EU anti-fraud watchdog probes EUR 200 million loan to Budapest Airport

Among the complaints is that the airport expansion did not meet environmental and social standards. In addition, two NGOs complained that the environmental impact of the project had not been properly assessed. The bank’s internal complaints procedure ruled that the climate impacts of the project hadn’t been properly assessed, nor had the airport engaged enough with the local community.

In a report dated October 2021, the bank’s complaints department said it “did not find any evidence” that the airport had carried out even a preliminary check on whether an environmental assessment was required for parts of the project where construction had already started. 

The airport had argued this was because it had already secured a “block exemption” to environmental due diligence, which meant it didn’t need individual exemptions for every part of the construction process.

But the bank’s complaints department said it found no proof of that. 

Any documents that were available in relation to the construction permits “did not take into account the climate related and cumulative impacts of the EIB-financed project,” the report said, even though that is required under EU law.

One of the recommendations in the report was that "prior to further disbursements, the EIB services should request the promoter to provide the EIB with at least a screening determination for the project components enabling capacity expansion" and come up with measures aimed at mitigating the increase in noise pollution.

The EIB continued to finance the project without either of those measures.

Asked why the EU's investment bank had proceeded with the loan despite the lack of environmental assessments, Hudák told Politico by email that the loan was "prepared by the EIB staff" and "approved by the EIB management committee as a collective decision-making body as well as by the board of directors."

What made the EIB's continued backing of the project so contentious is the announcement of Hudák’s move to a post on the Budapest Airport’s executive board in January 2020, three months after leaving his job at the Luxembourg-based institution.

That’s despite internal bank rules which said vice presidents were supposed to take 12 months of gardening leave before switching to any role that raised a potential conflict of interest.

Hudák told OLAF investigators he had been nominated as a board member in January 2020, and he officially joined only in November 2020, once his gardening leave was up.

It’s impossible to find any connection between the loan approval process inside EIB and my joining the BUD board. Simply because there was no such connection.

Bankwatch, a network of environmental NGOs, called Hudák's move an “appalling example of the revolving-door problems at the EU bank.”

Anna Roggenbuck, Bankwatch’s EIB policy officer, called for the remaining portion of funding for the airport to be frozen by the bank until it “publicly explains how this blatant conflict of interest influenced decisions around the airport expansion project.”

The EIB declined to comment but argued that, as a public bank, is "bound by contractual obligations," adding: "We will continue to disburse as long as the conditions attached to our contracts are fulfilled."