Prosecutor's Office overrules tax authority's decision to blow off a suspicious case worth €3.6 million

In April, the National Tax and Customs Administration (NAV) rejected a complaint submitted by the European Anti-Fraud Office (OLAF) against a Hungarian project on modernising schools' digital infrastructure, which was uncovered in February. However, the Budapest Prosecutor's Office has now overturned the NAV's decision to dismiss the case – the ruling of the Public Prosecutor's Office reveals.

Back in February, as Telex also reported, at the end of its investigation into a digital project in Hungary, OLAF recommended the repayment of more than €3.6 million in EU funding. OLAF had found several violations in the public procurement procedure, including a last-minute change to the technical specifications of the bid, which excluded the lowest bid and gave the winning company a competitive advantage.

According to OLAF, the irregularities didn't only impact the EU taxpayers, but also the students' educational experience, given that better hardware could have been purchased for the same price if the project had been properly implemented.

DK (Demokratikus Koalíció) MP Ágnes Vadai turned to the Prosecutor General in early March to inquire whether the case was being investigated, and Chief Prosecutor Péter Polt forwarded the matter to the Special Forces' Investigation Office, which in turn forwarded it to the National Tax and Customs Administration.

On 7 March 2023, the Investigative Department of the Directorate General of Criminal Investigation of the NAV ordered the filing of a supplementary complaint on charges of "budgetary fraud" and other crimes, but on 6 April it dismissed the case, saying that there was no indication of criminal activity.

The case was thus transferred to the Department for Combating Financial Crimes a the Budapest Police Headquarters, where the Financial Crimes Department ordered an investigation on 20 April,

but this time on suspicion of the crime of "an agreement to restrict competition in a public procurement procedure".

The Budapest Prosecutor's Office is also suspecting "an agreement to restrict competition in a public procurement procedure" in the case, rather than "budgetary fraud". The NAV, however, violated the law by failing to establish the facts of the offense, and their decision to reject the case was therefore overturned by the Public Prosecutor's Office.

Regardless of the legal wrangling, the Department for Combating Financial Crimes at the Budapest Police Headquarters is continuing its investigation in the case.