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EU to Hungary: Change procurement to bar 'systemic' fraud from recovery stimulus

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The European Union’s executive has told Hungary to reform its public procurement laws to curb systemic fraud before billions of euro from the EU pandemic recovery fund become available, according to an internal document seen by Reuters, writes Gabriela Baczynska.

The European Commission is mandated with managing the €750 billion scheme and has already told several EU states their proposals for spending their part of the funds must be improved.

The bloc wants outright changes to Hungary’s public procurement laws, according to the 26 January Commission document laying out specific legal changes required of Prime Minister Viktor Orban’s government.

There was no immediate response from the Hungarian government to an emailed request for comment on the document.

“Competition in public procurement is insufficient in practice,” said the document, adding that that was linked to “systemic irregularities” that “led to the highest financial correction in the history of (EU) structural funds in 2019”.

The document called specifically for improved data transparency and accessibility, arguing that that would lead to a fairer and more open procurement process.

Hungary had irregularities in nearly 4% of its spending of EU funds in 2015-2019, according to a report last year by the bloc’s anti-fraud body OLAF, compared to the EU average of 0.36% and much worse than the second-poorest score of 0.53% for Slovakia.

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The Commission document listed necessary legal changes to introduce more transparency, real competition between bidders and accountability in Hungarian public procurement to avoid fraud and the need to recuperate misspent aid.

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