Direkt36 has also obtained the indictment, which reveals a series of fraudulent practices involving EU tenders. According to the document, Tamás K. and his accomplices, a consultant working in the Ministry of National Economy and its successor, the Ministry of Finance, built up a corruption network involving dozens of people over the years. According to the prosecutors, Gyula Barta-Eke, a member of László Palkovics’ circle, and a former deputy state secretary, Tamás Karsai, were also involved in some of the frauds.

In the spring of 2022, the Orbán government made efforts to get access to the funds that the European Union had earmarked to mitigate the economic damage caused by Covid. Hungary would have been entitled to billions of euros from the so-called reconstruction fund, but the EU has withheld the money due to corruption concerns.

As it turned out, these concerns were not unfounded. Just in April 2022, the Hungarian prosecutor’s office said it had dismantled a network of government officials who had helped steal EU funds. The investigation found that several staff members of the Ministry of Finance and the Prime Minister’s Office co-operated repeatedly to help win tenders for companies that paid them bribes.

In addition, one of the suspected heads of department worked in a department of the Prime Minister’s Office which was responsible for ensuring that Hungary received the EU reconstruction funds it was entitled to.

More details about the case have been published in the press, but Direkt36 has now obtained the indictment compiled by the Central Investigative Prosecutor’s Office, which describes in more detail than ever before what the prosecution believes the crimes were. It contains only the information gathered by the prosecution, and the guilt of the accused will be decided by the court, but the trial has not yet started.

However, the nearly 400-page document compiled by the prosecution paints a picture of how an organization run by a finance ministry employee has been able to interfere in almost every aspect of the tendering system for years. Bids from companies paying bribes were cleaned up, marks of unsuitability were deleted during the evaluation process, and on-site inspections at the end of projects were falsified.

The case has a total of 54 defendants, including people who have previously held senior government positions. Among them is Gyula Barta-Eke, who together with former minister László Palkovics ran a state-owned company and was formerly chancellor of the Budapest University of Technology and Economics. The defendants also include a former deputy state secretary responsible for the disbursement of EU funds, Tamás Karsai. (In the article, the defendants are named by their full names, if they had decision-making powers in their state positions.)

The prosecutor’s office wrote to Direkt36 that during the investigation, 300 tenders were examined, 50 sites were searched and more than 100,000 pages of investigation documents were generated. They also added that the case was prosecuted in February this year at the Budapest District Court. The government said that “the employment of the employees involved in the case was terminated with immediate effect, regardless of their position”.

The indictment was also obtained by 24.hu, which published its article on the matter on Tuesday morning.

Instead of pálinka he asked for money

According to the indictment, the central figure in the criminal series and the main accused is Tamás K., who has been dealing with EU tenders at various state institutions since 2011. He did the same job as a professional adviser at the Ministry of National Economy, and after 2018 at the Ministry of Finance, the successor of the Ministry.

According to the indictment, by the beginning of 2015, Tamás K. had built up a clientele of tender writers and representatives of companies applying for tenders. In exchange for a certain percentage of the subsidies granted, he arranged for them to win their tenders. According to the prosecution, he typically asked for a payment of between 6 and 8 percent of the grants. K. was also assisted in the fraud by six staff members of the Ministry of Finance, including several heads of department.

The indictment details at length the services K. and his associates provided in exchange for the money. They offered their clients assistance in submitting applications. The indictment mentions an incident in which a tender writer working with K., Anita H., was unable to submit a tender for a company she represented on a dedicated website in February 2021. K. and his colleagues first tried to help her by telephone. When they were still unsuccessful, they asked for the applicant’s username and password and logged on to the system to solve the problem themselves. The application could then be submitted.

The help of Tamás K. did not stop there: according to the prosecution, the accused government officials also interfered in the application evaluation process. The indictment lists several such cases. For example, a Ministry of Finance official stated in connection with one tender that “the machines planned to purchase would not fit on the site”.

One of K.’s accomplices, a head of department in the ministry, forwarded his subordinate’s opinion by deleting this part. In the case of another application, the same head of department deleted from his subordinate’s opinion that the “letters of intent attached by the applicant were probably false”.

