Court sentences defendant to prison in a fraud case uncovered by Atlatszo in 2012
Seven years ago Atlatszo published a series of articles revealing that a company that got more than 200 million HUF (approximately €619 000 at today’s exchange rate) in EU funds obtained money through on an offshore company, that the equipment bought using the EU funds was overpriced and that the company employed naturopathic doctors instead of licensed clinical doctors. After the articles in 2015 were published, OLAF included this as a case study in their annual report. Based on OLAF’s recommendations, charges were pressed in Hungary and one of the defendants in the case has just been sentenced to prison.
In 2012 we reported that the one-year-old Body-Map Kft. was given Agricultural and Rural Development Operational Programme (ARDOP) funds from the EU, worth 215 million HUF, in order to establish a diagnostic center in the town of Kistelek.
The applicant had to provide 274 million HUF (€665 000) from its own funds to apply for the EU funding. Body-Map Kft. got a loan to cover this from an offshore company based on the Seychelles Islands. The company was called Test Body Ltd.
The manager of Body-Map was not willing to speak to our colleagues at the time, and our journalist was not welcome at the diagnostic center either.
In our second article we reported that the equipment purchased by Body-Map could have been brought for a significantly lower price. The spreadsheet attached to the tender accounts for 21 AMP non-invasive blood test and metabolite analyzers, bought in 2009, for 14.8 million HUF each (€45 800), a total of 310 million HUF (€960 000).
Our colleagues reached out to businesses selling the same product and they offered the same equipment for 3,4-4,5 million HUF (€10 500 – €14 000). The overpricing could be 9.4-11.3 million HUF (€29 000 – €35 000) per piece, and 197.4-237.3 million total (€610 000 – €734 000).
Our third and last article revealed how Body-Map employed naturopaths who used misleading titles suggesting that they were licensed medical doctors when in fact they were not. The centers listed the employee’s names with an apostrophe before the title (‘Dr) in a confusing manner.
A strange medical centre drew the attention of the National Tax and Customs Administration (NAV) and MAG Zrt, a company which investigates on behalf of the National Development Agency. The Csepel-based Body-Map Kft.
MAG Zrt., representing the body responsible for the distribution of EU funds at the time (Nemzeti Fejlesztési Ügynökség (NFÜ) was the first to take action in the case. MAG Zrt. examined whether the costs of equipment bought by Body-Map Kft. were realistic. The National Tax and Customs Administration (NAV) started an investigation into the possibly overpriced equipment, but they closed the investigation because MAG Zrt. was unable to prove any misuse of funds.
Based on the recommendations of the European Anti-Fraud Office, OLAF, Hungarian authorities charged two people in the case in April 2017. One of them was the manager of Body-Map Kft and the other was his or her friend who developed the idea for the fraud.
The first court decision in the case was made on May 3, 2019: the court of the first instance sentenced both defendants to prison but suspended the sentence of one of them. The length of the prison sentences was not made public, but these crimes carry a penalty of 2-8 years in prison.
Written by Katalin Erdélyi
English summary by Lili Rutai. You can read the original, Hungarian-language story here.