Hungarian c. bank files criminal complaint over HUF 81 billion headquarters renovation

The complaint is based on an expert report commissioned by the MNB's supervisory board, which examined the renovation with the involvement of legal, technical, architectural, and construction economics experts. The report indicates that

the National Bank of Hungary suffered financial losses, and the bank's board of directors will use all available legal means to remedy the damages.

The case stems from an investigation launched by the MNB into the renovation of its Szabadság Square headquarters after it was revealed that the project costs increased by one and a half times to HUF 81 billion from the original estimate.

The project was carried out by Raw Development Kft., which was not selected through public procurement and had no known experience in similar heritage building renovations. The company's leader, Bálint Somlai, a friend of former central bank governor György Matolcsy's son Ádám Matolcsy, previously stated that only minor warranty repairs remained. However, the MNB claims these were not completed on time, and the bank is now enforcing a multi-billion forint bank guarantee.

The renovation began in 2021, and the new central bank leadership under Mihály Varga took over the completed building this spring. During the works, the State Audit Office also examined the MNB's management and found serious deficiencies, particularly in real estate investments and financial controls. According to the expert report, the renovation costs of the MNB headquarters were significantly higher than those of the similarly renovated Ministry of Finance, where one square metre cost only HUF 1.7 million compared to HUF 4 million at the MNB.

The State Audit Office's report, published in March this year, highlighted that project costs increased significantly from the original plans, and the transparency of project management decisions was severely compromised. The investigation revealed that while the MNB board approved a gross budget of HUF 70 billion, the proposal mentioned only HUF 55 billion, and no expert opinion could be presented to justify the higher amount.

The State Audit Office also criticised the restriction of the supervisory powers of MNB-Ingatlan Kft.'s supervisory board, effectively leaving large-scale financial decisions without effective oversight. The central bank's board often made real estate investment decisions through expedited procedures outside of meetings, which further reduced transparency and accountability.

Cover photo (for illustration purposes only): Mark H. Milstein/Bloomberg via Getty Images