Corruption and the lack of transparency in Hungary’s economy are widely considered a given but have now become significant factors in hindering the country’s growth. The Budapest Business Journal held its 2010 Business Forum with the purpose of presenting the thoughts of distinguished panelists (summarized below) who have positive, forward-looking ideas on how businesses in this country can clean up their act.
managing director, CNS Europe, president,
Canadian Chamber of Commerce in Hungary
▶ Transparency and corruption are always sensitive issues that are difficult to discuss. At the same time we as the chambers active in Hungary have a responsibility to take action and improve conditions for our members and the national economy. So as the head of the CCCH I am inviting the other chambers to jointly develop a code of ethics that we could abide by with the aim of promoting transparency in how business is done in Hungary.
I am hoping that when we get together one year from now we will have good progress to report.
executive director, Transparency International Hungary
▶ It takes two to tango. Campaign financing has long been one of the main problems in Hungary, which is directly linked to corrupt practices in the business sector. Until this fundamental aspect changes we cannot expect things to improve. The most important thing for businesses is to say no. I know this is difficult given the conditions the private sector faces and that it does not carry any immediate benefits, but this attitude will definitely pay off in the long term.
Counselor, Head of Economic Department,
German Embassy in Budapest
▶ If someone had to choose between going to the dentist and going through the bureaucracy of acquiring a permit, surprisingly many people would opt for the former. The level of administrative hurdles that persist are proving to be a major obstacle in the continued development of businesses. In particular small and middle enterprises which play a very important part in the overall output of the economy are affected. Simplifying the conditions could greatly benefit them and improve their competitiveness.
BCCH Council Member Senior Lawyer
CMS Cameron McKenna LLP
▶ I have experienced many times that the lack of transparency in Hungary has become a deterrent for foreign companies to invest in the country. Although we are not doing too bad, legislation is often drafted and ratified hastily, without due preparation. This frequently leads to problems and loopholes that can be exploited. The judiciary system also plays a role through being somewhat out of touch with commercial reality. The current state of legislation is leading to less rather than more transparency without which investors will likely stay away.
Chief Public Prosecutor of Budapest, retired
▶ It is commonly accepted that corruption takes place everyday in the public sphere, but the definition of this concept is far from clear. There is a line between what is actually corruption in the legal sense and what could be considered by the public to be immoral. The distinction differs from country to country. In the OECD’s anti-corruption pact smaller gifts given to encourage employees to assist are actually legal. Perfect regulation is probably impossible, but good regulation can only be facilitated with adequate professional knowledge and wisdom.
managing director, Joint Venture Association
▶ Hungary could only achieve success if corruption is forced back in every level of the economy and greater transparency is achieved. The system needs to be revised, personal responsibilities must be defined and better tools for enforcement introduced. In order to advance Hungary’s economic progress the Joint Venture Association has compiled a proposal on changes that should be made to the tax system, which would give businesses the chance to grow and be more competitive.
Partner, KPMG, Forensic, Central and Eastern Europe
▶ The lack of transparency affects not only the state but also businesses and can profoundly impact how transactions in everyday business go. Companies creating structures that are transparent can have great benefits and it also serves the best interests of the public. For instance, it can guarantee fairness in the evaluation of various tenders. However, transparency starts with the individual. It is important for people in business to not even consider resorting to non-transparent channels.
Liliana de Sá Kirchknopf
Head of the Swiss Contribution Office
Embassy of Switzerland
▶ The Swiss Contribution Office has long been a proponent of transparency in public procurement through supporting public institutions that conduct their procedures in observance of transparency principles. We are also promoting best practices from other countries, such as the introducing of the integrity pact under which a company commits itself to fully conduct its activities transparently, or a public negative list of those companies that have been found complicit in corruption.
of counsel, Ferenczy Gide Loyrette Nouel
▶ The laws against money laundering and other business-related illegal practices are a necessity but they also put the legal profession in a difficult situation. The regulatory environment we live in basically requires reporting on almost all transfers of money for business purposes and the lawyers are called on to release their clients’ confidential information. This is highly problematic in a field that is built on confidentiality between client and attorney and could lead to serious issues in how business is done.