Hungary Watchdog Exposes HUF 310bn Deals

Hungary’s Integrity Authority was never meant to be decorative. Budapest created it because Brussels made clear that EU money would not keep flowing into a procurement system viewed as vulnerable to political capture. Now the body set up to reassure the EU has produced a 322-page annual report whose message is awkward for both sides: inflated public contracts in Hungary are not a glitch in the system. They are part of the system’s design (eGov, Telex).

That matters beyond Budapest. The Authority was one of the institutional fixes the EU wanted before Hungary could regain access to frozen European funds. Its own conclusion is that the machinery around it still allows public money, including EU money, to be priced upward before competition has even begun.

The Tricks Are Specific

The weakness begins at the first stage of procurement. Contracting authorities do not have to test estimated prices against real market data before tenders are launched. Once that gap is there, the rest follows. Inflated contract values become the starting point. Old overpriced contracts become the benchmark for new ones. Technical requirements can be written so that only one bidder has a serious chance. Contracts can be bundled or split in ways that drain the process of real competition (Átlátszó, HVG).

The figures give the story its shape. According to HVG, almost one in five successful tenders in 2025 attracted only a single bidder. Telex reported that HUF 309.5 billion in procurement sat behind opaque ownership linked to private-equity funds, with construction and energy carrying the sharpest overpricing risks.

The Authority did find one example of oversight doing what it is supposed to do. In an EU-funded food-package programme, a later procurement round bought food at almost 40% below retail prices, after earlier rounds had paid 1.5 to nearly 2 times retail. The same money delivered more than twice as many packages (Integrity Authority). It is useful evidence, but it is not proof that the wider system has changed.

A Watchdog Without Teeth in an Enforcement Chain Full of Gaps

The EU’s leverage comes through its budget conditionality law, Regulation 2020/2092, which allows funds to be suspended when rule-of-law failures put EU money at risk. In December 2022, EU member states froze about €6.3 billion in Hungarian cohesion commitments under that mechanism (Council, European Commission). Separately, the Commission approved Hungary’s recovery plan under the EU’s post-pandemic Recovery and Resilience Facility, but actual payments depend on Budapest meeting anti-corruption milestones. The Commission checks those milestones; the Council can block money if they are not met.

The problem is that the enforcement chain still has a weak link. The Integrity Authority can spot risks, carry out checks and issue recommendations. It cannot prosecute, suspend payments or release them (Integrity Authority). Criminal cases would normally sit with Hungarian prosecutors, while fraud involving EU money could fall to the European Public Prosecutor’s Office, the EU body with power to investigate and bring charges over crimes against the EU budget. Hungary’s pending accession to EPPO could put real enforcement into the system (EPPO, Euronews). What remains unresolved is whether EPPO would be able to reach contracts signed before accession. That legal timing question will decide whether billions already spent through inflated tenders can ever be pursued at EU level.

The Commission Owes an Answer

Bulgaria’s competition authority is already investigating an alleged cartel across 350 food-supply tenders (BTA), which suggests the procurement problem described by the Hungarian Authority is not confined to Hungary. But the immediate issue is more precise: which of the Authority’s findings are linked to the milestones Hungary must meet before EU funds are released?

The record so far shows that EU conditionality can force a government to create an oversight institution. It has not yet shown that the institution can change the political economy beneath public spending. The Commission now owes a public answer: which findings require payments to remain suspended, and what evidence would prove procurement prices are actually falling rather than being legitimised by the same inflated benchmarks the Authority has just exposed?