Today is International Anti-Corruption Day, and on this occasion, Transparency International Hungary (TI) once again organised Átláccó festival on board the ship A38 in Budapest. This year, the anti-corruption organisation organised a conference on public procurement, the distribution and supervision of EU funds, and the abuses related to these. The speakers at the international meeting included the United States’ Ambassador to Budapest Colleen Bell, State Secretary of the Prime Minister’s Office in Hungary in charge of EU Developments Eszter Vitályos, with presentations from the Policy Director of the European Anti-Fraud Office (OLAF) and the senior prosecutor of Romania’s anti-corruption agency (DNA).

40 percent of funds awarded in public procurement procedures in Hungary are generated by Hungarian tax-payers, while 60 percent comes from the tax-payers of other EU countries. “We are talking about public funds, therefore it is in the interest of us all that the Hungarian state spends these funds efficiently, and in accordance with the intended purpose and with regulations”, said general director of TI József Péter Martin in his opening speech at the conference. Hungary distributes an above-average amount of EU funds worth more than 6% of GDP, almost HUF 2000 billion this year.  Without these, there would be no public investments, nor any economic growth in Hungary. At the same time, the abundance of funds entails the risk of corruption, as it encourages the absorption of the most EU funds possible. The recently published research of TI found that EU projects are systematically overpriced.

US Ambassador: Demand more from elected officials

Anyone who is doing research in Hungary today on public procurement or reads investigative articles uncovering the abuses will have no doubt that steering grants to certain entrepreneurs, companies, acquaintances and in some cases relatives has become a common occurrence. It is particularly unsettling in this context that the parliament modified the section of the new public procurement act a few days ago that was intended to bar relatives of public decision makers from becoming beneficiaries of public grants. “This amendment further increases the possibility of corruption, as once again nothing will prevent relatives of public actors from having easy access to lucrative public contracts”, added József Péter Martin.

Colleen Bell, the US Ambassador to Hungary explained at the conference:  “Many believe that it is impossible to eliminate a problem as deeply rooted as corruption. In truth, it requires an engaged and vigilant electorate.  It requires investigative journalists. It requires civil society organizations galvanizing people to demand more from their elected officials, and to push elected officials to conduct the affairs of the people transparently. It requires only a commitment by the people to hold our governments accountable.”

Margarete Hofmann, Policy Director of OLAF said: “The fight against fraud and corruption affecting European Funds has made considerable progress in recent years across the European Union. However, there are still several gaps in our “safety nets”, as OLAF’s investigative experience shows. These weaknesses are heightened by the complex nature of the management and control of EU funds, involving several layers of legislation (European, national, regional and local level) and various actors. The lack of co-ordination increases the risk of criminal behaviour. OLAF therefore welcomes all measures and initiatives developed to counter fraud and corruption, but we believe that, in order for them to be truly effective, they need to be structured, targeted and coordinated. Ideally they should be integrated into national anti-fraud strategies, enabling all actors – elected representatives, public administrations, law enforcement and civil society – to play the same tune. This would not only effectively protect tax payers’ money, but would also help safeguard the credibility and reputation of the European project.”

Dana Manuela Ana, a senior prosecutor of Romania’s anti-corruption agency said: most corruption crimes are related to public procurement procedures, which is to be expected, given that corruption follows the money. Annual public procurement spending in Romania represents approximately 12 percent of GDP and more than one third of the total state budget. The DNA’s investigative experience shows that there are public institutions where it is common practice to ask for significant amounts of kickbacks of up to 10% of the contracts’ value. Corruption in Romania can no longer be regarded as an isolated phenomenon only involving criminals, added Dana Manuel Ana, who also emphasised that institutionalised corruption represents a significant threat to Romania’s national security.

TI also involves citizens in the fight to reduce corruption

Citizens may contribute to increasing the transparency of public procurement procedures and may make covering up fraud more difficult. TI has also presented the IT tools developed for this purpose. One of the tools suitable for monitoring public procurement procedures is the so called Red Flagssystem developed by TI and K-Monitor watchdog organisation, which shows up public procurement projects that are problematic in terms of corruption at the same time as the calls for these are announced based on the characteristics of such announcements.  “We have already screened approximately 15 thousand public procurement announcements with the Red Flags system, and received almost 8,000 corruption flags”, explained Anita Koncsik, legal expert of K-Monitor watchdog organisation, one of the contributors of the tool’s development.  The application makes it possible to monitor public procurement projects that are suspected to be tailored, and also informs about the number of contracts granted to any one bidder.

Moreover, TI has developed a mobile application to monitor the distribution of EU funds as part of the organisation’s public finance programmes. Citizens can evaluate the quality and usefulness of investments implemented using EU funds with the mobile app after downloading it to their smart phones. The EU fund-watching app visualises the reports received from citizens on a heat map.  TI investigates investments flagged as most questionable by citizens on an individual basis. “We cannot prevent corruption, but we can help making the abuses impossible to deny”, said Gabriella Nagy, TI’s head of public finance at the announcement of the mobile app.

We visualise corruption

Even though 89 out of 100 Hungarian citizens feel that corruption is a serious problem in Hungary, most of them still cannot put their finger on how the abuses take place in practice.  “Corruption is a phenomenon difficult to measure or illustrate, for which reason we set ourselves the goal of highlighting the harmful social and economic effects of corruption in an easily understandable manner. To this end, we invited applications for an infographic, and received several submissions illustrating the anomalies of public procurement”, explained Emese Hortobágyi, head of people engagement campaigns at TI. The ten best submitted infographics will be exhibited at the venue of the conference. The first prize of the infographic competition will be presented by the deputy ambassador of the Netherlands to Hungary, Elzo Molenberg.

Átláccó festival and International Anti-Corruption Day will be closed by the live concert of the jazz-funk band Amoeba.