Source: http://government.defenceindex.org/results/countries/hungary
Timestamp: 2014-12-21 15:52:42
Document Index: 35113053

Matched Legal Cases: ['Art. 5', 'Art. 5', 'Art. 5', 'Art. 5', 'Art. 5', 'Art. 5', 'Art. 68', 'Art 6', 'Art 5']

Hungary | International Defence & Security Programme
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See the government's response to the assessment. See our reply to their comments.
Hungary is placed in Band C. In relation to political corruption risk, the Parliament’s Defence and Internal Security Committee has formal powers of scrutiny of defence policy, though this was found to occur post facto. The new defence policy has been subject to public consultation, and debate on the sector has involved academics and think-tanks. There has been some systematic anti-corruption assessment by the State Audit Office (SAO), and the budget is fairly detailed, is subject to committee scrutiny, and is largely transparent – though, not in an easily digestible format. Arms controls are transparent and align with international protocols, though scrutiny is found to be limited. The assessment shows lack of effectiveness in the scrutiny of the intelligence services by the National Security Council, but there are formal procedures in place.
In terms of finance risk, the SAO audits asset disposals and they are indicated to be transparent as per legislation. There is no evidence of off-budget expenditure either. Parliamentary committees approve secret procurements, though there appears to be no separate audit of secret items. Finally, the MOD has business interests in various industries, including communications, arms, and cartography. A White Book was recently published covering controls of at least some of these firms.
In the area of personnel, there is considerable anti-corruption commitment in speeches and there is public evidence of action having been taken in White Books. Personnel numbers and pay rates are transparent and payment systems are indicated to be generally robust and not compromised. Although there are objective de juro recruitment systems, it is less certain that in practice such systems are immune from politicisation. There appears to be a lack of whistle-blowing policy and anti-corruption training. The Code of Conduct is found to lack clarity and coverage, and evidence of effectiveness is limited.
In operations, a new military strategy is scheduled to be brought out imminently, but the current one does not address corruption as an operational issue. There are operational civil-military co-operation handbooks that make reference to corruption, and some anti-corruption monitoring is indicated to occur.
Regarding procurement corruption risk, formal legislation exists but contains risk of exclusions, though oversight mechanisms are indicated to be comprehensive (involving four bodies, potentially, as per general procurement practice), and there is transparency surrounding purchasing. Probity is found to be aided by tender boards working closely with legal, economic, and financial experts. However, when considering potential bidders, the government does not specifically mention corruption as a barring factor. Poor controls in offsets have been linked to scandals and there is little transparency surrounding these contracts.
Is the country’s national defence policy debated and publicly available? 3 Score
Does the country have a process for acquisition planning that involves clear oversight, and is it publicly available? 4 Score
Is the defence budget transparent, showing key items of expenditure? This would include comprehensive information on military R&D, training, construction, personnel expenditures, acquisitions, disposal of assets, and maintenance. 3 Score
Is there policing to investigate corruption and organised crime within the defence services and is there evidence of the effectiveness of this policing? 2 Score
How effective are controls over the disposal of assets, and is information on these disposals, and the proceeds of their sale, transparent? 4 Score
Is the legislature (or the appropriate legislative committee or members of the legislature) given full information for the budget year on the spending of all secret items relating to national security and military intelligence? 3 Score
Off-budget military expenditures are those that are not formally authorised within a country’s official defence budget, often considered to operate through the ‘back-door’. In law, are off-budget military expenditures permitted, and if so, are they exceptional occurrences that are well-controlled? 3 Score
In practice, are there any off-budget military expenditures? If so, does evidence suggest this involves illicit economic activity? 3 Score
Are military-owned businesses subject to transparent independent scrutiny at a recognised international standard? 1 Score
Do the Defence Ministry, Defence Minister, Chiefs of Defence, and Single Service Chiefs publicly commit—through, for example, speeches, media interviews, or political mandates—to anti-corruption and integrity measures? Hint: This is an important question, but may be hard to answer and evidence may require reference to non-governmental resources, especially media articles. 4 Score
Is whistleblowing encouraged by the government, and are whistle-blowers in military and defence ministries afforded adequate protection from reprisal for reporting evidence of corruption, in both law and practice? 0 Score
Is special attention paid to the selection, time in post, and oversight of personnel in sensitive positions, including officials and personnel in defence procurement, contracting, financial management, and commercial management? Hint: “Special attention” would mean, for example, that they are subject to specific vetting requirements, rotation of post after a limited number of years, and post-retirement restrictions (for example, a procurement officer may not take up a post with a tendering company within a clearly defined period of time). Such sensitive positions include, as a minimum, procurement officers, commercial managers, and financial managers. 1 Score
Are pay rates and allowances for civilian and military personnel openly published? 2 Score
With regard to compulsory or voluntary conscription, is there a policy of refusing bribes to gain preferred postings in the recruitment process? Are there appropriate procedures in place to deal with such bribery, and are they applied? 3 Score
Is there a policy to make public outcomes of the prosecution of defence services personnel for corrupt activities, and is there evidence of effective prosecutions in recent years? 3 Score
Are trained professionals regularly deployed to monitor corruption risk in the field (whether deployed on operations or peacekeeping missions)? 2 Score
Are defence purchases based on clearly identified and quantified requirements? 2 Score
Are tender boards subject to regulations and codes of conduct and are their decisions subject to independent audit to ensure due process and fairness? Hint: Tender boards are committees of senior individuals who assess the procurement policy and agree on the recommended bidder. In many organisations, there will be separate tender boards for the technical assessment and the economic assessment of the bid. 3 Score
Does the country have legislation in place to discourage and punish collusion between bidders for defence and security contracts? Hint: Collusion is where contractors come together for the purposes of destroying competition, fixing prices, fixing solutions, or otherwise compromising the purpose of competition. 4 Score
Are procurement staff, in particular project and contract managers, specifically trained and empowered to ensure that defence contractors meet their obligations on reporting and delivery? 3 Score
What sanctions are used to punish the corrupt activities of a supplier? 3 Score
Are offset contracts subject to the same level of competition regulation as the main contract? 2 Score
Sources and References Interview with 1, MP, 13.04.2012, Budapest Act CXIII of 2011 on defence and the Hungarian Defence Forces and the measures that may be implemented in a state of emergency, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=139410.583069
Comments Article 19 of the Defence Act stipulates the powers of the Parliament in defence policy. The Parliament's Defence and Internal Security Committee has extensive rights to scrutinize defence policy, exercise budgetary power, etc. However, there are some short-comings in its powers and practice. "The Committee can effectively undertake scrutiny if there is already a scandal or information leaked to the press. However, it is unlikely that MPs of the opposition obtain information on wrongdoings, maladministration, etc. as the defence sector is very closed and the government aligned MPs support the government. The Committees scrutiny function therefore is post facto. The Committee is notified about public procurements when the Government has already made its decisions and it doesn't have the opportunity even to object to any contract -a good example is the 10 year extension of the Gripen contract which defines the Hungarian defence policy for a decade. The Committee has an inspection sub-committee which has the role of examination of the implementation of laws, but it had only two sessions as the government aligned MPs refused to take part in its work." - Interviewee 1. The current government has 2/3 majority in the Parliament and the governing parties, with very few exceptions, support the government which means the legislature may be unduly influenced by the executive to vote in its favour.
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Agree with Comments; COMMENTS: Since Act CXIII has only recently been adopted and given the nature of the 2/3 majority of the ruling coalition, I agree that legislative scrutiny is of uncertain quality.;
Sources and References Népszabadság (daily newspaper online version), Szalay Tamás Lajos, 10 March 2010, 'Szekrényvizit' a honvédelmi bizottság ülésén ['Checking the cupboards' at the meeting of the Defence Committee], http://nol.hu/belfold/20100310-_szekrenyvizit__a_honvedelmi_bizottsag_ulesen The Defence and Internal Security Committee has a functional website (http://www.parlament.hu/internet/plsql/ogy_biz.keret_frissit?p_szerv=185&p_ckl=39&p_biz=A341&p_nyelv=HU) which contains the list of its members (who are the Parliament members also), the most important decisions and documents, including the minutes of their meetings.
Comments The Parliament's Defence and Internal Security Committee has extensive rights to scrutinize defence policy, exercise budgetary power, etc. The Committee also has two sub-committees, which both have control functions. It has at least 4 meetings each month. The Committee has some formal provisions to invite and question the main stakeholders responsible for the defence policy (like the Defence Minister or military leaders) in regard to draft laws or other political queries. The Committee also has a significant role in the legislative procedure and procurement questions. However, In the last 10 years, there have been some examples (e.g. Gripen-offset contract, the Committee's decision about procurement questions) when its decisions were clearly affected by government policy.
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Disagree; COMMENTS: There is a parliamentary defence committee which is active and adequately resourced and the level of its powers meets democratic standards. However, its powers could be extended, and in some cases its effectiveness is highly dependent on the level of cooperation by government agencies.; SUGGESTED ANSWER: 3;
Sources and References The National Military Strategy of 2009 was adopted as a government resolution. 1009/2009. (I. 30.) Government Decree on the National Military Strategy of the Republic of Hungary, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=125599.179457 (accessed on 06.04.2012) A press release on the government's website refers to the open discussion of the National Security Strategy. Elkészült Magyarország új Nemzeti Biztonsági Stratégiája [The New National Security Strategy has been prepared], 22.02.2012, see at: http://www.kormany.hu/hu/kulugyminiszterium/hirek/elkeszult-magyarorszag-uj-nemzeti-biztonsagi-strategiaja The Minister of Defence announced at meeting of the Christian Democratic People's Party (minor party in the governing coalition) and the website of the major governing party reported on that a new National Military Strategy is being prepared. Hende: Tavaszra várható a nemzeti katonai stratégia, [Hende: The National Military Strategy is expected this Spring] 02.03.2012, see at http://www.fidesz.hu/index.php?Cikk=178399 (accessed on 06.04.2012) Legal norm:1035/2012. (II. 21.) Government Decree on the Hungary's National Security Strategy, see at http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=146732.590017 (accessed on 06.04.2012)
Comments It is to be noted that the country has a new National Security Strategy, and the government also planned to prepare a new National Military Strategy during the Spring of 2012. The new strategy is not ready yet, so the old one from 2008 has remained in force. The draft of the National Security Strategy was available to the public, and the Ministry of Defence gave a possibility for public consultation of the Strategy on the Ministry's website. The Ministry of Defence and other sub-institutes have websites with information on the defence policy in practice. When the new National Military Strategy is published, a uniform Defence policy of the current government can be considered.
