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TI paints corruption as a ʼfundamental traitʼ of the system in Hungary

“Bias and corruption have become fundamental traits of the system in Hungary,” according to József Péter Martin, the head of Transparency International Hungary, presenting TIʼs global Corruption Perceptions Index (CPI) for 2016 at a press conference yesterday. Later, government spokesman Zoltán Kovács defended the governmentʼs record against corruption. 

In a press release sent to the Budapest Business Journal yesterday afternoon, TI Hungary says the countryʼs competitiveness has been “woefully poor for 15 years now”, while noting that its experts have found that there is a strong correlation between corruption and GDP per capita within the European Union.

“Corruption also disrupts economic development in Hungary,” Martin was quoted as saying, noting that corruption results in an uncertain business environment, which in turn leads to a deterioration of competitiveness and income disparities.

The TI Hungary leader added that those with political power currently openly favor others close to them, to the detriment of all citizens.

Citing a survey by the World Economic Forum at the end of last year, TI Hungary noted that while Hungary was the 28th most competitive economy in the world in 2001, it ranked only 69th on the competitiveness list last year. It described the perception of public institutions as “outstandingly bad”: from 26th place in 2001, the country had slipped to 114th by 2016 in this respect. According to the press release, it is telling that businesspeople in Hungary named regulatory uncertainty and corruption as the main obstacles to running a successful business.

“The competitiveness of Hungaryʼs economy is not only drifting increasingly far from the EU28, but also from countries in the region, the main reason for which is the inappropriate operation of public institutions,” Martin claimed.

“Several examples from the past few years are evidence that those in power regard public funds in Hungary as their own,” said Miklós Ligeti, the legal director of TI Hungary. The press release commented that it is “commonly known” that the National Bank of Hungary has placed nearly HUF 267 billion into various foundations, which it said “are not tight-fisted when it comes to public funds, as they were handing them out by the hundred millions to persons closely linked to the central bankʼs management”. TI Hungary said it reported this as a crime to the chief public prosecutor, but in vain, as an investigation into a suspected case of damage to national assets was never initiated.

The TI Hungary press release went on to say: “If it is about lining friends’ pockets, the government is even willing to do business with the source of all evil, the ‘migrantsʼ, provided they have money.” It claimed that as a result of the governmentʼs immigration policy, selected intermediary agencies – whose proprietary background is unclear and which, with one exception, are registered in off-shore havens – have earned more than HUF 100 bln selling residency bonds to citizens of non-EU countries.

Spokesman defends governmentʼs record

Speaking to Hungarian news agency MTI in response to the release of TIʼs corruption report, government spokesman Zoltán Kovács said it was “interesting” that prior to 2010, when the current government took power, Transparency International had not made such observations about Hungary. He added that under the previous left-wing government, “EU funds were widely stolen”, there were huge problems with the use of public money, and economic growth declined. “Although during that period numerous signs pointed to fundamental problems with the handling of public money, no such criticism was made,” he added.

Kovács went on to assert that in recent years a new tendency has emerged, as the present government handles funds responsibly, Hungary has evaded excessive deficit procedures thanks to disciplined management, and sustainable growth has enabled money to go towards an increasing number of goals.

“It is at the very least strange to accuse Hungary now, under the Orbán government, of having a problem with corruption,” he added, insisting that the government is committed to the fight against corruption and has zero tolerance in this regard.

TI Hungary was later quoted by online news sites napi.hu and 444.hu as refuting Kovácsʼs assertion, saying it has often emphasized that the problems did not begin in 2010, while indicating that the nature of corruption has changed.

“Back in 2008, at the time of the left-wing government, we called attention to institutionalized corruption in Hungary, although at that time we judged corrupt practices much more as a by-product of the democratic system, rather than a fundamental characteristic,” TI Hungary was quoted as saying. “Since 2010 this has changed: corruption has become typical of the system.”