Corruption in Hungary

Corruption in Hungary remains a significant problem as the country has posted declining performance in international assessments. In 2023, the country was identified as the worst-performing European Union country in Transparency International’s Corruption Perception Index. This decline in Hungary’s position in the index covers most of the past decade, highlighting a troubling trend.

The systemic corruption that Hungary currently faces is attributed to the leadership of Prime Minister Viktor Orbán. Orbán's Fidesz government has changed Hungary’s election system, redesigned its electoral districts, and eliminated checks and balances within governance, which was built over the past two decades. Even the judicial system was reshaped as the regime gained full control of state institutions.

The impact of Orbán's regime on corruption is demonstrated in Hungary’s shift towards a state capture system, which involves Orbán and the ruling Fidesz party systematically controlling state institutions, resources, and decision-making so that they became instruments of political will and personal gain. As power is consolidated, Orbán and his circle of political elites control the flow of resources, entrenching corruption in the process. This is demonstrated in the case of public procurement.

It is reported that companies with close ties to Orbán and Fidesz are often awarded government contracts. This practice not only bypasses fair competition but also enables misappropriation of funds, as these are often diverted to politically connected individuals and organizations. In addition, the system leads to inflated costs and inefficiencies.

One notable case of corruption in public procurement is the "Elios case." This scandal involved Elios Innovatív Zrt., a company co-owned by Orbán's son-in-law, István Tiborcz. The company won numerous public contracts for street lighting projects, many of which were funded by the European Union. Investigations by the European Anti-Fraud Office (OLAF) revealed irregularities, including collusion, conspiracy, and inflated prices. The Hungarian government ultimately decided not to pursue legal action, further raising concerns about accountability.

The systemic nature of corruption in public procurement and other state agencies is exacerbated by the practice of mass clientelism. This is practiced by the Orbán regime to shore up and maintain political support. This reinforces the network of patronage and cronyism benefitting a small and politically connected elite with uninterrupted access to power and the central government's resources in exchange for their support of the Fidesz government. According to an anti-corruption watchdog, "personal, connection-based corruption not only exists in contemporary Hungary but has become stronger under Orbán." This transpired as the government openly embraced mass clientelism as a means to secure political support.

Notable cases of corruption tied to clientelism include Hungary's "Eastern Opening" policy, which sought closer ties with China. This initiative has been criticized for procurement-related corruption. A policy paper, for instance, revealed that bilateral projects with China have enriched Orbán's networks, further entrenching clientelist corruption. As clientelism becomes rampant, state resources such as workfare programs are also used to condition electoral support, particularly in economically vulnerable regions.

The misappropriation of European Union funds to Hungary is also indicative of corruption cases that stem from Orbán's state capture system and mass clientelism. EU funds intended for development and public welfare were reportedly funneled to businesses and individuals closely tied to Orbán and the Fidesz party. This practice contributes to the oligarchic system in Hungary, dominated by a small circle of politically connected individuals.