Hungary Insight

What is Hungary pledging to do to tackle corruption?

17_02_2022_Encontro_com_o_Primeiro-Ministro_da_Hungria,_Viktor_Mihály_Orbán

Budapest, Hungary – Hungary’s deal with the Commission was welcomed by Fidesz and opposed by its critics. However, there are some surprising safeguards in some of the newly introduced legislation that could actually work against corruption.

EU and Hungary reach deal to tackle corruption

On September 18, the European Commission finally made the decision everyone had been eagerly waiting for. It announced that with the new powers given to them in 2020 in the form of the rule-of-law mechanism, they would recommend the suspension of 65% of the commitments for three operational programmes (roughly worth €7.5 billion) in Hungary due to the risk of corruption.

However, these funds are not yet lost. The Commission essentially pushed the final decision onto the Council of the European Union, composed, in this instance, of the finance ministers of individual EU member states. The Commission even recommended that they wait until mid-November so that Hungary has the chance to implement institutional reforms that would ensure that EU funds are well spent.

On the Fidesz side, the decision was received positively. Shortly after the announcement, Viktor Orbán’s political director, Balázs Orbán posted on Twitter saying “Good News, [Hungary] has reached an agreement with the European Commission. Therefore the government will fulfil 100% of its commitments.” Ágoston Sámual Mráz, of the pro-government Nézőpont Institute, even remarked that the government “won a battle in Brussels.”

Those who have long been pushing for the EU to cut these funds were less enthusiastic. Green MEP Daniel Freund who has been a long-time advocate of using the rule-of-law mechanism against the Hungarian and Polish governments stated that “the Commission is giving Orbán an easy way out: sham reforms. This is NOT going in the right direction.”

The latter reaction is a bit premature. It especially was so at the time of the announcement, given that very little detail was available regarding the exact pieces of legislation that the Hungarian government pledged to introduce. Some of these reforms are somewhat unclear even now. There were also suggestions from those who disagree with the Commission’s decision that the EU made a bad deal because of how Fidesz politicians and think tanks reacted to it.

However, they should perhaps bear in mind that Fidesz’s rhetoric tends to spin whatever deal they make with the EU in a positive and victorious light, regardless of the outcome. This was the case two years ago when the rule of law mechanism was introduced, even though the original position of Orbán was that no such thing should be established. Although it is true that the Hungarian government’s tone is a bit more conciliatory rather than triumphant this time. Should this remain, it would probably bring about some positive change in Brussels-Budapest relations.

Hungarian legislation establishes Integrity Authority and Eligibility Committee

But what are the proposed legislations to counter corruption in Hungary? In order to address the Commission’s concerns, negotiations between Brussels and Budapest resulted in the introduction of new anti-corruption legislation in the country, which was developed in cooperation with the European Commission. One of these pieces of legislation was published last week, which shed light on what the bulk of the deal involved.

Legislation published on Friday concerns the establishment of three institutions: the Integrity Authority, the Anti-Corruption Work Group, and the Eligibility Committee.

The Integrity Authority will be able to act if it finds that other relevant authorities did not do everything to prevent fraud or corruption in relation to the spending of EU funds. It will be able to bring preventative measures, put recommendations, launch lawsuits, maintain a watchlist of individuals excluded from tenders, and most importantly it will be able to launch investigations.

Crucially, according to the legislation, the Integrity Authority would have the right to deal with “planned, ongoing, or former” projects that received EU funding. On the one hand, this means that the Authority would have no say over corruption matters exclusively related to Hungarian taxpayer money, however, it would also mean that, in theory, it can also investigate past, higher profile corruption matters that were so far unchecked by Hungarian authorities.

A point of criticism could be that even if the authority is able to do its job and investigate corruption issues freely, the courts who make the final judgement about these matters are still appointed based on current Hungarian law, a frequent target of criticism for its structural political bias.

However, it is worth bearing in mind, that 1. We do not know if Hungary and the Commission made further deals regarding some form of judiciary reform 2. This would still be the case if Hungary joined the EU Prosecutors’ office, which would have been seen by many as the best-case scenario.