According to the indictment, even when the Ministry of Finance ordered a deficiency request because of problems with the tenders, K. and his colleagues tried to help. In such cases, the requests for deficiencies were sent to the applicants concerned before the official notification. This was helpful because there was a time limit for replying to the deficiency letters once they had been downloaded from the electronic system.

There were also other ways of cheating with the deficiency requests, according to the indictment. On several occasions, the accused government officials received the deficiencies for review before the applicant formally submitted them. For example, in one case, the indictment says, the bidding company was advised to include a “higher, untrue amount as turnover in the submission because it would not be examined during the evaluation”. The applicant company did so and was awarded a grant of HUF 700 million in February 2022 (1 EUR is appr. 390 HUF at the current exchange rate). It is true however, that the Ministry of Finance imposed new conditions on the company to conclude the grant contract.

In several cases, the prosecutor’s office also reconstructed the circumstances under which the bribe money was transferred. For example, K. expected a grant from the owner of a waste processing company, despite the fact that the company’s tender eventually won without his help. As the applicant was not aware of this, he agreed to the deal. However, the payment had not been agreed beforehand, which led to a comic scene later on.

In the autumn of 2021, the owner of the company met K. near St Stephen’s Basilica in Budapest. According to the indictment, the man gave K. a “gift package of foodstuffs produced in Gyula – game meat, sausages and pálinka”. In response, K.  said that

“he was thankful for the gift package, but he would need 2 million forints in return for his help”.

According to the prosecutor’s office, K. received the money a few days later at a Shell gas station in Budaörs.

According to the indictment, in the case of another tender, the representative of the winning company also delivered HUF 2 million to K. via the tender writer “in a food delivery box made of Styrofoam”.

We visited Tamás K., who is currently under house arrest, at his home in Budapest. He said that he was not a familiar with the contents of the indictment. He added that he had not committed the offences with which he was charged. He also claimed that he was the victim of a political showdown and was being prosecuted because he had harshly criticized the Hungarian government’s foreign policy in conversations eavesdropped during the investigation.

From Palkovics’ side

It was not only from K. that the tender writers, who had links to government officials, received help. The indictment also implicates Gyula Barta-Eke, who also ran a state organization dealing with tenders, in corruption offences.

Mr. Barta-Eke was formerly deputy mayor of Ózd, a Fidesz member of the government. His name was repeatedly mentioned in the press after he, as chancellor of the Budapest University of Technology and Economics, offered to help women in a cooking show on the university’s TV in 2015 to get pregnant off the air.

Barta-Eke has previously held senior positions in several state-owned companies under the then Ministry of Innovation and Technology (ITM), headed by László Palkovics. One of these was the project company for the Zalaegerszeg test track for the development of self-driving cars. Barta-Eke was appointed managing director of the Autóipari Próbapálya Zala Ltd. in October 2020.

After Palkovics left the government at the end of 2022, he continued to run the company together with Barta-Eke. In connection with the case, we contacted Palkovics and asked him, among other things, how the prosecution investigation affected Barta-Eke’s position. Mr. Palkovics said that Mr. Barta-Eke’s position as CEO of Autóipari Próbapálya Zala Ltd. was terminated in mid-March this year.

Barta-Eke took over IFKA Közhasznú Nonprofit Ltd., which is under the ITM, in 2019 and which, according to the indictment, had a role in certain EU tenders. For these tenders, IFKA had to pre-qualify the bidding companies. If the applicants did not have a certificate issued after such qualification, the Ministry of Finance rejected their applications.

According to the indictment, Barta-Eke, through an acquaintance, demanded a bribe of HUF 3 million each for the issue of such certificates. After obtaining the certificates, he also offered to arrange for his clients to win the Ministry of Finance’s tenders. In return, he asked for 4 percent of the subsidy awarded, according to the prosecution. However, there was already a discount for this, and if the tender won, the HUF 3 million for the certificate was deducted from the final amount. The indictment lists several such cases, for which Barta-Eke received a total of at least HUF 78 million in bribes, according to prosecutors.

