Taxpayers’ billions wasted by the Food Rescue Centre that does not save food

Waste not, want not. So the saying goes, anyways. Indeed, that is the advertised aim of the state-run Food Rescue Center Nonprofit Ltd. – to reduce and prevent food waste in the commercial sector. Unfortunately, the non-profit doesn’t seem to believe its own slogan. They have spent a net HUF1.8 billion to operate their IT system, which was built for HUF2.2 billion. And surely, the noble – and necessary – cause would be worth all the money. Awkwardly, however, last year the company failed to collect a single kilogram of food. The logistics network that the company needs to fulfill its task has only just been put out to tender. Minor delay, minor oops – major costs.

The state-owned Élelmiszermentő Központ Nonprofit Kft., or Food Rescue Centre Nonprofit Ltd (FRCN) launched a public tender for the operation of their IT server system in July of this year. The contract, worth a net HUF1.8 billion, goes for a period of 1+1 years. Areus Infokommunikációs Zrt. and SCI-Hálózat Távközlési és Hálózatzatintegrációs Zrt applied – the latter won the contract for a total of HUF1.79 billion after the former’s bid was declared invalid.

The taxpayer funded state-owned company plays fast and loose with the money. While they understand the concept of spending, they were unfamiliar with the idea of revenue last year – their annual turnover was HUF 0, and they closed the year with a HUF167 million loss.

They are also unfamiliar with the idea of food collection and distribution.

In December 2022, in response to an FOIA we submitted about how much food had been collected and distributed and to how many organizations since the company’s founding, we received the answer: “Under Act XLVI of 2008 on the Food Chain and Official Supervision, no food donations were made to the MFC by food retailers in 2022.”

To be fair, the failure to rescue any food is hardly surprising – the FRCN is still looking for logistical partners to complete their task. Unquestionably, it would be difficult to transport food without transportation.

Photo: FRCN’s current logo.

The invitation to tender states:

“The Food Rescue Centre Nonprofit Ltd. aims to reduce the amount of food waste generated in the retail sector by collecting donated near-expiry products and distributing them to those in need through charitable organizations. To do this, it will use a logistics service partner to collect donated food from retail outlets, pack it in its own regional warehouse as requested by the charities and deliver it to them. The estimated number of collection points is 1,200.”

The deadline for tenders was September 12, but there is no information yet on the outcome.

The company was founded after regulation, introduced in February 2022, stipulated that all food retail chains with an annual turnover above HUF100 billion must offer to redistribute food products with a shelf life of 48 hours.

FRCN was established in early January 2022 to facilitate the redistribution.

But the company, now nearly two years old, has yet to lay the logistical foundations of the system. According to a Facebook post on Vác Online, they had just started trial operations in Pest County this September.

Photo: the big news was published by Vác Online on Facebook.

The company’s only other substantive work thus far has been giving a lecture to the students of the Eötvös József Technical School entitled “Food waste – Problems and solutions on the table”.

Those who can’t do, teach. If the lecture was done with the same efficiency that the company is run with, the non-profit may be teaching P.E. soon.

The NGOs have been there, done that

The company has collected no food and redistributed no food – all for the low, low price of a few billion forints.

They are also technically not needed – the Hungarian Food Bank Association has been doing the same task for a few years now.

According to the HFBA’s website, the NGO distributed a total of 97,100 tons of food across the country, worth over HUF62.5 billion. Last year, they distributed 8,651 tons, free of charge, to 239,000 people through 650 charities.

We received no information on how much the FRCN collected or redistributed this year, nor did we get any clarification on their trial runs before this story was published.

The real winner – ambiguously backed company sees billions

There are some obvious winners here. The company itself spent billions in public funds without any apparent accountability – winning.

SCI-Network Telecommunications and Network Integration Ltd is also winning. According to the public procurement authority’s website, the FRCN has already spent a net HUF2.2 billion on the development of an IT system – a contract won by SCI.

The contract itself was initially worth a net HUF1.5 billion – this price has increased to a net HUF2.2 billion now. Winning.

According to a HVG report, SCI is owned by the Turigum 2 Private Equity Investment Fund through Polaris Holding Zrt. The fund’s ownership is unknown, but two of the international consultants of the company managing the fund have previously held positions in the Orbán government or in a state organization. Also winning.

HVG identified one of them as Ferenc Szarvas, who has previously headed the State Debt Management Centre. He also sits or has sat on the board of MÁV, the Budapest Urban Management Centre, and MVM.

The other advisor, Tibor Halasi, is the former Minister of State for Property Policy at the Ministry of National Development. He stepped down in 2011 when he became an advisor to the Prime Minister.

The annual turnover of SCI-Hálózat Távközlési és Hálózatintegrációs Zrt. has sat between HUF 2.2 billion and HUF 6 billion in recent years. Its profit is between HUF 50 million and HUF 400 million. Last year, it was HUF 158 million.

So many winners, but Hungarian society, unfortunately, is not one of them. In fact, the public sits pretty firmly in the losing camp.

Translated by Vanda Mayer. The original Hungarian version of this story was written by Eszter Katus and can be found here.