Hungary has slipped nine places to 66th on the Corruption Perceptions Index (CPI) released by Transparency International (TI) on February 21, placing the country as the second most corrupt in the EU after Bulgaria.

Hungary garnered 45 points on a scale of 0 (perceived as highly corrupt) to 100 (perceived as very clean) in 2017, three points below its core in 2016. Over the last six years it has seen its ranking deteriorate from 55 points, the international NGO said, adding that Hungary represents one of the most alarming examples of shrinking civil society space in Eastern Europe. 

The results also mean that EU member Hungary is perceived as more corrupt than Montenegro, which is striving for EU membership and was told by Brussels that it is not clean enough to join the bloc, Transparency International Director General Carl Dolan said.

Prime Minister Viktor Orban's rightwing government has drafted legislation that threatens to restrict NGOs and revoke their charitable status, according to the report.  The government also passed a law, named after Hungarian-born billionaire George Soros, that stigmatises NGOs based on their funding structures and adds burdensome reporting requirements. More than 20 NGOs filed legal proceedings against the government in both the Hungarian Constitutional Court and European Court of Human Rights.

The recent legislation is widely perceived as an assault on NGOs critical to the government, including the author of the corruption index, Transparency International, which was labelled by the government as a Soros-funded organisation. On Wednesday, the government did not issue any comments. Analysts and opposition parties are convinced that the "Stop Soros" legislation also serves to divert attention to the latest corruption scandals.  

According to investigative news site Atlatszo, the government spent more than €40mn last year on advertising it's two ‘national consultations’ and communicating the ‘results’ of those. Nearly a third of that money flowed to a media group owned by Lorinc Meszaros, the mayor of the PM's home village, who has accumulated tremendous wealth over the last three years after former Fidesz cashier and oligarch Lajos Simicska cut ties with Orban after the 2014 election. 

"The index results indicate that countries with the lowest protections for press and NGOs also tend to have the worst rates of corruption," the CPI report said.  What we're seeing in Hungary is this decline in ability to promote the rule of law is also leading to opportunities for corruption," said Carl Dolan, Director of Transparency International EU.

Orban's family has been involved in one of the biggest corruption scandals in Hungary. The EU's anti-fraud office OLAF's report leaked to the press revealed severe irregularities and traces of organised fraud linked to a company once co-owned by the prime minister's son-in-law, Istvan Tiborcz. The company has won public tenders in 35 towns, in 14 counties out of the 19 total to modernise street lighting for €40mn in total. OLAF recommended legal action as it found serious irregularities, conflicts of interest in all of the tenders and suspected organised fraud in 17 cases. The EU's anti-graft office called on Brussels to recoup €40mn Hungary was given for the project. 

The TI report points to the high value of public procurements, which has has risen from 4.7% of GDP to 9.4% between 2012 and 2017 and the high number of negotiated public tenders, which carry the highest risk of corruption, continues to be 13% of the total, which is three times higher than the EU average.