Sources and References Magyar cégek kerülnek nehéz helyzetbe, ha nem lesz új titoktörvény [Hungarian firms may face difficulties, if a new secrecy act is not adopted], 06.10.2008 http://hirszerzo.hu/hirek/2008/10/6/81887_magyar_cegek_kerulnek_nehez_helyzetbe_ha_ne Meeting with 2, 02.04.2012, Budapest Anti-Corruption Coordination Body - source: Government Decree No. 1037/2007 (VI. 18) on tasks concerning the ï¬ght against corruption Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest Elkészült Magyarország új Nemzeti Biztonsági Stratégiája [The New National Security Strategy has been prepared], 22.02.2012, see at: http://www.kormany.hu/hu/kulugyminiszterium/hirek/elkeszult-magyarorszag-uj-nemzeti-biztonsagi-strategiaja Legal norm:1035/2012. (II. 21.) Government Decree on the Hungary's National Security Strategy, see at http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=146732.590017 (accessed on 06.04.2012)
Comments In 2008, NGOs initiated public discussions on the draft law on the Protection of Classified Information. At the second meeting, the Government was represented by all interested ministries, including the MoD. However, it was not a corruption related topic, but rather a transparency issue. "There are numerous NGOs in the military sector and connected to the MoD, but none of them deal with corruption issues. They may be able to comment on these matters as they are very professional, but none of them have an anti-corruption mandate. Moreover the MoD does not have any anti-corruption approach or policy related to NGOs. It does not consider the possibility of NGOs playing a role in anti-corruption initiatives in this sector" (anonymous legal expert familiar with military administration). In very general terms, there are references in the National Security Strategy to the role of civil society and NGOs but mainly in regard to stabilisation and democracy building. The Anti-Corruption Coordination Body which had the role of forming a general anti-corruption strategy had 3 NGO participants and 3 civil experts in addition to 6 representatives of the government and 6 representatives of independent public bodies. Additionally, in 2010, Transparency International Hungary visited the newly appointed Minister of Defence and discussed possibilities of future cooperation in the field of fighting corruption within the defence sector.
Sources and References OECD Website, Directorate for International and Financial Affairs, Hungary - OECD Anti-Bribery Convention, http://www.oecd.org/document/6/0,3746,en_2649_34859_44577234_1_1_1_1,00.html, accessed April 2012 Progress Report 2011: Enforcement of the OECD Anti-Bribery Convention, Transparency International, 2011, at: http://archive.transparency.org/publications/publications/conventions/oecd_report_2011 PHASE 3 REPORT ON IMPLEMENTING THE OECD ANTI-BRIBERY CONVENTION IN HUNGARY, OECD Working Group on Bribery, March 2012, see at: http://www.oecd.org/dataoecd/52/20/50026740.pdf First Evaluation Round Evaluation Report on Hungary, GRECO - Council of Europe, Adopted by GRECO at its 13th Plenary Meeting, 24-28 March 2003, http://www.coe.int/t/dghl/monitoring/greco/evaluations/round1/GrecoEval1%282002%295_Hungary_EN.pdf Second Evaluation Round Evaluation Report on Hungary, GRECO - Council of Europe, Adopted by GRECO at its 27th Plenary Meeting, 6-10 March 2006, see at: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/GrecoEval2%282005%295_Hungary_EN.pdf Third Evaluation Round Evaluation Report on Hungary on Incriminations (ETS 173 and 191, GPC 2), Adopted by GRECO at its 47th Plenary Meeting, 7-11 June 2010, see at: http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282009%298_Hungary_One_EN.pdf Third Evaluation Round Evaluation Report on Hungary Transparency of Party Funding, Adopted by GRECO at its 47th Plenary Meeting, 7-11 June 2010, see at:http://www.coe.int/t/dghl/monitoring/greco/evaluations/round3/GrecoEval3%282009%298_Hungary_Two_EN.pdf legal norm: Act CXXXIV of 2005 on promulgation of the United Nations Convention against Corruption adopted in Merida on 10 December 2003, at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=94402.131318
Comments Hungary is party to the OECD Anti-Bribery Convention, having ratified it in 1998 and implemented and enforced it in 1999. However, as per the OECD Progress Report (2011), Hungary is categorised as a country with 'little or no enforcement' of the convention. Hungary signed the UNCAC in 2003 and ratified it in 2005. There are limitations in its compliance, however. Additionally, Hungary signed the Criminal Law Convention on Corruption in 1999 and ratified it in 2000. As per GRECO's evaluation, there are shortcomings in application and implementation.
Sources and References Király, András: 'Obama háborúja [Obama's War],' Index, January 20, 2012, see at: http://index.hu/kulfold/oh1_9057/ Roundtable Discussion on the Future of Afghanistan Held in Budapest - Afghanistan After ISAF, 27 January 2012, see at: http://www.icdt.hu/news/latest-news/roundtable-discussion-on-the-future-of-afghanistan-held-in-budapest Hungarian Association of Military Science (which frequently organises events on defence policy issues) website, see at: http://mhtt.eu/rendezvenyek.html, accessed April 2012
Comments There are several defence/security news portals, journals, think tanks, academic associations and public forums organised by them. Occasionally, the mainstream media also discuss defence issues in detail. As think tanks and academia always have employees or members who are actual or retired soldiers, national security advisors, ambassadors, politicians, etc. they have good access government officials to ensure their participation at such events.
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Agree with Comments; COMMENTS: NGOs and academic institutions (listed below) involved in foreign policy issues are increasingly active in promoting public discourse - through conferences, publications, social media etc. - on foreign and security policy issues. Europa Varietas Institute - http://www.europavarietas.org/ Andrássy Gyula Külpolitikai Szalon - http://andrassyszalon.hu/ Corvinus Society for Foreign Affaires and Culture http://corvinusculture.hu/tevekenysegunk/2011 Hungarian Institute of International Affaires http://www.kulugyiintezet.hu/ Center for Strategic and Defence Studies http://hhk.uni-nke.hu/index.php/hu/kozpontok/svkk; || REVIEWER: Peer Reviewer; OPINION: Agree with Comments; COMMENTS: Although I agree with the evaluation of the Assessor, it seems to me that the general public is not really interested in issues of Hungarian security policy. The media devotes some attention to general international security issues but Hungarian security questions are only discussed when they involve domestic political issues - like the Gripen offset or construction of the NATO radar station.;
Sources and References Ministry of Defence, ' White Book - Corruption, audit and penal consequences,' 2011, see at: http://www.kormany.hu/download/3/52/40000/Honv%20Min%20-%20Feh%C3%A9r%20k%C3%B6nyv.pdf Legal norm: 1104/2012. (IV. 6.) Government Decree on Governmental Measures against Corruption and on Adoption of Corruption Prevention Programme of the Public Administration.
Comments The National Military Strategy does not mention corruption as a threat. When the Strategy mentions the risk of corruption, it is in reference to organised crime control. The new government has re-organised the entire Ministry of Defence and during this procedure they reviewed the previous government's work. They found several corruption cases and published them in a White Book. The main goal of this publication is to address corruption in the defence sector, although it did not draw up any anti-corruption policy or methods of implementation. On 6 April 2012, the government adopted an anti-corruption programme that covers the central public administration including all ministries.
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Disagree; COMMENTS: There is no specific anti-corruption policy pertaining to the defence sector, however, as the Assessor rightly points out there is an anti-corruption programme adopted by the government and high-profile corruption cases in the Ministry of Defence have been investigated. Since the new anti-corruption programme has just recently been adopted, it is impossible to determine at this moment its future implementation.; SUGGESTED ANSWER: 3;
Sources and References Report on the Audit of the Budgetary Chapter of the Ministry of Defence, April 2009, see at: http://www.asz.hu/jelentes/0905/jelentes-a-honvedelmi-miniszterium-fejezet-mukodesenek-ellenorzeserol/0905j000.pdf
Comments There are identifiable institutions tasked with building integrity and countering corruption within defence and security but they are not independent as they are either departments of the Ministry of Defence or supervised by it, such as military intelligence agencies. The prosecution service is set up as an institution independent of the government, but it does not have the mandate of building integrity, but to investigate and prosecute corruption cases. The State Audit Office is also independent body but it performs its audits with a different perspective from building integrity of preventing corruption.
Sources and References Global Corruption Barometer 2010, Transparency International, 9 December 2010, see at: http://www.asz.hu/jelentes/0905/jelentes-a-honvedelmi-miniszterium-fejezet-mukodesenek-ellenorzeserol/0905j000.pdf (slide 7 - 'Honvédelem')
Comments The public sees defence as the 4th least corrupt sector (9.5% think it is very corrupt), only religious bodies, education and CSOs are more trusted.
Sources and References Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest Kockázati tényezők a rend- és honvédelmi szerveknél, [Risk factors at law enforcement and defence bodies] In: Szente Zoltán (ed.) Korrupciós kockázatok feltérképezése - integritás alapú közigazgatási kultúra terjesztése ÁROP-1.2.4-09-2009-002: Elemzések a közszféra korrupciós kockázatairól. Gyűjteményes tanulmánykötet a 2011. évi integritás felmérés adataiból, Budapest: Állami Számvevőszék, 2012. pp. 280-299.
Comments "The Military Security Office may assess corruption risks but there is no public evidence of this in the last 12 years." - anonymous legal expert familiar with military administration, 12.04.2012, Budapest The State Audit Office (SAO) has a multi-annual, nationwide integrity project "Mapping Corruption Risks - Strengthening Integrity Based Administration" in which it surveyed thousands of public bodies in Hungary including the defence sector. The research examined the corruption risks and the measures in place to mitigate them and one of the studies of the project deals with the results of the survey related to the defence sector.
