasons, the city can no longer heat the water like they did before?

January 31, 2016 5:08 am

Orban’s pet project – diverted tax money for 5 kinds of team sports, 2011 to 2015.

Total 286.2 billion

[I think this is about 1/3 of the total money spent on higher education, and this amount is just the “TAO” scheme, not the total spent on “elite” sports – it does not include the huge sums wasted on soccer stadium building – correct me if I am wrong]

Soccer – 49.6%
Handball – 19.8%
Basketball – 12.8%
Water polo – 11.4%
Ice hockey – 6.5%

Breakdown of soccer support to teams:

Felcsút (Orban’s home village) 11.130 (11.0%)

Szolnok 2.454
Debrecen 2.113
Diósgyőr 2.072

Ferencváros 1.753
Újpest 1.707
Mezőkövesd 1.604

Kisvárda 1.491
Gyirmót 1.457

Henri Beyle
Henri Beyle
February 3, 2016 4:08 pm

So he is a snitch.