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EU should seek return of funds over Hungary metro project - EU watchdog
December 22, 2016 / 3:27 PM / a year ago

EU should seek return of funds over Hungary metro project - EU watchdog

BUDAPEST, Dec 22 (Reuters) - The European Union should ask Budapest to return more than 280 million euros it received to help build a metro line in the Hungarian capital due to “fraud and possible corruption”, the European Anti-Fraud Office (OLAF) said on Thursday.

Passenger numbers on Budapest’s metro line four, completed in 2014, have fallen far short of initial expectations while the 1.7 billion euros ($1.8 billion) bill for the project was higher than first estimated, local media have reported.

The project was co-financed with European Union cohesion funds.

“The OLAF investigation uncovered serious irregularities - fraud and possible corruption - and therefore the Office recommended the Directorate General for Regional and Urban Policy (DG REGIO) to recover 228 million euros,” OLAF’s press office said in an email.

“OLAF also made a financial recommendation to the European Investment Bank in relation to 55 million euros which formed part of the various EIB loans the project was awarded,” it said.

A spokesman for the city of Budapest said it had yet to see OLAF’s findings but suggested current officials could not have been involved.

“Based on our information the findings suggest financial irregularities relate to the years 2006 and 2007, that is, a period well before the current city management took office in 2010,” a spokesman said in an email.

“The European Commission has yet to decide on any potential repayment of the funds or part of the funds,” the spokesman added.

A Hungarian government spokesman said: “The government gave the city full support for the implementation of the project. The rest was up to Budapest to realise.”

The new metro line is one of the biggest infrastructure projects completed in Hungary in the last decade, with planning and construction starting before Prime Minister Viktor Orban came to power in 2010.

The anti-fraud body said it had submitted judicial recommendations to Hungarian and UK authorities, which should take its findings into account in proceedings under way in both EU states. It said this was necessary given the transnational nature of the case as the fraud took place in more than one country. It declined to go into detail. ($1 = 0.9580 euros) (Reporting by Gergely Szakacs; Editing by Hugh Lawson)

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