Hungarian authorities close investigation in high profile Elias corruption case

Hungarian authorities close investigation in high profile Elias corruption case
Hungarian PM Viktor Orban and his son-in-law drinking fruit brandy
By bne IntelliNews November 7, 2018

The Hungarian authorities have closed the investigation against Elios, a company involved in one of the country’s biggest corruption scandals, without pressing charges, state news agency MTI reported on November 6. Prosecutors found no evidence of criminal offence by the company once co-owned by the Prime Minister Viktor Orban’s son-in-law, Istvan Tiborcz.  

After a two-year investigation, the OLAF inspected 35 public lighting projects won by Elios, between 2011 and 2015. Tiborcz, who married Orban's eldest daughter in 2013, was co-owner of Elios until 2015 when he sold his stake after the first investigations were launched.   

The company won public tenders in towns in 14 of Hungary’s 19 counties to modernise street lighting for €40mn in total. The European anti-graft office uncovered conflicts of interest in numerous cases in addition to serious flaws in the bidding process. 

OLAF discovered an established system of organised fraud in 17 projects in 2012, as all 17 tenders were formulated so as to maximise the price paid to Elios. OLAF uncovered numerous serious irregularities that had occurred during the public procurement procedures. It also identified a conflict of interest between some consultants and the works company.

After completing its investigation at the end of 2017, OLAF sent its final report with financial recommendations to the European Commission to recover €43.7mn and judicial recommendations to the General Prosecutor of Hungary. 

The OLAF looked into irregularities in the use of European Structural and Investment Funds and agriculture funds for the period between 2013-2017. It closed 49 investigations in Hungary with a recommendation last year, the second highest after Romania, according to the annual report of the anti-graft office.

In terms of financial penalty in proportion to the EU payments, Hungary was ranked first, as it obliged to pay back 3.92% of the funds due to fraudulent use compared with the 0.43% average of the EU.

Hungary’s chief prosecutor Peter Polt, a close friend of Orban, has demonstrated a reluctance to investigate alleged cases of corruption in cases where government or Fidesz officials are involved.

The lack of sufficient investigations in rampant cases corruption such as Elios prompted opposition parties to call for Hungary to join the European Public Prosecutor’s Office (EPPO).

There is currently a drive led by independent MP Akos Hadhazy to collect one million signatures in support of getting Hungary to join the EPPO. Opposition parties say this would not result in the suspension of the transfer of European Union funds to Hungary, but would instead drive back corruption. The government firmly rejects the idea, saying there is already a “framework within which action can be taken against corruption” but the underlying argument by government officials is that Hungary would lose part of its sovereignty by joining the EPPO.