Administration of EU funding systems could be determined by family services

The current Hungarian government has made extensive efforts to gain control of a private company which is responsible for tracking European Union fund distribution. The death of one of the company owners one day after signing an important contract mean that his children – or more specifically, the state institution acting on their behalf – are key players in the story.

The Hungarian government’s forceful attempts to end the involvement of a private contractor in EU fund administration have led to a complicated legal situation. More than a decade ago, Welt 2000 Kft, a company half-owned by András Komáromi became a database vendor for the government of 1998 to 2002 – the same political party currently in power.  It then expanded the scope of its services to become the established database services provider for monitoring EU fund distribution after accession in 2004.

All this seemed to change last year, when the then state secretary (and now Minister) János Lázár decided that allowing an outside contractor to own the source code of a system which is so important to the state is a problem. Concern about external control of such a sensitive system was not a new issue, and previous governments also felt it was a problem that a contractor had exclusive rights to a system which was so critical to the administration of millions of euros worth of funding.

Understandably, the owners of Welt 2000 were not keen to part with such a valuable business asset, one which had grown into a lucrative business over the years. This apparently compelled the current government to take firmer measures.

Welt 2000 found itself under investigation by the tax authority, with armed officers’ storming the company’s offices as well as the residences of the owners. As the 444.hu news portal reported, after these events, the owners, including Komáromi, agreed to sell up for HUF 800 million (€2.5 million), which is less than what the company makes in a single year. One day after signing the contract, Komáromi died at the age of 47.

However, as Atlatszo.hu found out, his death actually prevented or at least postponed that transfer of ownership to the state. Family services now have a legal obligation to ensure the best interests of his three children, all of whom are minors and are now the legal heirs to their father’s 50% share in Welt 2000. Legal records show that despite the fact that Komáromi signed the contract on March 1, to this day, ownership has not been transferred to the state.

Nonetheless, we have learned the state remains determined to take over ownership, but because of the new situation, the price negotiations will become more complicated. Since the children’s guardian is legally bound to represent their best interests, it is not an option to sell an asset for less than its actual value, as was the case in the first deal. The children are protected, so the state will have to pay a much higher sum, or family services is legally obliged to relieve the legal guardian of financial control, a source told Atlatszo.hu. We also reached out to Komáromi’s widow, who declined comment.