Closing of investigation No. IH_III_59_2023 – systemic investigation of canopy walkway projects

The Integrity Authority has conducted a systemic investigation concerning European Union applications submitted within the framework of the call entitled “Development of free public welfare functions of forest ecosystems”: this call became known through the “canopy walkway applications”. The total fund available for the programme is HUF 1.61 billion.

The Authority has examined the entire process of the funding programme from the call for applications to the activity of the managing authority and the building of the canopy walkways to the submission of invoices.

The Authority has found serious irregularities in each main phase of the process, where it has established that they infringe the regulations concerning the use of European Union funds.

For these reasons, the Authority files a complaint against unknown person for the offense of budget fraud in accordance with Penal Code Section 396, for the offense of agreement in restraint of competition in public procurement and concession procedures in accordance with Penal Code Section 420, and for the misdemeanour of use of a forged private document in accordance with Penal Code Section 345. Furthermore, it initiates the constitution of a competition supervision proceeding at the Hungarian Competition Authority and calls upon the managing authority to conduct the irregularity proceedings.

The findings, in brief, are the following:

• There is a suspicion of collusive practice amongst the big group of beneficiaries: a large number of the applicants, limited to 2 counties (Hajdú-Bihar and Szabolcs-Szatmár-Bereg), submitted funding applications with identical content, matching project descriptions, technical content, designer and contractor, practically identical overall budget, and by, in a similar fashion, heavily overpricing the projects.
• Even the call for applications was irregular, whilst the process lacked control mechanisms and checks. Deviating from the initial, correct direction, the call for applications was published after several modifications in a way that favoured only a small number of applicants.
• The managing authority did not establish an objectively assessable evaluation framework. There were practically no factually assessable standards based on which the necessity and relevance of the applications could have been compared.
• The principle of equal treatment might also have been violated because the applicants were required to meet unequal requirements, for instance, with a window to resolve discrepancies or the lack thereof.
• The investigation conducted by the Integrity Authority has also revealed that the winners of the funds had supposedly restrained the competition over the course of the public procurement for the selection of the contractor.

“One can do good and do well even in the case of a call, such as this one. One realised example of this is the project of the Municipality of Gyöngyös, which was evidently realised in compliance with the keynote of the call for applications. Amongst the withdrawn applications we have found several which, much to our regret, never became a reality. One example of such application is that of Zalaerdő Erdészeti Zrt. or that of Ugodi Erdőbirtokossági Társulat”, added Ferenc Biró, President of the Integrity Authority.