EU funds worth $1.8 billion at risk for Hungary due to irregularities: report

BUDAPEST (Reuters) - European Commission inspectors found widespread irregularities in EU-financed projects in Hungary, a news report said on Tuesday, raising the risk that the European Union could withhold development funds worth $1.8 billion.

Citing a government document, news website said inspectors had found several shortcomings in the way a public procurement bureau under Prime Minister Viktor Orban’s office oversaw projects in the 2015-2017 period. They also found serious irregularities in 25 of the 29 projects they had examined, the report added.

The Commission declined to comment and the Hungarian government said it saw no block to European funding, but the report paints a stark picture of an on-going dispute between Brussels and Budapest over the handing of EU monies.

A Commission source said last week that the dispute may not be settled this year, which could delay payments.

A Commission spokesman said on Tuesday: “We do not comment on leaks and the Commission’s audit work is not public,” and declined to say when the dispute might be resolved.

The row over payments adds to Orban’s problems with the EU which has threatened to impose sanctions on Hungary, accusing it of breaching rules on democracy, civil rights and corruption.

A Hungarian government spokesman said in an emailed comment on the funding row: “The accounting and reimbursement of EU funds is continuous, running parallel with the progress of projects. We expect a further substantial amount to be transferred in the next months.”

G7 said, Hungary could lose access to as much as around 500 billion forints ($1.8 billion).

Hungary is one of the biggest recipients of EU cash and was allocated 25 billion euros of structural and investment funds for the 2014-2020 period.

Hungary’s cash-flow budget deficit widened to 1.646 trillion forints in January-August, exceeding the full-year target of 1.361 trillion as the government pre-financed EU-backed projects but received little in disbursements from the EU.

Reporting by Gergely Szakacs and Krisztina Than; Editing by Robin Pomeroy