Can the newly established Integrity Authority be a real weapon against corruption?

The leaders of the newly established Integrity Authority (IH), Hungary's new body for fighting corruption, were appointed on 4 November. After the announcement of the names of president Ferenc Biró and vice-presidents Tímea Holbusz and Kálmán Dabóczi, nothing seemed to happen for a while. Telex also reported that the opposition and the press both found the doors at the Authority's address locked, even though on paper the institution had been operating since 18 November.

The inquiry was followed by a swift reaction from the Authority, which issued a press release on Thursday stating that the inaugural meeting had been held on 18 November and that the Authority was already processing the submissions received so far. The operational rules were published on the IH website, showing which sub-units will be created within the authority and what each of them will be responsible for. They also stated that the Anti-Corruption Task Force will be set up by 1 December and will hold its first meeting no later than 15 December.

For a long time, it was a question whether Hungarian anti-corruption NGOs would want to participate in the Anti-Corruption Task Force (ACTF) and the answer finally came on Thursday, which was the deadline for submitting applications:

several well-known organisations, including Transparency International Hungary, in coordination and cooperation with others, finally submitted their applications to join the Task Force.

This also shows that despite the general skepticism (according to press reports, the EU is not fully convinced either, which may also play a role in the withholding of funds) and the total rejection of the Hungarian opposition parties, the professional circles of the NGOs see a chance for the Integrity Authority to deliver actual results.

Why is it a good thing that they were not ready in two weeks?

In the time between the selection of the Authority's leadership and the somewhat belated launch, it seemed that there was little transparency about the preparatory work, with formal announcements also kept to the minimum. This did not create the best impression for an institution dedicated to transparency. It is also a fact that the new head of the Integrity Authority, Ferenc Biró, is not yet available for interviews, and he asked Telex for patience when we contacted him (although we understand he has already verbally agreed to participate in a roundtable discussion at the annual World Anti-Corruption Day conference organised by Transparency International Hungary on 9 December).

Nevertheless, several professionals in the field have told Telex that they welcome the progress so far, and we have also learned that despite the lack of communication, work has clearly been going on behind the scenes in recent weeks.

Indeed, our sources pointed out that it would have been suspicious if a functioning organisation had been in place by 19 November. This would mean that instead of an independent control mechanism being set up, the whole thing was fixed in advance, i.e. the selection, budgeting and recruitment were just formalities.

As one of our sources told us, Ferenc Biró found out on 4 November that he would be the president and this was also when his two vice-presidents found out about the need for their work. To expect a brand new organisation to be up and running in two weeks, with no precedent, or to expect that this organisation will then create its budget, recruit the people it needs and set up its processes, is completely unrealistic.

Our source, who has been following the activities of the IH more closely, named several areas where progress has been made in recent weeks:

• new bills have been published;
• the preparations are underway for the IH, its budget is being prepared
• applications are now open for NGO members of the Anti-Corruption Task Force which will oversee the IH;
• and a parallel office, but within the government structure, has also begun recruiting.

The authority was set up to receive EU money

In order to better understand the significance of recent events, it is useful to outline the background to the Integrity Authority and the dilemmas it presents. Its establishment is the result of the Hungarian government's rule of law wrangle with the European Commission, and is part of a package agreed to by the Hungarian government in order to gain access to EU funds currently being withheld.

During the last 12 years of Orbán governments, Hungary has been consistently sliding down on the various corruption and rule of law lists, and what the liberals define as simple theft is defined by the Orbán government as being of national economic interest (cf. the creation of a 'national capitalist class').

In light of this, it is not surprising that there is much skepticism about the expected functioning of the Integrity Authority, as it was created out of constraint. According to the pessimistic reading, it is all an act, with no possibility of real change in this area within the system of NER (Nemzeti Együttműködés Rendszere or the System of National Cooperation). Others, however, even some who are critical of the government, are hopeful that a cleansing process may finally be underway.

