EU funds

Transparency and Átlátszó filed official complaints about overpriced food aid

After a long litigation and a final court decision, we received from the General Directorate of Social and Child Protection what products and at what price were contained in the food packages that the government distributed to the needy with European Union support. The data testify to shocking overpricing: as if the food had been bought in 2017 at this year’s prices. For this reason, together with Transparency International Hungary, we turned to the Tax Authority and the Integrity Authority with a report requesting an investigation.

In the packages purchased under the Operative Program to Support Needy Persons (RSZTOP), milk costing 159 forints cost 516 forints, and cooking oil costing 488 forints cost 1,333 forints. There was a similar multiple overpricing of other foodstuffs, rice, pasta, sugar and flour, according to data received by Atlatszo after a FOI request and lawsuit.

For a long time, we tried in vain to get information about the project coordinated by the General Directorate of Social and Child Protection (SZGYF), which started in 2018. The SZGYF was not willing to reveal what products were included in the food packages bought utilizing nearly HUF 10 billion European Union support, usually distributed by campaigning Fidesz politicians.

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The state body referred to business secrets and refused to hand out the pricing data where the three private companies listed item by item what product and at what price they were offering. For this reason, we launched a FOI lawsuit, which we won in the first instance at the end of 2021 , and then in May 2022, legally,  in the second instance as well.

After a long time, we finally received the requested tables , from which it was revealed that the companies that won the public procurement, Natur-Rost Kft., Enger Kft. and Káta-Mill Plus Bt., delivered the food in the packages overpriced. For example, one company sold a liter of milk for HUF 516, another for HUF 684, and the third for HUF 781 – although according to the KSH, the average price at the time was HUF 205, but in some stores it was also available for HUF 159. 

The situation is similar for the other products, flour, sugar, cooking oil, pasta and rice: all of them were delivered by the selected companies in 2017 at this year’s, super-inflationary 2023 price.

Brutal overpricing: 159 HUF milk cost 516 HUF in an EU-funded package for the poor – English

We sued the Hungarian Directorate-General for Social Affairs and Child Protection and won: the organization had to disclose exactly what was in the annexes to the framework contract for food packages for the poor distributed with EU money.

Due to the obvious overpricing, Transparency International Hungary and Átlátszó turned to the National Tax and Customs Office. We believe that the significant overpricing violates the requirement of efficient and effective financial management with the European Union budget and thereby endangers the financial interests of the European Union, therefore we filed a report on suspicion of budget fraud.

At the same time, we also turned to the Integrity Authority, requesting an investigation of the case. This anti-corruption office was established by the Hungarian government at the end of last year in order to meet the expectations of the European Union and to receive the frozen EU funds as soon as possible. Átlátszó and Transparency Hungary are civil members of the Anti-Corruption Working Group working alongside the Integrity Authority.

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Transparency International Hungary has sent a formal notification to the Integrity Authority requesting an investigation into the “partly unforested canopy trails”. In their submission, referring to our story, they write that the cases that have come to light suggest that “systemic errors occur” in the selection of certain projects using EU funds.

In our joint filing, we drew the attention of the Integrity Authority to the brutal overpricing of food packages for the poor, which, in our opinion, “violates the requirement of efficient and effective financial management with the European Union budget and thereby endangers the financial interests of the European Union”. We asked the Integrity Authority to investigate the case and take the necessary measures to remedy the discovered violations and hold those responsible accountable.

Cover photo: Fidesz Member of Parliament Béla Mihálffy distributes an EU-funded food package in October 2021 (Photo: the politician’s Facebook page)