They deceived each other

The indictment alleges that the members of the efficient organization sometimes cheated each other to win tenders. One such story involves K.’s former ministry boss, Tamás Karsai. Between 2014 and 2018, Karsai was the deputy state secretary in charge of the allocation of EU funds at the predecessor of the Ministry of Finance, the NGM.

After Karsai left his position as Deputy State Secretary, the indictment alleges that in the spring of 2021 he encountered Anita H., a tender writer in K.’s entourage. In their first meeting, Karsai offered to help H. in exchange for money in connection with a tender in which she was stuck. According to the prosecutors, Karsai claimed that he remained on good terms with several Ministry of Finance leaders.

Karsai subsequently met with a friend of one of the Ministry of Finance’s senior department heads, but he did not help H. with the specific case. In the meantime, the affairs of the company represented by H. had been resolved and Karsai, according to the indictment, told Anita H. that the case had been accelerated thanks to him. According to the prosecution, Karsai asked for HUF 5 million in return and received the money.

According to the prosecutors, Karsai then offered to help H. in the summer of 2021, using his network of contacts. The indictment states that in return he asked for HUF 500,000 per month. Karsai, according to the indictment, used “fabricated communications and emails” to convince Anita H. that his previous contacts were still alive. He named a head of department, two heads of division and a deputy state secretary whom he could implicate in the fraud. Anita H. believed him and, according to the indictment, paid Karsai on at least nine occasions. However, it is not clear from the document whether Karsai carried out any activities in return for these payments.

Through his lawyer, the former deputy state secretary said he did not wish to answer our questions, “he wishes to clear himself before the court.”

The Prime Minister’s Office has glossed over

According to the indictment, the fraud network also had a solution for when a tender got stuck in the Ministry of Finance’s office. To do this, they enlisted the help of a contact who worked first in the ITM and later in the Prime Minister’s Office. This was Zsolt P., who had a say in how EU applications were assessed in the event of rejection at second instance.

The indictment details several interesting cases as examples.

In one such case, a bidding company attached several other companies’ bids to the project it was planning to implement, but one of the bids, from a Romanian company, was found by the Ministry of Finance to be false. The ministry therefore rejected the bidder’s application.

Two weeks later, however, the ministry received a letter from an email address ending with “.co” instead of “.ro”, unlike the Romanian company’s. The letter claimed that the quotation was authentic and had indeed been submitted by the Romanian company. The Ministry of Finance officially contacted the Romanian company, which strongly denied having issued the quotation. The Ministry then launched an irregularity procedure, demanded the recovery of the grant already paid to the company and considered filing a complaint.

However, according to the indictment, Tamás K. and his circles did not give up on helping the company even after that. Zsolt P. was contacted to ask him whether he would be willing to annul the Ministry’s decision in appeal. On P.’s suggestion, a decision was taken in the ITM which obliged the Ministry to start a new procedure. The Ministry then contacted the Romanian company again and came to the same conclusion as before, i.e. that the bid was false.

At second instance, the case was again referred to P., who was then working at the Prime Minister’s Office. In the meantime, the ITM’s EU funds department had been transferred to the Prime Minister’s Office. Zsolt P. was the head of the department of the Deputy State Secretary in charge of obtaining funds for Hungary from the EU’s reconstruction fund (in the meantime, Hungary has received only a small part of the funds, and still not the full amount).

According to the indictment, P. recommended the annulment of the Ministry of Finance’s decision, despite the disagreement of one of his colleagues. The reason given for the decision was that “the managing authority (i.e. the Ministry of Finance) still failed to credibly establish the falsity of the bid.”

The representative of the bribing company paid HUF 9 million to the accused government officials, of which 2 million went to Zsolt P., the indictment says.

Prosecutors also describe another story in which the network accused of fraud needed P. In this case, a company would have received the grant if it could prove that the proposed location was suitable for the project. According to the prosecutors, because Tamás K.’s network knew that the location was unsuitable, they asked for P.’s help.

