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Central Europe
February 9, 2018 www.intellinews.com I Page 12
Olaf suspects fraud in company owned by Orban’s son-in-law
bne IntelliNews
The EU's anti-corruption agency Olaf suspects organised criminal activity in EU-funded public procurement projects involving Elios, the lighting company once co-owned by Istvan Tiborcz, the prime minister's son-in-law.
News about the OLAF report broke three weeks ago, after which Hungarian prosecutors ordered an inquiry, although an earlier procedure found no evidence of fraud. The anti-graft agency has rec- ommended that the European Commission order repayment of €40mn from Hungary.
In a two-year investigation, Olaf inspected 35 public lighting projects won by the company be- tween 2011 and 2015 in public tenders involving EU funds totalling €40mn. The anti-graft office uncovered conflicts of interest in numerous cases in addition to serious flaws in the bidding process. Istvan Tiborcz, who married Viktor Orban's eldest daughter in 2013, was co-owner of Elios until 2015 when he sold his stakes after the first investiga- tions were launched.
The latest documents obtained by news portal 24.hu reveals not only serious irregularities at the projects as reported earlier but also evidence of criminal conspiracy in 17 out of 35 public lighting contracts, as all 17 tenders were formulated so as to maximise the price paid to Elios.
The public procurement tender calls were tailor- made for Elios, as it was the only bidder with pre- vious experience with LED technology, a require-
ment not seen in other public lighting tenders. Elios sealed its first contract in Hodmezovasarhe- ly, central Hungary, whose mayor at the time was Prime Minister Office leader Janos Lazar, who was also in charge of EU fund distributions. The first contract proved to be the company's refer- ence for future works.
In the following tenders, Elios submitted independent indicative bids to support its own valuations. In all but one case, these were priced exactly 5% and 7% above the winning bid. Olaf learned that in every case these comparative bids were written by the same person on the same computer using the same formula.
The report also covers in detail how Elios circumvented procurement requirements on many occasions.
In all 17 cases, the company submitted applications that did not meet the required return rate, but later made last-minute modifications, changing the maximum hours of operations of the LED lamps to 100,000 hours of operation instead of 50,000, although this life expectancy was not validated.
Consultants to local councils also benefited from the arrangements, OLAF notes. Sistrade, owned by Endre Hamar, a good friend of Tiborcz, helped to prepare public procurements while Hamar was still an owner of Elios. The Excel documents that contained the return rate calculations were co-au-