Sources and References Act CLXXXVIII of 2011, Central Budget of Hungary of 2012, Chapter XIII. the budget of the Ministry of Defence, Annex 1, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=143414.594347 Ministry of Defence website, MoD Armament & Quartermaster Office, Annual Procurement Plan 2012, http://honvedelmibeszerzes.kormany.hu/download/5/d8/00000/kozbeszerzesi_terv_2012.PDF 71/2011. (VI. 30.) MoD instruction on procedures of procurement of defences entities, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=138640.563455 László Kaposvári,'A Magyar Honvédség Logisztikai Gazdálkodási Rendszere, Honvédségi Szemle, 2011/5,' pp. 2-5, https://olibx.zmne.hu/cgi-olib91/w207.bat?session=913436374&infile=details.glu&loid=279704&rs=1178831&hitno=-1
Comments The main figures of the defence budget are defined by the Annual Budget. For example Act CLXXXVIII of 2011 on the Central Budget of Hungary of 2012 sets in its Annex 1, Chapter XIII, the budget of the Ministry of Defence. The annual public procurement plan of Hungary's Armament and Quartermaster Office, which is responsible practically for all the procurements of the MoD and the army is published on their website. The legal norms regulating the planning are also available.
Sources and References Act CLXXXVIII of 2011, Central Budget of Hungary of 2012, Chapter XIII. the budget of the Ministry of Defence, Annex 1, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=143414.594347 Act CLXXXVIII of 2011, Art. 5.§ (6)-(7), Central Budget of Hungary of 2012, Chapter XIII. the budget of the Ministry of Defence, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=143414.594347 Ministry of Defence website, MoD Armament & Quartermaster Office, Annual Procurement Plan 2012, http://honvedelmibeszerzes.kormany.hu/download/5/d8/00000/kozbeszerzesi_terv_2012.PDF Ministry of Defence website, Detailed Annual Budget for 2011, http://www.kormany.hu/download/d/90/30000/2011evi_elemi_koltsegvetes.zip
Comments The main figures of the defence budget are defined by the Annual Budget. For example, Act CLXXXVIII of 2011 on the Central Budget of Hungary of 2012 sets in its Annex 1, Chapter XIII, the budget of the Ministry of Defence. Art. 5.§ (6)-(7) of the same act also contains provisions on assets disposals and selling of real estate. The annual public procurement plan of Hungary's Armament and Quartermaster Office, which is responsible practically for all the procurements of the MoD and the army is published on their website. The Annual Budget Act has a general structure for each ministry that could be more detailed and transparent. The MoD also publishes its detailed budget, but it shows data as held in accounting records, which causes figures on military R&D, training, construction, personnel expenditures, acquisitions, disposal of assets, and maintenance to be hardly recognisable.
Sources and References Minutes of the Parliamentary Defence and Internal Security Committee of 11 November 2011, HRB-21/2010. (HRB-21/2010-2014.), see at: http://www.parlament.hu/biz39/bizjkv39/HOB/1011111.pdf
Comments The Parliamentary Defence and Internal Security Committee scrutinises the Act on Central Budget and the Act on Final Accounts. At the Committee's hearing the representatives of the relevant ministries (including the ministry of finance) and of the State Audit Office provide their opinion on the relevant chapters and the MPs can question the representatives.
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Disagree; COMMENTS: The Committee does have the power for defense budget scrunity and analysis, but does not necessarily have all the relevant information or data provided by the government in a timely manner, as was the case with the Gripen fighterplanes acquisition, and through the numerous modifications of the agreement. Tamás Kern: A Gripen-projekt: egy elhibázott katonai beszerzés margójára (The Gipen project: On the margins of a failed military acquisition) p.13-14. http://www.szenzorkft.hu/a_gripen_projekt.pdf; SUGGESTED ANSWER: 2;
Sources and References Act CLXXXVIII of 2011, Central Budget of Hungary of 2012, Chapter XIII, Annex 1, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=143414.594347 Act CLXXXVIII of 2011, Art. 5.§ (6)-(7), Central Budget of Hungary of 2012, Chapter XIII. the budget of the Ministry of Defence, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=143414.594347 Ministry of Defence website, Detailed Annual Budget for 2011, http://www.kormany.hu/download/d/90/30000/2011evi_elemi_koltsegvetes.zip Act CXII of 2011 on Informational Self-Determination and Freedom of Information, www.naih.hu/files/ACT_2011_CXII_in_eng-v2.pdf (unofficial translation)
Comments As mentioned in the comments for indicators 11 and 12, The main figures of the defence budget are defined by the Annual Budget. For example, Act CLXXXVIII of 2011 on the Central Budget of Hungary of 2012 sets in its Annex 1, Chapter XIII, the budget of the Ministry of Defence. Art. 5.§ (6)-(7) of the same act also contains provisions on assets disposals and selling of real estate. The MoD also publishes its detailed budget, but it shows data as held in accounting records, which causes figures on military R&D, training, construction, personnel expenditures, acquisitions, disposal of assets, and maintenance to be hardly recognisable. Act CXII of 2011 on Informational Self-Determination and Freedom of Information prescribes proactive disclosure of financial information of public bodies, and the same act provides for the right of access to information. The act also covers the MoD defence and all defence entities.
Sources and References Act CLXXXVIII of 2011, Art. 5.§ (6)-(7), Central Budget of Hungary of 2012, Chapter XIII, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=143414.594347 Ministry of Defence website, MoD Armament and Quartermaster Office , http://honvedelmibeszerzes.kormany.hu/ertekesites Állami Számvevőszék, Jelentés a Honvédelmi Minisztérium fejezet működésének ellenőrzéséről, 2009, http://www.asz.hu/jelentes/0905/jelentes-a-honvedelmi-miniszterium-fejezet-mukodesenek-ellenorzeserol/0905j000.pdf Interview with anonymous legal expert familiar with military administration, 12.04.2012, Budapest.
Comments Act CLXXXVIII of 2011 on the Central Budget of Hungary of 2012 in Art. 5.§ (6)-(7), contains provisions on assets disposals and selling of real estate. Hungary's Armament and Quartermaster Office's website contains information on equipment sales in May 2009, but there has been no further information uploaded since. The State Audit Office occasionally audits the MoD, including the Hungarian Defence Forces. The last audit covered the years of 2005-2008 and the report was published in 2009. The report also scrutinised the income from assets disposals and sales of real estates. Businesses owned by the MoD (cartography, publishing houses etc.) may also make profits, but it is unclear whether they are profitable and the dividends are channelled back to the MoD. Please refer to the comments for indicators 30 and 31 for greater detail. The National Public Service University also collects tuition fees which is a source of income, however, the university has an independent legal personality and budget.
Sources and References Állami Számvevőszék, Jelentés a Honvédelmi Minisztérium fejezet működésének ellenőrzéséről, 2009, http://www.asz.hu/jelentes/0905/jelentes-a-honvedelmi-miniszterium-fejezet-mukodesenek-ellenorzeserol/0905j000.pdf Interview with 3, legal expert familiar with military administration 12.04.2012, Budapest
Comments The State Audit Office (SAO) occasionally undertakes external audits of the MoD, including the Hungarian Defence Forces. The last audit covered the years of 2005-2008 and the report was published in 2009. The report of the State Audit Office also examined internal control mechanisms in detail and found the quality of its work satisfactory. Thus, the findings of external audits indicate the existence of internal audits, which are not publically available. Since 2009 there has been no audit concerning the MoD by the State Audit Office and the findings of internal audits are inaccessible to the public, thus there is no clear evidence how the government acts upon the findings of internal audit. The State Audit Office reports to the Parliament and its reports are public. "After the change in government, there was a major audit all over in the defence sector; they had the skills and the willingness to do it. The same time the findings of the audit were not published at once, but being diffused gradually to the public which serves political aims" (anonymous legal expert familiar with military administration). The audits referred to here were not undertaken by the SAO, and it is unclear which body was responsible.
Sources and References Állami Számvevőszék, Jelentés a Honvédelmi Minisztérium fejezet működésének ellenőrzéséről, 2009, http://www.asz.hu/jelentes/0905/jelentes-a-honvedelmi-miniszterium-fejezet-mukodesenek-ellenorzeserol/0905j000.pdf House of the Nation (Parliament of the Republic of Hungary), Defence and Internal Security Committee, Minutes of the Meeting, September 7, 2010, http://www.parlament.hu/biz39/bizjkv39/HOB/1009071.pdf The Parliament of the Republic of Hungary website, Detailed Reasoning of the Bill of Act CLXXXVIII of 2011, http://www.parlament.hu/irom39/04365/adatok/fejezetek/13.pdf (09.04.2012) Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest
Comments The State Audit Office (SAO) occasionally audits the MoD, including the Hungarian Defence Forces. The last audit covered the years of 2005-2008, the report was published in 2009. The minutes of the Defence and Internal Security Committee meeting of 7 September, 2010 show that the MoD reported on how the SAO's recommendations were followed. Following the change in government in 2010, there was a major audit of the defence sector, although not by the SAO, and it is unclear which body undertook this responsibility. The results of these audits were not published, but are being gradually released to the public, which may be a political move. A detailed reasoning of the bill of Act CLXXXVIII of 2011on the Central Budget of Hungary of 2012 reports on the regulatory and accounting changes introduced in line with the recommendations of the SAO. When the Defence and Internal Security Committee discusses the actual Act on Final Accounts or the Annual Budget Act at its hearing, the representatives of the State Audit Office are present and provide their opinion in regard to how the previous year's budget has been implemented and whether they consider reliable the budgetary plans for the coming year. Members of the Parliament can follow up on whether the recommendations of the SAO were implemented. These reports examine only the reliability of the budget but do not address expediency and efficiency as per the 2009 report.
Sources and References Websites of the three forestry enterprises formerly owned by the MoD and since 2010 by the Hungarian Development Bank (which is a state owned bank), see their websites at: HM Verga Forestry Veszprém wesbite, http://www.verga.hu/index.php/homepage HM Kaszó Erdőgazdaság Zrt. wesbite, http://www.kaszort.hu/en/erdogazdasag/about-us Ministry of Defence, Budapest Forestry Company website, http://www.bp-erdo.hu/english/index.html (accessed on 10.04.2012) Béla Németh, 'Az MH ingatlangazdálkodási gyakorlatának elemzése és annak hatékonysága fokozásának módszerei a modern ingatlanpiaci környezetben [Analysis of the real estate management of the Hungarian Defence Forces and methods to increase their effectiveness in the modern real estate market environment],' Doctoral Thesis, ZRINYI MIKLÓS NEMZETVEDELMI EGYETEM, 2005, see at: http://193.224.76.4/download/konyvtar/digitgy/phd/2006/nemeth_bela.pdf (accessed on 09.04.2012) Report of the State Audit Office on the Audit of Functioning of the Chapter of the Ministry of Defence, 2009, see at: http://www.asz.hu/jelentes/0905/jelentes-a-honvedelmi-miniszterium-fejezet-mukodesenek-ellenorzeserol/0905j000.pdf , p.56
Comments The Hungarian Defence Forces have maneuvered grounds partially covered by forests, where forestry and game management can be considered as exploitation of natural resources. Some of these properties also have mining facilities, for example, in Veszprém, there is sand and clay mining.