As for the newly appointed leaders of the Integrity Authority, there is no political affiliation that would preclude any meaningful work at the Integrity Authority, and in the case of President Ferenc Biró, the majority of opinions in professional circles are very positive.

NGOs debated, but decided to give it a chance in the end

The role of an external monitor will be filled by the so-called Anti-Corruption Task Force, for which applications were accepted until Thursday. The 21-member body, chaired by the authority's chairman, will meet at least twice a year, with a 10-member governmental component (e.g. some ministries, ORFK, (National Police HQ) and NAV (National Tax and Customs Board) may delegate members) and observers.

One of the big questions is who will be appointed to the other ten seats, which are reserved for NGOs.

Based on the selection mechanism, there is every hope for independence here, but it was not at all clear beforehand whether the better known domestic anti-corruption NGOs would want to participate.

According to our source who had insight into the consultation, there were arguments up to the last minute as to whether this was likely to be a truly meaningfully functioning institution (in which case it is worth getting involved) or whether it was just set up for appearances (in which case it is not worth getting involved).

A decision was finally made on this on Thursday, and Telex learned that four well-known anti-corruption NGOs finally signed up to join the Task Force on the day of the deadline. Transparency International Hungary and their close partner K-Monitor, are understood to have been joined by at least two other independent NGOs active in the field. TI has sent a cover letter to accompany its application. In it, among other things, they state:

"We believe that the measures taken or envisaged so far by the Hungarian government as part of the rule of law procedure initiated by the European Commission are not sufficient to achieve a breakthrough in the fight against corruption. We have also expressed serious doubts as to whether the powers of the newly established Integrity Authority will be sufficient to eradicate or at least reduce corrupt practices, and in particular the systematic irregularities.

The powers of the Anti-Corruption Task Force are rather limited. There is a risk that this body will not have the necessary powers to take effective action against the failings of public bodies.

On the other hand, part of TI Hungary's mission is to inform and facilitate the activities of the responsible bodies and the competent authorities in the fight against corruption. Therefore, we believe that every opportunity should be taken for dialogue between state and non-state actors."

In other words, the participants are somewhat suspicious, but they think that they should give a chance to being involved in the work and external control of the IH. As they say, they do not see their application as a matter of principle, but rather as an opportunity to express their views on corruption through several channels and to hold the authorities concerned to account on the implementation of anti-corruption measures.

They state, however, that their participation in the task force is only possible as long as "there are no pseudo-NGOs among the non-state actors that cannot demonstrate real professional performance and cannot be considered independent of the authorities". Finally, they add that it is important that other key civil society players, notably K-Monitor, are also involved.

Still too early to judge

The civilians' long ruminations are not surprising in light of the fact that, as we have written before, as serious as the Authority's concept may sound in theory, it may not be a remedy for the "NER"-type corruption. After all, Hungary has had institutions before, but they did not perform their functions properly. Moreover, even if the spending of EU funds is taken more seriously, it will not mean anything for domestically funded public procurement contracts where the risk of corruption has been increasing in recent years anyway.

The powers of the IH will be relatively broad (more on these in a moment), although there has also been criticism. Transparency International's main concern, as is clear from their joint reports with K-Monitor and the Helsinki Committee, is that

the Integrity Authority cannot go directly to court if the prosecution does not prosecute the case the Authority has uncovered

– József Péter Martin, Executive Director of Transparency International Hungary told Telex. Another important point of criticism from TI is that the authority's scope is too narrow in terms of resources: it can only investigate cases involving EU subsidies, which does not cover the whole spectrum of public procurement (although it does cover most of it, with a ratio of roughly 8:2 for procedures above the EU threshold).

The watchful eye of Brussels is reason for cautious hope

According to József Péter Martin, if we consider the logic of the system, there is no reason for hope, since in a "state that's been taken captive", all institutions can only be Potemkin-institutions.

However, TI's CEO believes that there is some hope because the IH was created and will operate under EU pressure in a very tense situation, and there are different winds blowing in the EU institutions today than there were a few years ago. So, "if the IH doesn’t do anything, it is likely to result in the loss of funds because, contrary to what many people have said here at home, the process will not be over in a few weeks at all," he said.

