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Editorial: Appearance of corruption becomes routine

History

The following is the Editorial column from the October 16 biweekly edition of the Budapest Business Journal.

One-bid tenders, or contracts awarded without a tender, have become standard operating procedure with this government. The appearance of impropriety is the elephant in the room with such contracts, but we have become so inured to situations that appear corrupt that it seems almost unnecessary to point them out.

Just for the sake of form, we will point out a few recent cases.

Chinese telco Huawei was named the winner of a no-bid contract to participate with state-owned Antenna Hungária – a company also chosen without a tendering process – to build Hungary’s fourth mobile network. The total contract is said to be worth HUF 12.8 billion, but neither party is sharing details. It is interesting to note that Huawei has faced charges of providing insecure equipment from various governments. U.S. officials have even said that Huawei creates equipment that allows the Chinese government to spy on users – though U.S. officials are hardly beyond reproach when it comes to charges of spying. Regardless of who the partners are, it seems bizarre that taxpayers are not allowed more information on this major deal for which they are paying. If there were some reason to forgo a competitive tender, it would be nice to know what that reason was.

Then there is the fence on the Serbian-Hungarian border, built by a state-owned company, HM EI, which was contracted by the Ministry of Defense. The man who oversaw the tendering process was Ministry of National Defense State Secretary István Dankó, who is also chairman of the board of HM EI. Because this is such an obvious conflict of interest, the government had to change the rules just for this bid. As the sole bidder, HM EI reportedly won the contract on August 2 – one day after the conflict-of interest rule was changed and the tender was announced. The contract with HM EI set the hourly wage for attaching the razor wire to the existing posts at as high as HUF 10,795, according to reports. While we would question the moral and legal existence of the fence, which was built to prevent refugees from entering this country, there may be some in the government who would argue that the job was so important that is was necessary to forgo a tendering process. If that is the case, then why not explain it in a credible fashion? Why go through a sham tendering process that had to be exposed in the media?

Before we go accusing the government of completely ignoring corrupt procurement proceedings, we should look at the case of Közgép. The Hungarian Procurement Board has prohibited Közgép from participating in public tenders for the next three years after it found the company submitted “false data” in a construction bid. It was great of the Procurement Board to flag this problem, but why were there no problems with Közgép before, when it was one of the most successful bidders for government work? Since Fidesz was elected in 2010, Közgép reportedly received state orders valued at more than HUF 100 bln in public procurement tenders. Things changed in February, when one of Közgép’s owners, media oligarch Lajos Simicska, had a public falling out with Prime Minister Viktor Orbán. Since then, Közgép has stopped getting government work, and just this month, the company said it would have to lay off half of its staff. Maybe there is no connection between the company’s fate and its owner’s relationship with the prime minister. But it certainly seems that way.

It is possible to ignore the appearance of corruption in the government’s dealings. It is even possible to ignore an elephant. But it is not easy.

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