Is there evidence, for example through media investigations or prosecution reports, of a penetration of organised crime into the defence and security sector? If no, is there evidence that the government is alert and prepared for this risk? Sources and References Interview with 3, legal expert familiar with military administration,12.04.2012, Budapest Tábornokok vesztegetési pere - A meghallgatott vádlottak egyike sem tartja megát bűnösnek az ellene felhozott vádakban [Bribery case of generals- none of the defendants pled guilty to charges raised], Report of the Hungarian Press Agency, republished on the website of the Governmental Accountability Commissioner, 1 February 2012, see at: http://elszamoltatas.kormany.hu/tabornokok-vesztegetesi-pere-a-meghallgatott-vadlottak-egyike-sem-tartja-megat-bunosnek-az-ellene-felhozott-vadakban (accessed on 12.04.2012)
Comments There is a pending corruption case before the Military Council of the Kaposvar Tribunal (county court) in which several high ranking military officers, including generals were indicted with corruption charges. The former state secretary is charged with concealing the offences committed by a criminal organisation. If they are convicted as criminal organisation that can be considered as "home-grown organised crime". On the other hand, "it would not make much sense for organised crime to infiltrate the defence sector, as the military is rather poor and Hungary is not interesting from a national security point of view" (anonymous legal expert familiar with military administration).
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Agree with Comments; COMMENTS: The current government published a White Book on corruption in the defense sector in 2011 after numerous corruption cases involving high ranking military officials came to light before the elections in 2010. The increased public attention provides incentives for the government and the Ministry of Defence to tackle corruption in the sector, and hampers any large-scale corruption or the emergence of organized crime within the sector. Fehér Könyv: Korrupció, átvilágítás és büntetőjogi konzekvenciák. Honvédelmi Minisztérium, 2011. (White Book: Corruption, audit and criminal law consequenses. Ministry of Defence) http://www.kormany.hu/download/3/52/40000/Honv%20Min%20-%20Feh%C3%A9r%20k%C3%B6nyv.pdf;
Sources and References Tábornokok vesztegetési pere - A meghallgatott vádlottak egyike sem tartja megát bűnösnek az ellene felhozott vádakban [Bribery case of generals- none of the defendants pled guilty to charges raised], Report of the Hungarian Press Agency republished on the website of the Governmental Accountability Commissioner, 1 February 2012, see at: http://elszamoltatas.kormany.hu/tabornokok-vesztegetesi-pere-a-meghallgatott-vadlottak-egyike-sem-tartja-megat-bunosnek-az-ellene-felhozott-vadakban (accessed on 12.04.2012) Ministry of Defence: White Book - Corruption, audit and penal law consequences, 2011, see at: http://www.kormany.hu/download/3/52/40000/Honv%20Min%20-%20Feh%C3%A9r%20k%C3%B6nyv.pdf Corruption Risks in Hungary 2011 - National Integrity System Country Study, Transparency International Hungary, 2012, pp. 112-125, see at: http://www.transparency.hu/uploads/docs/Corruption_Risks_in_Hungary_NIS_2011.pdf
Comments In regard to independent policing, the Prosecution Service can be considered as an independent actor which investigates grand corruption cases and supervises all investigations by the police and presses charges in court procedures. After the 2010 elections the new government re-organised the entire Ministry of Defence and during this procedure, they reviewed the previous government's work. They found several corruption cases and published them in a White Book. Some of the cases referred to by the White Book resulted in initiation of criminal procedures. There is a pending procedure of a corruption case before the Military Council of the Kaposvar Tribunal (county court) in which several high ranking military officers, including three general brigadiers, six colonels, two lieutenant-colonels, one major and four civilians, were indicted with corruption charges. The former state secretary is charged with concealing the offences committed by a criminal organisation. If they are convicted as criminal organisation that can be considered as "home-grown organised crime".
Are the policies, administration, and budgets of the intelligence services subject to effective, properly resourced, and independent oversight? Sources and References Act CXXV of 1995 on National Security Services, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=23599.582529, accessed on 12.04.2012 Report on the activity of the Committee of Inquiry on inspection of national security risks of the functioning of the "Together for Each Other, for An-Other Foundation" and on cicrumstances of the participation of the public bodies and the "Together for Each Other, for An-Other Foundation" in affairs suspected of corruption, 2008, see at: http://www.parlament.hu/irom38/04848/04848.pdf (Accessed on 12.04.2012)
Comments Currently, according to the Act on National Security Services, there are four intelligence service, though there are at least two more agencies that can be considered as intelligence services. In the beginning of 2012, two military intelligence services were merged and the new entity is called the Military National Security Office (MNSO). The MNSO is controlled by the government through the minister of defence. All intelligence agencies are supervised by the National Security Committee of the Parliament and the responsible minister has to report to the National Security Committee on its activities at least twice a year. However, in practice there is only one written report prepared annually. The National Security Committee has extensive powers to request information on the activities of the agencies, inspect complaints concerning their activities, initiate inspections, hear general director candidates of the agencies, etc. The president of the Committee has to be Member of the Parliament from the opposition. The minister of defence is also required to report on the activities of the MNSO to the Defence and Internal Security Committee of the Parliament at least once a year and the Committee holds hearings of the general director candidates of the agency. The aforementioned oversight, however, cannot be considered as very effective, as a major corruption scandal and a significant criminal procedure hit the civil intelligence agencies in the last few years. This was not detected or effectively uncovered by the National Security Committee, despite its extensive powers.
Sources and References Archived website of the Military Security Agency, last date of archiving was 23.10.2010, see at http://web.archive.org/web/20090426042406/http://www.kbh.gov.hu/index.php?id=felvetel Act CXXV of 1995 on the National Security Services, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=23599.582529, accessed on 12.04.2012
Comments There may be objective criteria for the selection of senior positions, though such criteria are not available to the public and the appointment of senior positions are not published openly. The archived website of the Military Security Office shows the selection criteria for entry level positions (http://www.ah.gov.hu/html/felveteli.html), while the archived website of the Military Intelligence Office does not provide similar information. According to Art. 68 of the Act CXXV of 1995 on the National Security Services, persons holding or nominated to important and confidential positions, including employees of intelligence services, have to go through security vetting, however this provision applies not only to senior positions.
Sources and References Government decree No. 320/2010. (XII.27.) on the Hungarian Trade Licensing Office and the regional competent metrological and technical safety offices. Website of the Hungarian Trade Licensing Office, see at: http://mkeh.gov.hu/haditechnika/haditechnika_kulkereskedelem/6a_Jelentesek Act CIX of 2005 on the Licensing of Producing Military Equipment and Providing Technical Assistance, Government Decree No. 160/2011. (VIII. 18.)
Comments The Hungarian Trade Licensing Office (HTLO) is a central office of the Government. The HTLO has a Department of Authority of Defence Industry and Export Control responsible for arms control processes. On the HTLO website, individual arms export or import decisions are not published. Annual reports spanning the years 2004 - 2010 are available with information on total export and import to various countries and different categories of items. The legal regulation of arms control is very detailed and refers to a wide range of international legal norms and the EU acquis. Arms control decisions align with international protocols, are publicly available, but are not scrutinised by an independent body.
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Disagree; COMMENTS: According to a Small Arms Survey by the Graduate Institute of International and Development Studies, Geneva, Hungary was one of the least transparent small arms exporters in the European Union. Jasna Lazarevic: Transparency Counts: Assessing State Reporting on Small Arms Transfers, 2001-08 http://www.smallarmssurvey.org/fileadmin/docs/B-Occasional-papers/SAS-OP25-Barometer.pdf; SUGGESTED ANSWER: 3; || REVIEWER: Peer Reviewer; OPINION: Agree with Comments; COMMENTS: There is potential parliamentary oversight especially in the form of commission of inquiry.;
Sources and References Amendment to the announcement of the MoD on commission of the Hungarian State Holding Company on the sale of 6 pieces MiG-29B and 2 pieces MiG-29UB fighter jets (including their engines), as well as 20 replacement engines, 2011, see at: http://www.mnvzrt.hu/palyazatok/egyeb/mig29_modositas.html Act CLXIX of 2010 on the budget of Republic of Hungary in 2011, Art 6. para 4 , see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=131536.580743 Act CLXXXVIII of 2011 on Central Budget of Hungary of 2012, Art 5. http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=143414.594347 Ministry of Defence website, Armament and Quartermaster Office, see at: http://honvedelmibeszerzes.kormany.hu/ink-024-ny-005-2011 Hir Extra, 'Lejárt szavatosságú bombákat árul a HM,' November 17, 2010, http://www.hirextra.hu/2010/11/16/lejart-szavatossagu-bombakat-arul-a-hm/ (accessed on 09.04.2012)
Comments The annual budgets foresee that the income from asset sale has to be used for the modernisation of the Hungarian Defence Forces. For several years Hungary has been trying to sell its MiG fighter jets without success. For 2012, the Central Budget plans income from the sales of MiG-29 fighter jets, Mi helicopters, L39 fighter jets and T72 tanks. The annual Act on Final Accounts would contain the incomes from the sales as prescribed by the Act on the Central Budget. The report of the State Audit Office of 2009 also contained information on the income from assets disposals as well as information on irregularities found in accounting it. Announcements of the disposal of explosives, arms, other minor items etc. along with the results of tenders are published by the Armament and Quartermaster Office on the MoD website. Specifications of the items for sale are not available online but can be purchased with the tender package. The media also reports on asset disposal calls.
Sources and References Állami Számvevőszék, Jelentés a Honvédelmi Minisztérium fejezet működésének ellenőrzéséről, 2009, http://www.asz.hu/jelentes/0905/jelentes-a-honvedelmi-miniszterium-fejezet-mukodesenek-ellenorzeserol/0905j000.pdf The National Integrity Study of Hungary, Transparency International Hungary, 2012, pp. 157-169, see at: http://www.transparency.hu/NIS_2011_english
Comments The State Audit Office (SAO) occasionally audits the MoD, including the Hungarian Defence Forces. The last audit covered the years of 2005-2008, the report was published in 2009. The report also scrutinised the incomes and the use of incomes from assets disposals. The SAO is generally regarded as independent.
