Institutional framework paves way for nabbing farm funds

A division of the Hungarian state administration overseeing the distribution of agricultural support funds turned out to be a serious player in the illicit utilization of public money. As Atlatszo.hu found, the flaws in the system that allowed the misappropriation was well known, significant amounts were siphoned out nonetheless in a fraudulent scheme currently being investigated by the police.

Anomalies in relation to distribution European Union and other development funds is a fairly common theme in Hungary’s agriculture, even though the complete lack of transparency is something well known to the authorities.

In 2012 the agriculture and rural development office MVH was subjected to a government commissioned audit to explore areas where efficiency may be improved. What they found during the process – that was often obstructed by various MVH branches – was a completely outdated, bureaucratic organization that lacked any sort of proper oversight and had no inclination to provide adequate customer service, thus making it a serious corruption risk.

The audit report obtained by Atlatszo.hu notes that this is likely caused by the fact that MVH is the direct legal successor of the bureau distributing the earlier-used Sapard funds prior to Hungary’s accession to the European Union. This came in 2004, apparently there have been little to no improvements carried out in the organizational structure since. The situation was aggravated by the complexity of the legislation meant to regulate the bureau’s operation, which posed a risk rather than anything else, because it made oversight near impossible. The report notes that accordingly, MVH could easily violate its own internal regulations without any repercussions, since there was no way to explore and expose wrongdoings.

In 2013, the state of affairs culminated in a criminal investigation against MVH for crimes related to paying out farmland subsidies. The criminal organization stole HUF 117 million (€371,500) and had its sights set on HUF 1.4 billion (€4.4 million) more. Police allege that the ring was led by MVH’s deputy director and another senior executive.

The defendants realized that there are areas of land that would be eligible for subsidization, but no application was ever submitted. They then hired individuals to act as strawman and submit subsidy applications, which the MVH officials approved and then collected the money for themselves. The applications passed even though the applicants lacked any eligibility. Due to the obscurity of the organization, as well as the few inspections that ever took place, the perpetrators could rightfully assume that nobody would ever find out.

However, their undoing was their own carelessness. Whenever there was a remote chance that they would be had, like a routine information check, they regularly resorted to withdrawing the bid altogether. The high number of curious cases when bids were submitted and then withdrawn for no good reason eventually raised red flags and prompted closer scrutiny.

The trial is currently underway.

Original article in Hungarian.