Martin said a conditional agreement can be expected and that the EU institutions would be watching the implementation of the measures with a watchful eye, following the Polish precedent.

For example, it is almost certain that it will not be possible for Viktor Orbán to "work things out" so that in exchange for a few sham measures the country would be granted all the EU funds. Instead, the granting of money will most likely be connected to milestones.

So a current deal in no way means that Brussels will tolerate anything in the future. On the other hand, it is also unlikely that all the money will be withheld, as it is not in the EU's interest to see the Hungarian economy sink into a deep recession.

According to József Péter Martin, it has been clear to those familiar with the EU dynamics for some time that the most likely scenario is that 30% of cohesion funds will be suspended and the Commission will impose strict requirements on the recovery fund money.

In summary, the total amount at stake – adding together the cohesion and recovery funds at risk – is around HUF 5,000 billion, which is almost 10 percent of Hungary's GDP.

According to Martin, there would be serious consequences for the economy if this money were missing from the Hungarian budget. He adds that the primary danger isn't so much the effect on the budget, but the loss of trust in the markets.

All of this, of course, is part of a greater framework of political bargaining, as other than the rule of law procedure and the wrangling about the recovery fund, there are several ongoing matters in which the Hungarian government can threaten with a veto (Sweden and Finland joining NATO, the next sanctions package against Russia, EU financial support for Ukraine for next year). All of these make it very difficult to predict what conditions the diplomatic give-and-take with the EU would bring about, Martin added.

It’s all a farce according to the opposition

Other than asking professionals working in the field for their opinion, we wanted to know what the Hungarian opposition parties thought about the new authority. LMP’s answer was just one sentence: “in our opinion, the creation of the Integrity Authority is nothing more than a farce”. Momentum said that “the government has implemented sham measures” in order to get the EU funds. According to the party, the fact that the Policies and Procedures of the Authority were not published until the fifth day of its official existence “speaks volumes about how seriously the Integrity Authority takes its own operation”.

Jobbik would have preferred if the government had chosen to fight corruption with the means already available: if they had joined the European Public Prosecutor’s Office (EPPO) or if they had appointed a chief prosecutor “who actually does his job”. Without any of the above, in their opinion, the Integrity Authority seems to be “nothing more than a bandaid”.

DK (the Democratic Coalition) is of a similar opinion, considering the amendment of the 17 laws (and thus the establishment of the Integrity Authority) sham measures. Instead of these, they have submitted “a real rule of law package of their own” to Parliament.

We asked Ákos Hadházy, the independent MP famous for his fight against corruption for his opinion as well. He isn’t too hopeful about the IH either. In Hadházy’s opinion, even a perfectly functioning IH would have the same problem as the one faced by OLAF: the Authority will not be able to turn directly to the court with anything they have uncovered. Instead, they will have to submit any findings to the Chief Prosecutor’s office, led by Péter Polt, where “the process may be sabotaged”. The other problem he sees is that similarly to the OLAF-reports, the findings of the IH will not become automatically public, this will only be true for its annual report.

József Péter Martin also has concerns about the lack of publicity. In his opinion, much will depend on whether the Authority will want to consciously use the public. Since they will not be able to turn directly to the courts, they could garner attention for cases which get stuck in the Chief Prosecutor’s Office through the media.

For the same reason, how committed the newly appointed leaders of the Integrity Authority will be, as well as whether they will be willing to confront the government and state players if needed will be of enormous significance.

Hadházy, based on his negative opinion regarding the Authority’s founding added that he will not pretend for one second that the IH can replace Hungary joining the EPPO, which is what he has been fighting for.

He has no plans to submit anything to the Authority, because – as he says – this would suggest that any real, positive change is underway with the establishment of the same.

Instead, his preferred message for the European Commission is that they made a big mistake by not forcing Hungary to join the EPPO in exchange for the funds.