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Atlatszo.hu compiled a selection of Budapest corruption stories to mark the 140th anniversary of the city’s foundation
The saga of Metro Line 4
The idea of building a fourth underground line for Budapest has been a political football for over four decades. It was first mentioned in 1972, and again in 1996, only to be scrapped by the Orbán government of 1998-2002, while Budapest’s liberal mayor of 1990-2010 Gábor Demszky continually dangled the M4 carrot in his election campaigns. Construction finally began in 2004 and it seems incumbent mayor István Tarlós will be the one to open it.
After many delays as well as fears over drilling potentially causing subsidence to a Budapest Technical University building, the construction is nearing completion, albeit over-budget and with fewer stations and potential passengers than the capital’s other metro lines. A total of three consortiums and nine companies have been involved in the construction of the line, which stretches from Keleti Station to Kelenföld.
The project has also been dogged by persistent rumours of corruption. An investigation was launched into the ever-growing budget as part of one of the ongoing lawsuits involving Attila Antal, former head of the Budapest public transport company (BKV). Antal accused erstwhile Budapest deputy mayor Miklós Hagyó of accepting bribes from the rail construction company Swietelsky, which prompted police searches at the metro project directorate (DBR). Antal later apologised to Hagyó, but the state audit office (ASZ), the government supervisory office (Kehi) and an independent supervisory engineer of the metro also probed the investment’s legality. The ASZ then pressed misuse of funds charges in 2010.
With the trains at testing stage, the metro line’s first station has now opened and surface-level work is scheduled for completion presently. The government has even considered a law to simplify the approval process and enable swifter work, according to reports.
Although Budapest mayor István Tarlós’s pledge in July 2013 that the line would be open before the general election next spring now looks optimistic, the construction will receive a HUF 181 billion subsidy from the European Union, which has informally said it will accept completion of the project by the end of 2016, a year later than originally agreed. Operating the line will cost HUF 6-7 billion per year.
Property fraud in District VII
The romkocsma (ruin bar) phenomenon has put Budapest on more tourist itineries in the last decade than any other development. Ruin bars emerged in an era when buildings and backyards were being offered for rent, and venue owners paid rents to offshore companies in some cases. Budapest’s life as an international party hub began, and fortunately many of the pubs were allowed to remain, while similar venues opened in their vicinity.
However real estate corruption and the financial crisis have also played a key role. According to a development plan drawn up by District VII (Erzsébetváros), early last decade, properties were passed on to private investors, who destroyed many buildings or let them fall into disrepair, outraging conservationists. MSZP District VII mayor György Hunvald was accused of fraud, bribery, misuse of funds and document forgery in a case of eight district-owned buildings being passed on to “friendly” real estate companies. The local government sold the properties at a very low price to companies affiliated with György Nagy, the managing director of the local government’s own construction company, while councillors allegedly received sweeteners.
“They could have published a tender and sold it to the highest bidder but this didn’t happen. Instead, in 2003-04 someone bought a Jaguar sports car, a luxury apartment with a swimming pool and pocketed more money than would fit in both of our pockets,” news website Index.hu wrote in 2008. Fidesz councillors also agreed to the house sales and in 2008 at least one individual fled Hungary over the investigations.
Meanwhile Szeged city court ruled that Hunvald could not have known about the crimes of Free Democrat politician György Gál. Hunvald was immediately released as he had already served 18 months on remand for minor crimes committed. The damage caused totalled HUF 232 million and there was no organized crime group in the case, the court ruled, adding that Gál will probably spend only one year in prison.
The re-construction of Margaret Bridge
The revamp of Margithíd (Margaret Bridge) is a high profile case with links to one of Hungary’s most famous oligarchs Lajos Simicska. Work began in 2009, and although the bridge reopened to traffic in 2011, some parts are still under construction. The public tender was won by a consortium (Közgép Zrt., Strabag MML Kft., A-Híd Zrt. as Mh-2009 Konzorcium) with links to Hungary’s two largest political parties Fidesz and the Socialist MSZP, weekly HVG reported after studying the exceeded budget in 2011.
At this point in time no one knows how much public money was spent on the project, and to whom these payments were made. The development cost an estimated HUF 30 billion, double the original budget, and despite a court ruling that the invoices fell under the scope of public data, Index.hu news site never received them, and was told “the company holding the data does not conduct public service activities.” Furthermore, the extra costs related to the reconstruction have already hit HUF 1 billion.
The consortium successfully sued Budapest over the three-month delay in another lawsuit. Budapest police closed the fraud investigation last year, having failed to establish any misuse of funds and bribery. The planning of the bridge has also received criticism regarding transportation logistics.
The original text written by Áron Halász was posted on 17 November 2013. Edited by Dan Nolan.