core sector communique

Hungary: Government agrees to back mega-project in Hungary despite concerns about transparency

Anti-corruption NGOs have turned to Joaquín Almunia
Budapest, Hungary, 03 March 2010

A new motor race-course (the so-called ’Balatonring’ in Sávoly) will be built in Hungary with state aid despite many alarming facts. According to documents leaked from the Ministry of Finance, officials found the investment very “risky, uneconomic and unlawful” and even Péter Oszkó, Minister of Finance admitted that the leaked documents contained true information. Yet, the Government decided on awarding EUR 74,7 million state aid and a loan of EUR 55 million from the Hungarian Development Bank to the project of Sávoly Motorcentrum Kft., owned by Worldwide Circuit Managment SL., in which the Spanish Sedesa is involved. The head of Grupo Milton Management Zrt., the company responsible for the management of the project and former owner of Sávoly Motorcentrum Kft. was convicted on charges of fraud and of other crimes in 1995. “Even more concerning is the fact that the feasibility study of the project is not open to the public, and journalists seeking the release of the study under Hungarian Freedom of Information legislation were refused access to the document” – said Balázs Dénes, chairman of Hungarian Civil Liberties Union.

Transparency International Hungary, the Hungarian Civil Liberties Union and K-Monitor Anticorruption Watchdog Institute – major anti-corruption NGOs of Hungary – have therefore turned to Prime Minister Gordon Bajnai to express their concerns about the project’s financing from public sources, asking him to freeze the contracting procedure and the disbursement immediately. As Ádám Földes, legal officer of Transparency International Hungary stated, the organizations asked the Government to make the feasibility study of the project public, and to halt payments before taxpayers can be reassured that their money is prudently spent. At first, the Government failed to react to the civil society organisations’ letter and also refused to comment the case to the press, but on Friday, the Prime Minister finally ordered the Ministry of National Development and Economy to make the feasibility study of the project public.

As the case is not only alarming in the national context but may also conflict with European Union regulation on competition and state aid, the Hungarian Civil Liberties Union and K-Monitor Anticorruption Watchdog Institute have turned to Joaquín Almunia, European Commissioner for competition as well. Sándor Léderer, director of K-Monitor Anticorruption Watchdog Institute said that the NGOs asked the Commissioner to review the case and consider whether the decision of Hungary’s government has violated European law.