Closing of investigation No. VIZSG/13/2024 closed

Following the conclusion of its investigation, the Integrity Authority has filed a criminal complaint on suspicion of budget fraud and using forged private documents after a company utilised HUF 130 million of European Union funding in such a way that calls into question the project’s entire implementation. The Authority is advocating for the recovery of the disbursed funds.

The Integrity Authority has initiated an ex officio investigation into project no. GINOP-2.1.7-15-2016-01244, supported under the Economic Development and Innovation Operational Programme (GINOP). The project’s funding, provided by the European Union, totalled HUF 129,968,000.

According to its website, the beneficiary is a company providing accounting services, but its registered main activity in the company register shows physical well-being services. The supported project’s initial goal, however, was different from both right from the outset, focusing on the development of a portable hazardous waste disposal device and later shifting – by modifying the subject of the project – to the development of an innovative plant-based yoghurt product. The beneficiary did not participate in the development or testing of the project’s subject but instead outsourced these tasks to another company. This is inconsistent with the call for proposals, which aimed to support in-house prototype development by small and medium-sized enterprises. The project also failed to meet the criterion of professional feasibility. At the time of submitting the grant application, the company had one employee and did not plan to hire staff for the project’s implementation either.

The Authority’s investigation found that several tons of raw materials requiring handling and special storage were delivered to a third-floor apartment, according to project documentation, but the feasibility and practicality of this claim are fundamentally questionable. The Authority obtained the project’s research documentation that showed significant discrepancies between the quantities of materials accounted for under the GINOP project and the actual quantities used, as well as inconsistencies in the records of the companies delivering these materials. The Authority identified inconsistencies amounting to several tons. Additionally, the persons and dates listed in the research records did not match the names and dates indicated in the documents submitted by the beneficiary during the project’s financial settlement.  Based on information available to the Authority, the beneficiary has not sold the developed product on the market.

In view of the above, the Authority finds no indication as to whether the implementation of the project aimed at developing a plant-based yoghurt product, undertaken by a company primarily engaged in accounting activities, was consistent with regulations and the financial report submitted to the managing authority. Therefore, the Authority has filed a criminal complaint against unknown person on suspicion of budget fraud and using forged private documents. Furthermore, it has also initiated irregularity proceedings with the Managing Authority of GINOP, recommending the termination of the grant contract and the recovery of HUF 129,968,000 of disbursed funds, including interest.