Hungarian police investigating fraud in EU-funded projects

BUDAPEST (Reuters) - Hungarian prosecutors have launched an investigation into European Union-funded projects investigated by the European Anti-Fraud Office (OLAF) and run by a company once controlled by the son-in-law of Prime Minister Viktor Orban.

OLAF said last month its investigation concerned 35 public lighting projects in Hungary. It had sent a report containing financial recommendations to the European Commission and its judicial recommendations to prosecutors.

Hungary receives billions of euros in EU development funds each year, an important driver of economic growth. The EU is preparing for tough negotiations on its next seven-year spending plan, with some member-states calling for a reduction in generous funding for the ex-communist east.

Orban’s right-wing Fidesz party, in power since 2010, is tipped to win a third consecutive term in an election due on April 8. The OLAF investigation has become part of the election campaign, with the strongest opposition party Jobbik calling on Orban to resign.

Reuters has been unable to reach Orban’s son-in-law, Istvan Tiborcz, for comment. The company said media reports of the investigation were politically motivated.

The Pest-county prosecution said in a reply to Reuters on Thursday that on Jan. 22 it ordered an investigation into projects examined by OLAF based on “excessive budgetary fraud ... and other crimes”. She said police were now conducting the investigation.

“The date of completion of the investigation cannot be projected at this stage,” Csilla Gugyi, prosecutor and spokeswoman, said. She did not give further details.

The government spokesman’s office said Hungarian authorities had investigated the projects cited by OLAF, adding: “We support the current investigation as well. The appropriate approach is if Hungarian authorities investigate all OLAF’s recommendations.”

OLAF said last month its investigation “revealed not only serious irregularities in most of the projects, but also conflict of interest.” The OLAF press office declined to give further details.

The projects, which modernized street lamps in several towns, had been run by a company called Elios Innovativ Zrt from 2011 to 2015. Tiborcz, who married Orban’s daughter Rahel in 2013, was a member of the Elios board from 2009 to 2014.

He sold his stake in the company in 2015, Tiborcz told website Origo in an interview in October 2017, due to “continuous attacks against me - and thus my family - which were based on presumptions”.

Elios has not replied to questions sent by Reuters.

The company, in a statement released on television ATV’s website, said: “ELIOS Innovativ Zrt followed legal regulations in all of its projects, and performed at a high professional quality. We cooperated with authorities to a maximum degree in all previous official investigations ... and will continue to do so in any possible future proceedings.”

Elios said it did not wish to make further comments on media reports which were “politically motivated.”

“It is unacceptable that we live in a corrupt system that is built on fraud,” Jobbik lawmaker Gyorgy Szilagyi told national news agency MTI late on Wednesday.

Reporting by Krisztina Than in Budapest; Editing by Janet Lawrence