District Prosecutor’s office overturns police decisions not to investigate bid rigging

Both the Hungarian Competition Authority (GVH) and the National Bureau of Investigation (NNI) would have closed the investigation into the suspected corruption in the public procurement procedures we presented, but the Budapest IX District Prosecutor’s Office intervened and overturned the police decisions. Thus, the NNI’s Corruption and Economic Crime Department has to investigate several public tenders where the Mészáros-companies were the winners under suspicious circumstances. Be it fleet tenders or MCC construction projects.

Last March, we reported that a closer examination of some tenders revealed that Mészáros M1 Autókereskedő Kft., owned by Lőrinc Mészáros (childhood friend of Viktor Orbán), had won several contracts by accepting extra-short delivery deadlines. Such short delivery times that even major market players such as Porsche or Mercarius could not compete with them, even though they offered significantly lower prices in some cases.

The success of Mészáros M1 was partly due to the evaluation criteria in the calls for tenders, after contracting authorities had on several occasions set the evaluation weighting for the delivery deadline apparently unrealistically high. In other words, speed was more important to the tenderer than price. As Átlátszó’s public procurement expert pointed out at the time, this is problematic because it assumes that the public companies did not carry out prior market research and did not launch the procurement procedures in time, although they could have been aware of when their existing contracts would expire.

It has therefore damaged the budget by paying a higher price for cars in exchange for getting them earlier.

On the other hand, the question was raised as to how Mészáros M1 Ltd. was able to meet such short deadlines (even under special conditions), which even the biggest car dealers were not able to do. The simplest explanation is that, for some reason, the company has at its disposal exactly the number of vehicles with the special equipment required by the tender.

As the aim of the procurement is to rationalise public spending, ensure good management and efficient use of public money, we asked the Integrity Authority to investigate whether these priorities had been breached in the cases outlined.

The Hungarian Competition Authority and the police refused to investigate

The Integrity Authority forwarded our complaint to the Hungarian Competition Authority (GVH) due to a lack of competence, but the GVH did not see any reason to open a competition investigation „due to a lack of concrete evidence”. After we reported on this, opposition MP Ágnes Vadai (DK) submitted a written question to Péter Polt asking whether the Attorney General believes that any law was violated in the cases that were revealed.

Péter Polt and Ágnes Vadai

Polt assessed the question as a denunciation and forwarded it to the National Investigation Bureau, which, however, rejected the complaint due to the lack of suspicion of criminal offence. But this story did not end there.

District prosecutor’s office overturned the police decision

As it turned out, the Integrity Authority „submitted a motion for reconsideration within the deadline for the publication of the anonymised decision”. The Budapest IX District Prosecutor’s Office granted the motion, annulled the decision of the investigating authority and ordered an investigation into suspected misappropriation.

The investigation was launched and in the meantime Atlatszo investigated even more suspicious tenders, also involving M1 Mészáros.

Suspected restrictive conduct

As we have reported in multiple stories, the company has won several fleet tenders without the lower bidder submitting a replacement bid, so Mészáros M1 won the contract. In our opinion, there is a suspicion that the competing companies are colluding.

Ágnes Vadai wanted to know what the Attorney General thought about this and submitted new questions. Péter Polt acted in a similar way to the previous case: he assessed the question as a denunciation and forwarded it to the police. However, the NNI saw no signs of criminality this time either and rejected this complaint.

However, the Budapest IX District Prosecutor’s Office also annulled this decision and ordered the authority to investigate.

The NNI has recently informed Ágnes Vadai that an investigation has been ordered into the suspected crime of restrictive conduct in public procurement.

MCC tenders are also under investigation

In addition to the car fleet tenders, the police are also investigating the construction projects of the Mathias Corvinus Collegium Foundation (MCC), a largely publicly funded, elite Fidesz school.

As our newspaper has revealed, ZÁÉV, a company owned by Lőrinc Mészáros, won one of the MCC’s tenders, only after five of the ten other applicants were disqualified, mainly on the grounds that they had offered disproportionately low prices. In another public procurement procedure, a similar scenario occurred: REAG Invest Kft. was selected after two other bidders were excluded on the grounds of „disproportionately low” prices and one on other grounds.

Asked about the tenders presented, Ágnes Vadai asked Péter Polt whether he thought it should be investigated why MCC continually excludes the best bidders in its public procurement on the most varied grounds. The usual scenario then played out: Polt referred the question to the NNI, which he assessed as a denunciation, and the police rejected it.

However, it has recently emerged that the IX District Prosecutor’s Office has also overturned this decision and ordered the police to investigate these cases.

Written and translated by Eszter Katus. The original, Hungarian version of this story can be found here.