National
Development Agency

A tender writing company – pulling the strings behind the curtain - is the mastermind behind the plot and also the most likely beneficiary of the mechanism dubbed as the „beehive model”, which is none-other than an attempt at bribery. Following examinations carried out in connection with the call for application ECOP/2007-2.1.1/A announced by MAG Zrt., NDA reported the incident to the competent authorities.      

The call for applications only defined formal criteria, which if satisfied – and duly certified – potentially ensures favourable evaluation of the applicant. The only difficulty that applicants may encounter in connection with ECOP-2007-2.1.1/A calls is that the full amount of the investment must be made available on a transitional basis; the 30% funding contribution is only subsequently made available. Applicants that attempted abuse relied on how the authorities will not be able to control all of the applications due to lack of capacities and the huge volume of applications submitted. However, in this case, misuse was already suspected during the decision-preparation procedure, since employees discovered a series of identical elements in the various applications, namely:    

• The same tender writing company compiled the submitted documents in each case.

• In most cases, the company issuing the price quote needed in the case of the development to be granted funding was also identical – the same price quote was submitted in almost every case.     

• In most cases, the same 2-3 individuals countersigned – as witnesses - the document certifying the availability of own funds.

• In many cases, the seat of the applicant micro-enterprise was located in a settlement from where it would be impossible to participate in the tender; however, the settlement specified in the application did not feature on the copy of the company’s registration. The implementation sites specified were located far away from the seat of the applicant (the IT equipment they envisaged to procure on the basis of the documents submitted can be operated from any location.)     

• The implementation site had the same address in the case of several applications.

• The economic indicators of the applicants failed to justify the size of the project and the planned investment did not correspond to the activities of applicants in many cases.    

The grounds of suspicion were furher reinforced by the fact that when the authority notified the enterprises on a control to be conducted, they all withdrew from participating in the tender.

The term „beehive model” used is suitable, since a relatively well-prepared tender writing company is at the heart of the fraud. According to the metafor, the tender writing company is the queen bee, at the centre of the organisation, whilst the micro-enterprises fussing round the queen bee are „busy” bees, who nevertheless do receive a share of the „collected goodies” – since the participation of these enterprise constitutes a precondition for „everyone to reep the rewards” – however, they should have settled for only a part of the profit.      

From the circumstances it is possible to deduce the either one person or a handful of individuals devised, prepared and organised the attempt at fraud.  

A tender writing company was at the heart of the inquiry. A Hungarian couple owns this company – a series of business organisations that ended up going bankrupt characterises the success of the business activities of the family. Besides this couple, the companies and their directors are also held responsible, since they most definitely had to know that the price quotes were false, for example.  

Since invoices must in all cases certify acquisitions made in connection with the application, there are numerous reasons for suspecting that an „invoice factory” would have also been linked up with the system of fraud. However, the control conducted prevented the launch of this operation.  

Having closed the examination, Minister of Local Government and Rural Development Gordon Bajnai officially pressed charges today by reporting the incident to the investigation authority. The Minister declared the following in connection with the case: it must be evident for every similar swindler that the NDA and connecting institutions are busy working and all attempts at fraud will sooner or later be unravelled, if not during the tendering phase then later on.   

We strongly believe that our task is to build a New Hungary from the EU funding made available, and we will do everything possible to ensure that the money is going to the right place in the future as well.