Sources and References Interview with 1, MP, 13.04.2012, Budapest Act CXXXIII. of 2011 on implementation of the 2010 Budget of the Republic of Hungary, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=140965.570190
Comments "As a rough estimation, it could be 10 per cent of the total value of the procurement," according to an interviewee. The final accounts act does not contain any figure pertaining to defence and security expenditure in the budget year dedicated to spending on secret items relating to national security and the intelligence services.
Is the legislature (or the appropriate legislative committee or members of the legislature) given full information for the budget year on the spending of all secret items relating to national security and military intelligence? Sources and References Interview with 1, MP. 13.04.2012, Budapest Government Decree 218/2011 on the specific rules of procurements that are in connection with the national defence interest of the country Government Decree 228/2004 on procurement in connection with basic defence and military interest
Comments "The Defence and Internal Security Committee and the National Security Committee approve 'secret' procurements. When approval for exemption from the normal procurement rules is requested, information on the subject, the cost, the suppliers etc. are all made known to the Committees. Extensive information is available for each procurement of this type, but no annual summary is prepared on the total," according to interviewee 1.
Sources and References Government Decree 226/2004. (VII. 27.) on from the general rules of public finance with regard to the operation of defence bodies Government Decree 130/2011. (VII. 18.) on various special rules of budget and management ofcivil intelligence services
Comments There is no separate audit of secret items. The State Audit Office (SAO) and the Government Control Office are authorised to audit the intelligence services and their secret procurements, which are audited together with other financial activities of the services. The SAO occasionally audits the MoD, including the Hungarian Defence Forces, as well as the intelligence services. In these public audit reports the SAO mentions the legislation in force regarding secret procurements, occasionally some procurements are also discussed, but there is no separate audit (published) for secret procurements and there are no other reports that could be discussed by the committees in charge. The intelligence services are provided with public budgetary and final accounts headings in which costs of secret construction, salaries, purchase of items, etc are summarised. Accounting reports are also prepared as summaries. Although intelligence services have legal roles in all secret procurements, other agencies, such as law enforcement bodies, prosecution, etc are also entitled to purchase through secret procurements any special items they need.
Sources and References Interview with 1, MP, 13.04.2012, Budapest Interview with 4, Hungarian military journalist, 2 April 2012, Budapest Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest
Comments None of theInterviewees were aware of the existence of off-budget military expenditures. Neither is there irrefutable knowledge that they are not in existence.
Sources and References Interview with 1, MP. 13.04.2012, Budapest Interview with 4, Hungarian military journalist, 2 April 2012, Budapest Interview with 3, legal expert familiar with military administration,12.04.2012, Budapest
Comments None of theInterviewees were aware of any off-budget military expenditures. Nor is there irrefutable proof that they are not in existence.
Sources and References Act CLV of 2009 on the Protection of Classified Information, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=124738.578132 Pfv.IV.20.871/2008/9. decison of the Supreme Court
Comments The Act on the Protection of Classified Information does not provide for effective scrutiny by courts. The Parliamentary Commissioner for Data Protection and Freedom of Information had effective powers of scrutiny, but this position was abolished and the powers were given to the Hungarian National Authority for Data Protection and Freedom of Information which in fact is not an independent entity, and thus the application of his authority in practice is questionable. The originating agencies also have internal scrutiny procedures according to law, but there is no evidence that such scrutiny is exercised at all. The Hungarian Civil Liberties Union (HCLU) had a freedom of information litigation against the most important originator, the National Security Office (later reRoled fthe Constitution Protection Office) which refused to provide information on the circumstances for declassifications. In its request, the HCLU asked the following questions regarding the period from 1 January 2004 to 28 November 2006: which documents have lost their classified quality, what was the reason for every single document of losing its classification, who was the originator person and what was the legal basis of classification, what was the expiry (beginning and length) of the classification, level of classification and subject of the document. The Supreme Court overturned the final decision of the Metropolitan Appeal Court and refused to grant access to data on declassifications.
Sources and References Ministry of Defence, Fehér Könyv: korrupció, átvilágítás és büntetőjogi konzekvenciák, [White Book: corruption, audit and penal law consequences], 2011, see at http://www.kormany.hu/download/3/52/40000/Honv%20Min%20-%20Feh%C3%A9r%20k%C3%B6nyv.pdf#!DocumentBrowse (Accessed on 3 April 2012) Organigram of the Deputy State Secretary for Defence Economy of MoD, see at: http://www.kormany.hu/download/7/73/80000/V%C3%A9delemgazdas%C3%A1g%C3%A9rt%20Felel%C5%91s%20Helyettes%20%C3%81T%20szervezeti%20rajza.jpg (Accessed on 2 April 2012)
Comments The national defence and security institution has beneficial ownership in the following commercial companies: HM Rekreációs és Kulturális Közhasznú Nonprofit Kft HM Zrínyi Kommunikációs Szolgáltató Nonprofit Kft. HM Térképészeti Közhasznú Nonprofit Kft. HM EI Zrt. HM Currus Zrt. HM Armcom Zrt. HM Arzenál Zrt. HM Fejlesztési és Logisztikai Ügynökség This means that the Ministry of Defence has interests in communications, arms and cartographic businesses. The Ministry of Defence published the 'White Book' in 2011 about corruption, audit, and penal law consequences. It contains the cases, criminal consequences, and the promise that this document is only the first step to create a successful military force. The White Book is a report on corruption cases of the previous governments in which the first five companies of the above list were involved.
Sources and References Ministry of Defence, Fehér Könyv: korrupció, átvilágítás és büntetőjogi konzekvenciák, [White Book: corruption, audit and penal law consequences], 2011, see at http://www.kormany.hu/download/3/52/40000/Honv%20Min%20-%20Feh%C3%A9r%20k%C3%B6nyv.pdf#!DocumentBrowse (Accessed on 3 April 2012) Report of the State Audit Office on the Audit of Functioning of the Chapter of the Ministry of Defence, 2009, see at: http://www.asz.hu/jelentes/0905/jelentes-a-honvedelmi-miniszterium-fejezet-mukodesenek-ellenorzeserol/0905j000.pdf , pp.56-64 Hungarian State Holding Company's website, http://www.mnvzrt.hu
Comments The White Book, prepared by the MoD, refers to audits of the enterprises owned by the MoD, but these audits were not performed by independent bodies. The report of the State Audit Office touches upon how the Hungarian State Holding Company's proprietary rights and the MoD's supervisory role are exercised, but the SAO did not perform the audit of these enterprises and neither is any information on independent audits available on the Hungarian State Holding Company's website.
Sources and References Ministry of Defence, Fehér Könyv: korrupció, átvilágítás és büntetőjogi konzekvenciák, [White Book: corruption, audit and penal law consequences], 2011, see at http://www.kormany.hu/download/3/52/40000/Honv%20Min%20-%20Feh%C3%A9r%20k%C3%B6nyv.pdf#!DocumentBrowse (Accessed on 3 April 2012) Report of the State Audit Office on the Audit of Functioning of the Chapter of the Ministry of Defence, 2009, see at: http://www.asz.hu/jelentes/0905/jelentes-a-honvedelmi-miniszterium-fejezet-mukodesenek-ellenorzeserol/0905j000.pdf
Comments Audits by the current government on the corruption cases of the previous governments or the State Audit Office's audit would have been likely to uncovered the existence of unauthorised private enterprise, but they did not reveal anything of this form.
Sources and References Ministry of Defence: White Book - Corruption, audit and penal consequences, 2011, see at: http://www.kormany.hu/download/3/52/40000/Honv%20Min%20-%20Feh%C3%A9r%20k%C3%B6nyv.pdf àšjabb sötét ügyek Hende Csaba előtt Bővebben a mai Magyar Hírlapban, Stefanits Csaba, 02.03.2011, see at: http://www.magyarhirlap.hu/belfold/mindenkit_megeloz_a_csapathonved.html Vezetői értekezlet, 01.03.2011, see at: http://www.honvedelem.hu/cikk/24594/vezetoi-ertekezlet Hende Csaba: visszaszerezné a korrupciós pénzeket a Honvédelmi Minisztérium, 07.03.2011, see at:http://nol.hu/belfold/hende_csaba__visszaszerezne_a_korrupcios_penzeket_a_honvedelmi_miniszterium Tájékoztatás, tapasztalat-, és véleménycsere, 02.06.2011, see at: http://www.honvedelem.hu/cikk/26264/tajekoztatas,-tapasztalat%E2%80%93,-es-velemenycsere Benkő: a korrupciós ügyek a honvédséget nem szennyezhetik be, 03.04.2011, see at: http://www.mr1-kossuth.hu/hirek/itthon/benko-a-katonai-szervezeteknel-egyetlen-ember-sem-erintett-a-feltart-buncselekmenyekben.html
Comments After the change of government in 2010, the new Defence Minister Hende Csaba displayed major commitment to reducing corruption in the military. Part of this was the publication of the White Book, a paper showing the past years' biggest corruption scandals. The Defence Minister, the Chief of Defence and the Deputy State Secretary for Defence Economy expressed in severalInterviews and speeches their commitment to prevent and prosecute corruption in the MoD and in the Armed Forces.
Sources and References Ministry of Defence: White Book - Corruption, audit and penal consequences, 2011, see at: http://www.kormany.hu/download/3/52/40000/Honv%20Min%20-%20Feh%C3%A9r%20k%C3%B6nyv.pdf Tábornokok vesztegetési pere - A meghallgatott vádlottak egyike sem tartja megát bűnösnek az ellene felhozott vádakban [Bribery case of generals- none of the defendants pled guilty to charges raised], Report of the Hungarian Press Agency republished on the website of the Governmental Accountability Commissioner, 1 February 2012, see at: http://elszamoltatas.kormany.hu/tabornokok-vesztegetesi-pere-a-meghallgatott-vadlottak-egyike-sem-tartja-megat-bunosnek-az-ellene-felhozott-vadakban (accessed on 12.04.2012) A tárca és a honvédség elmúlt évét értékelte Hende Csaba, Website of the Government 02.06.2011, see at: http://www.kormany.hu/hu/honvedelmi-miniszterium/hirek/a-tarca-es-a-honvedseg-elmult-evet-ertekelte-hende-csaba
Comments After the 2010 elections in Hungary, the new government re-organised the entire Ministry of Defence and during this procedure they reviewed the previous government's work. They found several corruption cases and published them in a White Book. There is a pending procedure of a corruption case before the Military Council of the Kaposvar Tribunal (county court) in which several high ranking military officers, including three general brigadiers, six colonels, two lieutenant-colonels, one major and four civilians, were indicted with corruption charges. The former state secretary is charged with concealing the offences committed by a criminal organisation. If they are convicted as criminal organisation that can be considered as "home-grown organised crime". The Minister of Defence announced that a new Code of Conduct and an anti-corruption strategy for the MoD and the Armed Forces will be introduced soon.