It is also true that in Hungary, the question tends to be not what certain organisations are capable of doing legally, but whether they will actually fulfil their legal obligations, or will a government strawman be appointed to fulfil these responsibilities who would subsequently not do their job properly. So, who will this authority be composed of?

Will these safeguards be enough?

The Integrity Authority will have a Chair and two deputy-Chairs who are to be appointed by the President of Hungary on the recommendation of the President of the Hungarian State Audit Office.

At first, this might sound like an inherently politically tainted organisation for those who are familiar with Katalin Novák, Hungary’s current president who used to be Fidesz’s vice-president or for those who are aware that Fidesz has infiltrated all areas of the Hungarian state. However, there is a catch which indicates that the Integrity Authority might be able to do its job without political bias.

In order to even be eligible for any of the three positions, apart from meeting specific conflict of interest conditions (they must not have been a member of any political party or filled a political position in the past five years), candidates will have to be approved by the so-called Eligibility Committee. The Eligibility Committee (consisting of three members) is appointed by the Hungarian Director General of the Directorate General for Audit of European Funds and its members have to meet several conditions.

They themselves must not have been in any political position in the past five years (including simple party membership) and they must have “substantial experience working for a recognised international institution and long, verifiable, and relevant practice within such an organisation in the areas of public procurement and/or anti-corruption.”

This means that even if the Director General, Balázs Dencső would try to appoint someone who would not do their jobs properly, his hands are tied regarding who they can actually put in this position. The specific condition of international experience seems to be a particularly solid safeguard from the appointment of Fidesz soldiers of unquestioning loyalty.

The final institution the legislation published on Friday sets up is the Anti-Corruption Work Group. The Work Group appears to be a less relevant institution, given that it seems to be more of an advisory organisation. It will examine existing anti-corruption legislation and recommend new ones, as well as write an annual report for the government.

The Work Group is set to have 21 members: ten governmental appointees, ten non-governmental appointees, and the president of the Integrity Authority. The ten non-governmental appointees will be appointed by the Chair of the Integrity Authority based on the list compiled by themselves and the Integrity Authority’s two Deputy Chairs.

Initial leaked news about the structure of Hungary’s deal with the EU suggested that the operation of the authorities would be examined once every two years. Final news did not include this proposal, but this might be incorporated into Hungary’s milestones as part of the RFF funds (the funds are only distributed step-by-step once certain conditions are met). If these institutions prove to be insufficient, there will be some room for modification.

The big problem, however, remains that as Fidesz-affiliated business entities have been given so many public tenders and others were shut out from these contracts so much in the past decade that it is quite likely that contracts would go to the same business groups as in the past 12 years, simply because the competition has already been virtually killed off.

More room for negotiation

However, even if the newly introduced institutions are completely worthless, if it really wants to, the EU as a whole still has one more option to contain some of Orbánism’s other aspects.

As the Commission pushed the final decision onto the Council of the EU, individual member states have much greater leverage over the Hungarian government than before as they can decide on cutting some of Hungary’s funding.

The Commission made this decision possible by proposing cutting the funds significantly less than the first leaks suggested. Did anyone seriously think that member states would decide to strip one of 70% of its EU funds (as was originally suggested in initial leaks) if they know that a similar fate could await them? With a smaller sum on the table, the Council will be able to at least consider cutting the funds.

Prime Minister Orbán will have the support of Poland and Italy as a given, however, other member states could try to do a deal with him.

Are they frustrated by some of his decision-making during the war or by the security risks of Russian foreign influence not being addressed in an EU and NATO member? They could try and blackmail the Hungarian government with their votes. Are sanctions and security policy completely unrelated to the rule of law in Hungary and corruption-related EU funds? Yes, they are. However, Orbán has broken every possible informal rule in the past decade when it comes to EU politics. If they have the political will, other member states now can use his own weapon on him.

By Ábel Bede

Ábel Bede was born in Budapest and has two degrees in History from Durham University. He specialised in Central Europan history and has been contributing to Kafkadesk since 2019. Feel free to check out more of his articles right here!