Hungarian government opens route to setting up own foundations

By bne IntelliNews October 17, 2016

According to a recent law amendment, the Hungarian government now has the right to set up charitable foundations, local press reported on on October 17.

Critics fear that the law amendment will increase the risk of corruption by opening the way for officials to divert funds. A series of scandals has surrounded six such bodies established by the central bank, while the government has been scrambling to close to public scrutiny their use of public funds.

The amendment, passed on October 11 but yet to be countersigned by the president, restores the government’s rights to set up foundations after it was rescinded a decade ago. The legislation does not specify the objectives or the maximum budget of the potential organisations. It also remains unclear who can be appointed to the boards of any such foundation.

The bill was passed in spite of the fact that the biggest scandal to dog the ruling Fidesz party in recent years has revolved around the use of public funds by the six charitable foundations established by the Magyar Nemzeti Bank. The scandal broke after a Constitutional Court ruling blocked the government's attempt earlier this year to remove spending by the foundations from public scrutiny.

A series of other measures has recently been introduced that appear intended to limit financial transparency in Hungary, especially concerning public money. Most recently, the government passed a bill that classifies details of donations and related tax rebates as secrets.

In 2006, the government led by the Hungarian Socialist Party abolished 'public foundations,' arguing that in many cases, they had “become one of the main channels of siphoning off public assets,” local Magyar Nemzet reports.

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