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29th May 2022

Liberal MEPs demand von der Leyen scrutinise Hungary's plan

  • EU Commission president Ursula von der Leyen and Hungary's prime minister Viktor Orbán met in April to negotiate over the recovery plan (Photo: European Commission)

A group of MEPs from the liberal Renew Europe group have written to EU Commission president Ursula von der Leyen to urge her not to approve Hungary's recovery plan until an effective anti-fraud system is in place in the country.

"We are not saying that Hungary as a country should not get its fair share of the EU's recovery funds. But we think those funds should benefit all Hungarians, not just a few politically-connected ones," the MEPs wrote in the letter, co-signed by group president Dacian Ciolos.

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The MEPs, including Hungarian lawmaker Katalin Cseh, French MEP Valerie Hayer and Spanish legislator Luis Garicano, argue that the EU executive itself concluded that "determined systematic action to prosecute high-level corruption is lacking".

In the commission's 2020 economic recommendations - which are expected to be addressed in member states' national recovery plans - the executive said that "accountability for decisions to close investigations remains a matter of concern, as there are no effective remedies against decisions of the prosecution service not to prosecute alleged criminal activity".

It also adds that "restrictions on access to information continue to hinder the fight against corruption".

The MEPs want the commission to ask Budapest to allow access to all the final beneficiaries of EU recovery funds to the bloc's anti-fraud agency, OLAF, as a condition to accessing the recovery fund.

Another condition, proposed by MEPs, should be that Hungary adopts laws to ensure that persons and entities with a "record of serious financial irregularities or conflicts of interests found by OLAF" will not be able to access EU funds.

Hungary should also revise legislation that hinders access of journalists and civic organisations to public information.

The EU Commission's approval for Budapest's plan could come as early as 8 July, an EU official said. It concerns some €7.2bn of funding.

Von der Leyen has been visiting capitals of EU countries whose plans have been approved by the commission, although the council of member states also needs to give the green light for governments to access the funds.

Council scrutiny is expected to start in July. The council of member states will also need to approve the release of new tranches of money, once agreed milestones countries committed to in their plans are reached.

A commission spokesperson on Monday (28 June) said that member states need to explain to the commission the adequate control mechanism, and the commission assesses if those "controls system provide sufficient assurances".

"Member states will need to collect data on the final recipients of funds, the contractors, the subcontractors and the beneficial owners and make it available upon request," the spokesperson said.

Some EU countries have blocked the use of a common EU-wide database, called Arachne - which makes it harder for OLAF to monitor the flow of EU funds.

Over 20 countries have signed up to use the database voluntarily for the recovery fund, but they are not required to do so.

However, member states are to be required to set up national systems to record and report the final beneficiaries of EU recovery funds.

Hungary has been at the top of OLAF's investigation list for the two previous years, and has been leading the rate of financial recommendations - money to be recovered - in several annual reports by the agency.

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