Tender software could cost Hungary HUF 18 bn in EU funding

April 19, 2017, 10:02 am  english version Hungarian version  
The European Commission has found severe irregularities in three contracts for IT systems to distribute and register EU funding in the 2007-2013 budget period and could revoke 100% of the combined HUF 18 bn paid for the systems, reported citing a letter from the EC. Should Hungary fail to challenge the decision, the government would have to demand repayments from a software developer it owns. According to the report, the amount would be hard to regroup to other projects, so the funding could be returned to Brussels.

The European Commission is looking into contracts signed for the so-called unified monitoring information system (EMIR). Two projects are under scrutiny (VOP-2.1.1-2007-0001 and VOP-2.1.1-2008-0001).

Government agencies including the Prime Minister's Office and the National Development Agency invited several tenders starting from 2003 under the project. The first two of these went fine and the development and operation of EMIR was awarded to Welt 2000 Kft.

Problems began when a third contract was awarded through a negotiated procedure without invitation to tender, even though the service in question could have been provided by other companies as well. A court subsequently found the procurement to have been illegal, but Hungarian authorities failed to react accordingly, the EC's letter points out. To make matters worse, ownership rights were gradually transferred to Welt 2000 Kft., which the Commission says was not the most cost effective solution.

Hungary signed three more contracts with Welt 2000 between 2007 and 2009, paying the company a combined HUF 25 billion, mostly after the then-new Fidesz administration after 2010. The European Commission's letter refers to these contracts when it envisions severe consequences, including a financial correction equal to 100% the contracted amount, or roughly HUF 18 billion.

If the measure goes through, this funding could be lost to Hungary. The government should collect the amount form a company it now owns, and even if it succeeded without bankrupting the company, it would be hard pressed to reroute the funding to other EU projects, which means the amount could find its way back to Brussels, concluded.

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