Fraudulent misuse of state funds for the film industry

In June 2010 the Motion Picture Public Foundation of Hungary (Magyar Mozgókép Közalapítvány, MMKA)—the public foundation responsible for the distribution of state funds in the film industry—underwent a detailed internal audit. The organizational, operational, economical and legal structure of the foundation was reviewed, but only a cut back and extenuated version of the results was published. Atlatszo.hu managed to obtain the full, anonymized report, and published it in early November.

In April 2012, following an investigation by the Government Monitoring Office (Kormányzati Ellenőrzési Hivatal, KEHI) a police investigation started. The foundation once responsible for the distribution of state financing in the film industry fell under the suspicion of repeated fraudulent misuse of funds and attempts for fraudulent misuse of funds that caused the loss of a total of 6.2 billion Hungarian forints (ca. 22 million Euros) – report of KEHI obtained by atlatszo.hu states.

The scale of the misuse is shown by the fact that after the investigation of the Government Monitoring Office another investigation started looking into the affairs of the public foundation to find evidence to the suspected misuse of billions. The Government Monitoring Office investigated the time period from January 2006 to December 2010 during which the Motion Picture Public Foundation of Hungary received and distributed a total of 26.1 billion Hungarian forints (ca. 92.8 million Euros) to stakeholders in the film industry. The public foundation had to adhere to clear and strict regulations regarding the use of these funds. However, the Government Monitoring Office believes that about a sixth of these funds, a total of 3.7 billion Hungarian forints (ca. 13 million Euros) was used for other purposes.

According to the summary of the Government Monitoring Office, the public foundation financed invalid, incomplete and unsuitable applications with more than a billion Hungarian forints (ca. 3.5 million Euros). Another 1.6 billion forints (ca. 5.6 million Euros) were paid as unlawful interest rate subsidies for loans taken by film production companies. The Motion Picture Public Foundation of Hungary also used budgetary funds to finance the Master of Hungarian Motion Picture (Magyar Mozgókép Mestere) awards, that come with a generous cash prize, despite the fact that the contracts with the ministry did not issue the fundings for this purpose. The Motion Picture Public Foundation of Hungary also paid a total of 100 million Hungarian forints (ca. 355 thousand Euros) without public procurement (and for that they have been fined by the public procurement committee).

In addition to this the Motion Picture Public Foundation used funds that meant to finance the film industry for its own operational purposes. The funds were used to support the Foundation’s own commercial companies which were running a deficit.

Full article in Hungarian

Translated by Atlatszo.hu’s volunteers.