Sources and References Interview with 4, Hungarian military journalist, 2 April 2012, Budapest Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest
Comments "In 2004, a captain complained in an online chat forum that his squadron was sent on patrol with insufficient equipment in Afghanistan. He criticised the vehicles and equipment, which were unfit for missions. His concerns were investigated and the report found that everything was perfect. As an aftermath of his report, the chat forum was closed down, he had to face retaliation and emigrated from Hungary. Originally the chat forum was set up by the office of the Chief of Armed Forces and the Chief also read the comments. Many of the comments were very useful, it made the information flow upwards easier." - anonymous Hungarian military journalist, 2 April 2012, Budapest "There is no whistleblower policy and the attitude of the personnel is very concerning, no one dares to complain or blow the whistle if needed, no one has the courage for that." - anonymous legal expert familiar with military administration, 12.04.2012, Budapest
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Disagree; COMMENTS: While there is no separate piece of legislation concerning the reporting of any evidence of corruption it is the duty of every public servant and miltary personnel to report any improper conduct to relevant bodies.; SUGGESTED ANSWER: 1;
Sources and References Interview with 4, Hungarian military journalist, 2 April 2012, Budapest Interview with 3, legal expert familiar with military administration,12.04.2012, Budapest
Comments "Only clean criminal records and assets declarations are needed" - anonymous legal expert familiar with military administration. "Generally there is a shortage of well trained personnel, so there is not much to filter." - anonymous Hungarian military journalist.
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Agree with Comments; COMMENTS: Clean criminal records and assets declarations are needed, but further than that, political affiliation and political aspects can play as important a role as competence in certain appointments - though in the case cited the office-holder did in the end resign. Gubcsi Lajos elvesztette az Index elleni büntetőpert (Lajos Gubcsi loses his lawsuit against Index) http://index.hu/belfold/2012/01/26/elvesztette_gubcsi_lajos_az_index_elleni_buntetopert/?utm_source=mandiner&utm_medium=link&utm_campaign=mandiner_201205;
Sources and References 106/2007. (XII. 6.) Resolution of the Parliament on detailed number of the Armed Forces of Hungary, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=109948.567647
Comments The Parliamentary Resolution provides the numbers of both civil and military personnel. It was introduced in the Parliament by the minister of defence and after public discussion, it was published in the Official Gazette.
Sources and References Act XCV of 2001 on the Legal status of the professional and the contracted staff of the Hungarian Military, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=56445.582072 Act CXCIX of 2011 on Public Service Officials, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=143562.590853
Comments The legal provisions relating to pay rates and allowances are defined by law and may vary according to objective criteria set by law. They are transparent. The transparency of actual pay rates is less certain, and relevant information could not be retrieved.
Comments "There have been no problems with payments during the last 12 years" - anonymous legal expert familiar with military administration. "Soldiers on mission receive their payment in USD that may be complicated sometimes." - anonymous Hungarian military journalist.
Sources and References Interview with 1, MP, 13.04.2012, Budapest Interview with 4, Hungarian military journalist, 2 April 2012, Budapest 79/2011. (VII. 29.) Instruction of the Minister of Defence on Human Resources Strategy for the period of 2012-2021 of the Hungarian Armed Forces, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=139401.519381
Comments "There is a promotion system, a military career model is promised by each government, a human resources strategy has been developed, but we have to see how much it is followed." - Interviewee 1. "Well qualified soldiers are scarce and the system is highly politicised on the top level. Already at middle level one has to be supple, but on higher level good connections are needed." - anonymous Hungarian military journalist, 2 April 2012, Budapest
Comments "There is a promotion system, a military career model is promised by each government, a human resources strategy has been developed, we have to see how much it is followed." - Interviewee 1. "Well qualified soldiers are scarce and the system is highly politicised on top level. Already at middle level one has to be supple, but on higher level good connections are needed." - anonymous Hungarian military journalist. "Personal relationships, mutual favours are highly important. At various levels, amongst largely equally qualified individuals, often not the most qualified can advance, as external aspects may come into play. On paper everything is perfect, but the practice is different." - anonymous legal expert familiar with military administration.
Sources and References Vége a sorkötelezettségnek [End of the compulsory conscription], League Against Conscription, 10.06.2004, see at: http://www.hel.hu/component/content/article/104-vege-a-sorkoetelezettsegnek.html Fundamental Law of Hungary, Article XXXI, see at: http://www.kormany.hu/download/4/c3/30000/THE%20FUNDAMENTAL%20LAW%20OF%20HUNGARY.pdf
Comments Statutory military service and compulsory conscription are suspended in peacetime in Hungary.
Sources and References Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest Interview with 4, Hungarian military journalist, 2 April 2012, Budapest
Comments There is voluntary conscription for the reserves. BothInterviewees told that there is no sign of bribery in recruitment procedures. No policy on this matter is known. The information through theInterviewees does not, however, indicate any risk of bribery among professional military contracts or voluntary reserves.
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Disagree; COMMENTS: In Hungary, Bribery is a military offence therefore I am not convinced that the Ministry of Defence should have implemented a policy specifically regarding the issue covered by this question.; SUGGESTED ANSWER: 4;
Is there evidence of ‘ghost soldiers’, or non-existent soldiers on the payroll? Sources and References Interview with 1, MP, 13.04.2012, Budapest Interview with 4, Hungarian military journalist, 2 April 2012, Budapest Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest
Comments There appears to be no evidence of the existence of 'ghost soldeirs' on the payroll of defence establishments.
Comments "In theory, chains of command are separated from chains of payment, but senior officials can propose salary increases and bonuses. In Hungary, superiors cannot impose disciplinary sanctions (through payments)" - anonymous legal expert familiar with military administration.
Sources and References 67/2003. (HK 18.) Instruction of Minister of Defence on publication of the Code of Military Ethics and on the establishment and duties of the Council of Ethics of the Armed Forces
Comments While a Code of Conduct for all civilian and military personnel does exist, it is unclear, lacks comprehensiveness and there are likely to be issues in regard to its effectiveness.
Sources and References Vesztegetési ügybe keveredett a Honvédelmi Minisztérium egyik cége, Népszava, 24.02.2010., http://www.nepszava.hu/articles/article.php?id=263282 Mindent tagad a korrupciós hálózat üzemeltetője, Magyar Nemzet Online, 31.01.2012, see at: http://mno.hu/ahirtvhirei/mindent-tagad-a-korrupcios-halozat-uzemeltetoje-video-1047476
Comments There is no sign that breaches of the Code of Conduct that do not reach the level of criminal liability are addressed, though if criminal offences are prosecuted, their results may be published.
Sources and References Interview with1, MP, 13.04.2012, Budapest Interview with 4, Hungarian military journalist, 2 April 2012, Budapest Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest
Comments None of theInterviewees have heard about any anti-corruption training for military and civilian personnel.
Sources and References Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest Ministry of Defence, ' White Book - Corruption, Audit and Penal Consequences,' 2011, see at: http://www.kormany.hu/download/3/52/40000/Honv%20Min%20-%20Feh%C3%A9r%20k%C3%B6nyv.pdf
Comments "When the government started its work in 2010, it audited the entire MoD and Defence Forces and found numerous corruption cases. Findings of the audit were not published at once, but are being diffused gradually to the public which serves political aims." - anonymous legal expert familiar with military administration. "Exhaustive audits started and were successfully concluded after the change in the government in 2010. The results were submitted by experts as summary reports to the minister of defence" - from the foreword of the White Book (2011).
Are there effective measures in place to discourage facilitation payments (which are illegal in almost all countries)? Sources and References 67/2003. (HK 18.) Instruction of Minister of Defence on publication of the Code of Military Ethics and on the establishment and duties of the Council of Ethics of the Armed Forces Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest Interview with 4, Hungarian military journalist, 2 April 2012, Budapest
Comments Beyond the Code of Conduct and the general rules of the Criminal Code, there are no effective measures to discourage facilitation payments or the system of favours. "I don't know about payments, but favours are totally inherent in the system of the military. There are individuals who refuse it, but there is nothing visible on official level." - anonymous legal expert familiar with military administration. "The Defences Forces are prouder than allowing facilitation payments, though there are many soldiers who serve in them only for the money. However, if some equipment breaks down favours are asked and are awarded by a bottle of whisky. Such practices are used to make the Defence Forces functioning at all and not for private gain. It is tolerated as there are many things that would not work otherwise." - anonymous Hungarian military journalist.
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Disagree; COMMENTS: Bribery is, nonetheless, a criminal offence, even if there is little evidence that it is prosecuted in relation to facilitation payments.; SUGGESTED ANSWER: 2;
Sources and References 1009/2009. (I. 30.) Government Decree on the National Military Strategy of the Republic of Hungary, see at: http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=125599.179457 (accessed on 06.04.2012) 1035/2012. (II. 21.) Government Decree on the Hungary's National Security Strategy, see at http://jogszabalykereso.mhk.hu/cgi_bin/njt_doc.cgi?docid=146732.590017 (accessed on 06.04.2012) Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest
Comments The military doctrine has to be based on a clear National Military and Defence Strategy. The country has a new National Security Strategy, and the government has also planned to write a new National Military Strategy for spring 2012. This new strategy is not ready yet, and so the old National Military Strategy from 2008 is still in force. It seems that the old military doctrine is still in force, but it doesn't address corruption issues. "I am not aware of any Hungarian military doctrine related to anti-corruption, only code of conducts are applicable norms in this matter" -anonymous legal expert familiar with military administration,
Sources and References Interview with 4, Hungarian military journalist, 2 April 2012, Budapest Baghlan Province CIMIC Handbook, CIMIC-PSYOPS Unit, Hungarian Defence Forces Joint Forces, 2010, see at: www.kormany.hu/download/7/b5/10000/baghlan.pdf CIMIC Handbook of Afghanistan, CIMIC-PSYOPS Unit, Hungarian Defence Forces Joint Forces, 2004, see at: http://www.honvedelem.hu/files/9/5960/afganisztan_cimic_kezikonyve__3._kiadas_.pdf (Last modified 2 April 2012) CIMIC Handbook of Iraq, CIMIC-PSYOPS Unit, Hungarian Defence Forces Joint Forces, 2004, see at: http://www.honvedelem.hu/files/9/5963/jooo.pdf (Last modified 2 April 2012) Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest
Comments The Baghlan Province CIMIC Handbook and the other CIMIC Handbooks at several chapters refer to the issues of corruption. "The issue of corruption may be included in the cultural preparation of soldiers, though there is no information on the quality of the training. The mission preparations are in their infancy in Hungary. Each soldier receives a copy of the Baghlan Province CIMIC Handbook, which may have some effect on the soldiers, though the general Hungarian attitude towards corruption is unlikely to be affected. There's a blanket condemnation of corruption, but they acknowledge the phenomenon with resignation" - anonymous Hungarian military journalist. The existence of such training is disputed, however. "I had the opportunity to discuss the preparation for deployment with a number of officers who have taken part in missions and I'm sure they didn't get an anti-corruption training as they would have mentioned it." - anonymous legal expert familiar with military administration.