According to the indictment, Zsolt P. also lobbied a head of the Ministry of Finance’s department in December 2021 to ensure that the applicant company received the requested funding. In the process, P. falsely claimed, according to the prosecutors, that this was a request from his boss, Zsolt Leveleki, the deputy state secretary preparing the call for EU funds. Later, P. convinced Leveleki – who was not charged by the prosecution – that the tender had been a mere professional error. As a result, the company received the HUF 541 million grant.

A few months later, in September 2022, Leveleki resigned from his post as Deputy State Secretary. The reason for the resignation was not given, but articles on the matter mentioned that one of the suspects in the corruption case uncovered by the prosecution was a subordinate of Leveleki. Leveleki is not named as a defendant in the case.

When contacted, Zsolt P. said that “I would like to present my position on the criminal proceedings not through the press, but in the courtroom”. Leveleki wrote to Direkt36 that he was not aware of any criminal activity in the area under his control. He also added that he resigned from his post for personal reasons unrelated to the corruption case.

60-year-old machines claimed to be new

Prosecutors also accuse Tamás K.’s network of profiteering from the inspection of the projects. According to the indictment, they offered their clients the opportunity to influence the on-site inspections of the projects they were supporting in exchange for bribes. One of Tamás K.’s accomplices was the head of the department responsible for on-site inspections within the Ministry of Finance. Thus, according to the prosecutors, the head of department assigned himself and his accomplices to the inspections for which bribes were requested.

The indictment lists more than forty such cases. During one of the inspections, for example, it was recorded in the minutes that all but one of the new equipment needed for the project had been purchased by the applicant. On the other hand, the indictment states that “instead of newly purchased machines, the equipment on site was manufactured between 1960 and 1980”. Prosecutors claim that one of K.’s associates “attempted to attach to the minutes photographs of what appeared to be new machinery, but failed and did not include them in the record book”. According to the indictment, K. Tamás’s network received HUF 5 million for all this.

In another case, the premises of a company in a village in Bács-Kiskun County were in such a poor state that they were not suitable for inspection. The inspection was therefore carried out in the same village, but at a different location, while the address of the original location was written in the report. “The inspectors did not inspect the implementation site, knowing that it was unsuitable for the project, but only checked the project documents,” the indictment says. According to the prosecutor’s office, the accused government officials received “at least 450,000 forints”.

The “Meaty” and the “Dickhead”

According to the indictment, Tamás K., who operated an extensive network, tried to hide his tracks. The corruption offences involved the use of dedicated dumb phones and an encryption mail system called Protonmail. To protect themselves against possible interceptions, they used code names for different activities and persons. For example, they called the on-site inspection “Gestapo”, Barta-Eke “Mr. B”, Zsolt P. “Turkey Meaty” or “Meaty”, Karsai “Bluebeard” or “Krisztián Lisztes” (a Hungarian football player in the 90’s and 2000’s), and another accomplice “Dickhead.”

Despite all this, the network was still caught out. In addition to the wiretaps, this was also due to a plea bargain made by the prosecution with one of the suspects. In the spring of 2022, K. received information through a banker friend that the authorities had asked financial institutions to provide information on K.’s financial data.

K. was accused of taking bribes totaling HUF 491 million, of which at least HUF 314 million remained with him. The organization’s leader used part of the cash to buy real estate and deposited HUF 180 million in bank vaults.

K. initially believed that the National Tax and Customs Administration (NTCA) was investigating him in connection with a company he had previously run. To prove the origin of the money, he asked a lawyer friend for help.

According to the indictment, the lawyer suggested that K. should have his mother sign a document stating that she had given the money to her son years ago. Prosecutors allege that K. went to his 75-year-old mother, who was in hospital with a recurrence of cancer, and had her sign the document. On 20 April 2022, when the prosecution staff searched Tamás K.’s house, K. tried to prove the origin of the money with this document, unsuccessfully.

The lawyer was also charged in the case, who told Direkt36 that “the indictment contains false and untrue statements of facts, which the prosecution is aware of”. He wrote that he had not participated in the drafting of the document, that he had not registered it as a lawyer, and that he had not received any money for it. He also added that he had no knowledge that Tamás K. had money from corruption.

Cover picture: The building of the Ministry of Finances in Budapest at the József Nádor Square / Wikimedia