Sources and References Interview with 4, Hungarian military journalist, 2 April 2012, Budapest Archived website of the Military Security Agency, last date of archiving was 23.10.2010, see at http://web.archive.org/web/20100821002124/http://www.kbh.gov.hu/ Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest
Comments The Military Security Agency has an officer at each unit, who is responsible for monitoring the activities of the unit and reporting if any criminal offence is detected such as theft. drug abuse, etc. There are also regular checks by officers directly deployed from Hungary to inspect units. Two military intelligence agencies were merged at the end of 2011. Neither of the old websites are functional and the new agency does not have any functioning website either. No report was available on such inspections on the Military Security Agency' website. "There is no external scrutiny on anti-corruption matters and it wouldn't work anyway, but I can imagine that Military Security Agency staff does anti-corruption work" - anonymous legal expert familiar with military administration.
Comments "Guidelines and regulations related to corruption risks in contracting would be the same as in Hungary, though it is much more complicated in a mission. A part of machine guns regularly broke because of poor construction and it would have been easier to find a local contractor to replace them, as it is long way to order them from Hungary through German military transport. The system may have been simplified since and Afghan bidders are tendered by the local CIVIC unit, however all bidders taking part are presumably affiliates of the governor, otherwise they wouldn't be allowed by the locals to take part" - anonymous Hungarian military journalist. "There is a wide range of framework contracts with accredited service providers and when something is needed, the superiors have to be notified, and they make the decision to order the supply. Some commanders don't even have the authority to purchase anything and even is something is bought locally, it requires the approval of the superiors." - anonymous legal expert familiar with military administration.
Sources and References 3, legal expert familiar with military administration, 12.04.2012, Budapest
Comments Private Military Contractors in military environments are not employed. Other private contractors for logistics and transport purposes, for example the Hungarian National Airlines, were/are employed. There is a lack of certainty over this latter issue. There is also a lack of evidence of regulations forbidding their use.
Sources and References Government Decree No. 218/2011 (X.19.) on special rules of procurements that concern classified information, fundamental security or national security interests of the country or that requires special security measures. The decree transposes the Directive 2009/81/EC on defence and sensitive security procurement.
Comments The current legislation entered into force on January 1, 2012. Article 9 para (1) of Act CVIII of 2011 on Public Procurements defines numerous exemptions from its application which is further detailed by Government Decree No. 218/2011 (X.19.). The Government Decree also authorises the Government, on the joint initiative of the minister of interior and minister responsible for the industry, to define individual criteria for exemptions from the application of the Decree. Both the current and the previous legislations have failed to prevent seemingly corrupt procurements where national security was used as a pretext, though unrelated to defence issues. Article 1 paragraph 2 of the Decree stipulates that the tendering authority is required to ensure and all the bidders ought to respect the fairness and transparency of competition.
Sources and References Ministry of Defence website, Armament and Quartermaster Office, Annual Public Procurement Plan 2012, see at:http://honvedelmibeszerzes.kormany.hu/download/5/d8/00000/kozbeszerzesi_terv_2012.PDF (accessed on 12.04.2012) Ministry of Defence website, Armament and Quartermaster Office, documents pertaining to the public procurement cycle , see at http://honvedelmibeszerzes.kormany.hu/eljaras-tipusok (accessed on 12.04.2012)
Comments The annual public procurement plan of the MoD's Armament and Quartermaster Office, which is responsible practically for all the procurements of the MoD and the army is published on their website. The plan includes mundane items, such as pastry, fruits, bandages for the military hospital, etc. The later phase of the cycle can be followed through further documents published on the Office's website, such as tender calls, contracts, amendments to contracts, etc. However, the proportion of the tender calls, contracts, amendments and remedies published cannot be judged without having access to the registry of documents.
Are defence procurement oversight mechanisms in place and are these oversight mechanisms active and transparent? Sources and References Article 9 paragraph (1) of Act CVIII of 2011 on Public Procurements
Comments Defence procurement has the same oversight mechanisms as general procurement. There are four bodies (three institutions and one committee) which can take part in the oversight mechanism in different cases. These are: the Public Procurement Arbitration Board (as a first instance a quasi judicial body and as a second instance, remedies can be sought before the courts). The State Audit Office can examine the efficiency and effectiveness of the use of public resources and the Competition Authority provides remedy in cases of unfair competition in public procurement procedures. The legal remedies are widely used in general and the application is transparent. There is no information available regarding how they used in defence procurement matters specifically, however.
Sources and References Ministry of Defence, Armament and Quartermaster Office, Annual Public Procurement Plan, 2012, see at:http://honvedelmibeszerzes.kormany.hu/download/5/d8/00000/kozbeszerzesi_terv_2012.PDF (accessed on 12.04.2012) Ministry of Defence website, Armament and Quartermaster Office, documents pertaining to the public procurement cycle , see at http://honvedelmibeszerzes.kormany.hu/eljaras-tipusok (accessed on 12.04.2012) NATO Supplier Information website, http://www.natotender.gov.hu/(Last modified 2 April 2012) Ministry of Defence website, Armament and Quartermaster Office, http://honvedelmibeszerzes.kormany.hu/fontos-jogszabalyok (Last modified 2 April 2012)
Comments The annual public procurement plan of Hungary's Armament and Quartermaster Office, which is responsible practically for all the procurements of the MoD and the army, is published on its website, but only for the actual year and not in advance. Procurement contracts are also disclosed. NATO tenders have their own regulations and home page. Only these suppliers can see the actual procurement needs, entitled NATO Supplier". (http://www.natotender.gov.hu/ )( Last modified 2 April 2012) On the Ministry of Defence media homepage, there is information about new procurement, for example, the purchase of Finnish helicopters.
Sources and References Government Decree 228/2004 (VIII.30.) on Special Provisions of the Procurement of Goods Regarding National Defence. Ministry of Defence website, the Armament and Quartermaster Office, Tender calls, see at: http://honvedelmibeszerzes.kormany.hu/ajanlati-felhivas
Comments The Government Decree prescribes the minimum criteria to which the bidders have to comply, such as, the bidder must have clean records regarding paying taxes, providing true information in public procurements, etc. Beyond the minimum criteria, the authority can set extra requirements (also defined by the Decree) for bidders and their sub-contractors concerning earlier violations of public procurement laws, competition law, etc. These provisions do not mention corruption or corrupt activity as a risk, but the expectation that applying companies avoid corrupt activity is implicit in other provisions.
Sources and References 58/2007. (HK 12.) Instruction of the Minister of Defence on the preparation of a 10 year strategic plan for 2009-2018 and on the performance of the national duties of NATO defence planning and monitoring procedures, published in the Defence Gazette CXXXIV/12 (27 June 2007) 102/2010. (XII. 3.) Instruction of the Minister of Defence on the preparation of a long-term strategic plan of the Ministry of Defence for the years of 2012-2021, published in Official Notices, (3 December 2010), see at www.magyarkozlony.hu/pdf/8050 Report of the State Audit Office on the Audit of Functioning of the Chapter of the Ministry of Defence, 2009, see at: http://www.asz.hu/jelentes/0905/jelentes-a-honvedelmi-miniszterium-fejezet-mukodesenek-ellenorzeserol/0905j000.pdf , p. 38
Comments There have been several attempts to prepare ten year strategic plans (2004-2013, 2005-2014, 2009-2018) that would be in line with the National Military Strategy and would provide for the balance of resources, capacities and strategic aims. According to the State Audit Office, until 2009 the MoD was not successful with its ten years plans.
Sources and References The Hungarian Institute of Military Engineering, websitehttp://www.haditechnikaiintezet.hu/ (accessed April, 2012) Ministry of Defence website, the Armament and Quartermaster Office, http://honvedelmibeszerzes.kormany.hu/ (accessed April, 2012) Jöhetnek az osztrák tankok, [Austrian tanks can come] Hungarian Press Agency via Népszabadság, 11.12.2010, see at http://nol.hu/archivum/johetnek_az_osztrak_tankok (accessed on 13.04.2012) Az ingyenhelikopter a legolcsóbb?, [Free helicopters are the cheapest?], Szalay Tamás Lajos, Népszabadság, 20.02.2012, see at http://nol.hu/belfold/20120220-hazhoz_jottek_az_amerikaiak (accessed on 13.04.2012)
Comments The Hungarian Institute of Military Technology Ltd. of Hungary's Armament and Quartermaster Office within the Ministry of Defence provides for the quality assurance of defence procurements. Neither the website of the Hungarian Institute of Military Technology Ltd., nor the Armament and Quartermaster Office provide information on quantitative assessments used in the planning of procurements. Occassionally, Hungary receives offers from other countries and starts negotiations on buying or receiving as donations used arms, such as tanks from Austria or helicopters from the US. Neither of these negotiations have been concluded. There is very limited information available on this subject.
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Agree with Comments; COMMENTS: Defense purchases are highly determined by constrained resources. There is a lack of clearly defined and quantified requirements in advance. The actual purchases are highly dependent on the end state of the negotiations with the concerned partners.;
Sources and References Regina Wilson, Dominic Scott and Mark Pyman, 'The extent of single sourcing and attendant corruption risk in defence procurement: a first look,' Transparency International (UK), 2006,see at: http://www.ti-defence.org/component/cckjseblod/?task=download&file=publication_file&id=722 (accessed on 12.04.2012) Interview with 3, legal expert familiar with military administration, 12.04.2012, Budapest
Comments "It is quite common that a tender is tailored to a supplier, as the soldiers know already in advance what they want. They may be used to a product and want to purchase the same again. The competition in Hungary is illusory anyway as there are few military suppliers in the country" - anonymous legal expert familiar with military administration.
Sources and References 67/2003. (HK 18.) Instruction of the Minister of Defence on the publication of the "Military Code of Ethics" and on the establishment and duties of the "Military Board of Ethics" (Public) Procurement Regulations of the Ministry of Defence (2011), see at: http://honvedelmibeszerzes.kormany.hu/download/d/98/00000/HMFLUSZAB.pdf
Comments The Military Code of Ethics is a very simplified document without a properly functioning ethical system. The (Public) Procurement regulations of the Ministry of Defence set up a complex system of responsibilities. The most important details of the regulation is that tender boards have to work together with legal, economic and financial experts. This can guarantee the board makes the correct decision. The external control over tender boards is divided into two steps: 1. the expert committee chairman's control 2. the procurement director's control (based on the first step). The State Audit Office performs independent audits and publishes all of its reports.
Sources and References Act LVII of 1996 on the Prohibition of Unfair and Restrictive Market Practices, see at: http://www.gvh.hu/gvh/alpha?do=2&st=2&pg=128&m5_doc=4835 (accessed on 12.14.2012)
Comments The country has legislation in place to discourage and punish collusion between bidders. The Competition Authority has effective instruments and applies them even to powerful companies. Competition distorting agreements and cartels are well known in other sectors, but not in the defence sector.
Peer Review Comments REVIEWER: Peer Reviewer; OPINION: Disagree; COMMENTS: There is no reported case of collusion between bidders in the security sector and such practice would result in criminal prosecution.; SUGGESTED ANSWER: 4;
Sources and References Kormányportál, Honvédelmi Minisztérium, Védelemgazdaságért Felelős Helyettes Államtitkárság, Márki Gáborh, http://www.kormany.hu/hu/honvedelmi-miniszterium/vedelemgazdasagert-felelos-helyettes-allamtitkarsag (last modified 2 April 2012) Report of the State Audit Office on the Audit of Functioning of the Chapter of the Ministry of Defence, 2009, see at: http://www.asz.hu/jelentes/0905/jelentes-a-honvedelmi-miniszterium-fejezet-mukodesenek-ellenorzeserol/0905j000.pdf , p. 66, (accessed April, 2012)
Comments Defence procurement staff are organised into a professional staff department, but there is no public information available about their training. The resumes of some procurement staff members are available on the Ministry of Defence homepage. The State Audit Office reported that there were staff procurement shortages at the end of the year. Such phenomenon is rather common in any Hungarian public institution where, due to mid-year restrictions, unused funds are spent before the next budgetary year starts.
Sources and References Act CVIII of 2011 on Public Procurement, see at: http://www.kozbeszerzes.hu/static/uploaded/document/PPA%202012_03.pdf
Comments There is a formal mechanism of seeking legal remedy, which is regulated by general procurement law. There is no information available about whether companies are protected against future discrimination; companies are reportedly often reluctant to seek remedy for such fears.
Sources and References Act CVIII of 2011 on Public Procurement, see at: http://www.kozbeszerzes.hu/static/uploaded/document/PPA%202012_03.pdf Annual Report of the Public Procurement Council to the Parliament, 2010, see at: http://www.parlament.hu/irom39/03451/03451.pdf (accessed April, 2012)
Comments The procurement executive him/herself cannot impose any sanctions on a bidder, but final court decisions (either civil or criminal) related to corruption, result in debarment that is noticed by the procurement executive. The procurement executive also has the obligation of reporting to the competition authority if collusion of bidders is presumed and the authority then examines the case. The procurement executive can also initiate examination of the case and the Public Procurement Arbitration Board or the court can impose fines on the bidders. The procurement executive has the additional opportunity of initiating criminal procedure. The Annual Report of the Public Procurement Council contains data on fines; 38% of violations of public procurement laws were sanctioned by fines.
Sources and References Former BAE agent charged with bribery over arms deals, David Leigh and Rob Evans, The Guardian, 29 January 2010, see at: http://www.guardian.co.uk/world/2010/jan/29/former-bae-agent-bribery-arms Elpazarolt Gripen-milliárdok, Balázs Szentkirályi, 21.09.2010., see at: http://index.hu/gazdasag/magyar/2010/09/21/elpazarolt_gripen_milliardok_-_mi_lett_a_gazdasagelenkitessel/ Gripen-milliárdok nyomában, Balázs Szentkirályi, 17.09.2010, see at: http://www.es.hu/?view=doc;26849
Comments There are pending investigations and criminal procedures concerning the sale of Gripen fighter-jets in the region. The intermediary of the sale has been charged with bribery. Had there been a due diligence check or any other measure to prevent corruption, there would be no criminal procedures concerning this offset agreement. There was no effective follow up on offset contract performance by the government. Before the offset agreement took effect, no assessment was performed to define the baseline of investments before the offset or in the framework of the offset agreement.
Sources and References Gripen-ügy: játssza a hülyét a minisztérium, Zsófia Gergely, 22.10.2008, see at: http://www.origo.hu/itthon/20081021-tizennegy-ceg-vett-reszt-a-gripen-ellentetelezesben-a-gazdasagi-miniszterium.html HCLU Wins Landmark Freedom of Information Case, Hungarian Civil Liberties Union, 22.11.2008, see at:http://tasz.hu/en/freedom-information/hclu-wins-landmark-freedom-information-case Sikeres Gripen kampány - üröm az örömben, Hungarian Civil Liberties Union, 07.11.2008., see at: http://tasz.hu/informacioszabadsag/sikeres-gripen-kampany-urom-az-oromben
Comments The Government ensures practically no level of transparency of offset agreements beyond the existence of the contract and public announcements of the procurement made. For example, in the Gripen case, the fighter-jets were supplied were made public. It took a year long freedom of information litigation by an investigative journalist represented by an NGO to gain access to the details of the performance of the contract. Even after the court ordered disclosure of the list of companies and investments made by them in Hungary, the responsible ministry attempted to disregard the final court decision by separating the amount of investments and the investing companies. Several companies were even omitted from the list.
Sources and References Megújultak az ellentételezés általános szabályai, 28.01.2010., see at: http://www.vg.hu/gazdasag/gazdasagpolitika/megujultak-az-ellentetelezes-altalanos-szabalyai-303978 EU Observer, 'EU defence contracts to become more transparent,' 01.07.09, see at: http://euobserver.com/13/28396
Comments In 2010, the European Defence Agency's Code of Conduct on Offsets was introduced in Hungary. After the Gripen-offset, a new structure of offset procurement was introduced so that offset contracts are not part of the procurement procedure. Instead, the responsible ministry negotiates separately with the other partner in regard to economic and industrial cooperation. The latter does not depend on the main contract.
Sources and References Interview with 1, MP, 13.04.2012, Budapest HIR24, 'Hende kiiktatná a közvetítőket a haditechnikai beszerzésekből,' 18.01.2012, see at: http://www.hir24.hu/belfold/2012/01/18/hende-kiiktatna-a-kozvetitoket-a-haditechnikai-beszerzesekbol/
Comments "There is no sign of goverment policy concerning this issue, but I think the Government doesn't really use agents or intermediaries." - Interviewee 1, 13.04.2012, Budapest. After the unsuccessful attempt of selling used MiG fighter-jets, the minister of defence announced that they initiated a legal amendment so that the Hungarian State Holding Company could sell without intermediaries. The amendment would allow direct trade with other states instead of being limited to transactions with firms that have export licenses.
Sources and References Ministry of Defence website, MoD Armament and Quartermaster Office , http://honvedelmibeszerzes.kormany.hu/ertekesites, (accessed April, 2012) http://honvedelmibeszerzes.kormany.hu/download/4/f7/00000/ajfelh_81143_10-95_016-0137.pdf http://honvedelmibeszerzes.kormany.hu/download/d/78/00000/RVFELH67002_11-74_184.pdf
Comments On the website of the MoD's Armament and Quartermaster Office, which is responsible for defence purchases within the Ministry of Defence, the public procurement notices are published. In the procurement notice, there is reference to how the contracting authority will fulfil its financial obligations (such as in line with the procedural rules of the Hungarian State Treasury or reference to provisions of the Public Procurement Act). There was no further information available in regard to this.
Does the government formally require that the main contractor ensures subsidiaries and sub-contractors adopt anti-corruption programmes, and is there evidence that this is enforced? Hint: The main contractor will contract some elements of the work to be done to other companies, known as sub-contractors. They in turn can further contract work out. Such ‘chains’ of contractors are very common in the defence industry. Sources and References Government Decree 228/2004 (VIII.30.) on Special Provisions of the Procurement of Goods Regarding National Defence. Tender calls are available on the website of the Armament and Quartermaster Office, Ministry of Defence, see at: http://honvedelmibeszerzes.kormany.hu/ajanlati-felhivas
Comments The Government Decree prescribes the minimum criteria with which the bidders have to comply, such as: the bidder has clean records regarding paying taxes, providing true information in public procurements, etc. Beyond the minimum criteria, the authority can set extra requirements (also defined by the Decree) for bidders and their sub-contractors concerning earlier violations of public procurement laws, competition law, etc. These provisions don't mention corruption or corrupt activity as a risk, but the expectation is that applying companies avoid corrupt activity is implicit in other provisions.
Sources and References Interview with 4, Hungarian military journalist, 2 April 2012, Budapest. The Gripen affair, Eva S. Balogh, 13.08.2007, see at: http://esbalogh.typepad.com/hungarianspectrum/2007/08/the-gripen-affa.html Huzavona egy harcászati megrendelés körül -Frekvenciazavarok, Ibolya Vitez F., 20.04.2005., see at: http://hvg.hu/hvgfriss/2005.16/200516HVGFriss142
Comments "In case of major procurements, such as the Gripen fighter-jets or the Tetra telecommunication system by Kongsberg Defence Communications AS have clearly shown the importance of political influence. Otherwise the Hungarian army is rather poor and modernisation takes place mainly out of the normal purchase channels, through assistance or lending programmes of better resourced armed forces." - anonymous Hungarian military journalist, 2 April 2012, Budapest