TRICK OR ’LEGAL’ FRAUD

The government makes citizens pay twice for motorway constructions.

According to experts the aim of the government is not to finance motorway construction from private investments but to have the state-owned Motorway Management Company (AK) ’buy’ the earlier built motorways bought from the budget with the help of private investors. The interests of the suspicious deal will be paid by the Hungarian taxpayers while the ’purchase price’ will be paid in the budget by the National Motorway Company (NA).

The government gave HUF 178 billion in 2003 and 2004 for motorway construction and the sum was duly paid to NA which has built a section of M3 motorway between Polgár and Görbeháza, a section of M30 between Emőd and Miskolc, a section of M7 between Becsehely and Letenye, and a section of M70 between Letenye and Tornyiszentmiklós. Early in 2004, however, it became clear that the budget deficit would be enormous and it was then that the idea came that the government should make NA repay the sums to improve the budget balance.The essence of the idea was to build motorways in the future with the help of private capital. This has been followed by several hasty law amendments and government decisions which resulted in the appendix of the motorway law amended in 2005 which describes the motorways sections as unfinished ones to be financed by AK with using private investment. The law ruled that incompleted investments should be given to AK by NA which had to borrow money to pay the ’purchase price’. NA Company repaid the HUF 178 billion for the central budget and it will have to repay the bank loan until the end of 2005 with the interests. Experts of Magyar Nemzet point out the problematic nature of the tricky deal as the whole transaction refers to already existing and used motorway sections and not to unfinished ones. Clearly the aim of the government was to ’face-lift’ the budget deficit issuing government bonds and having the interests paid by the taxpayers. The transaction, however, has failed as the responsible officials of the European Union recognized the intention of fraud. The only outcome of the trick revealed will be a much higher state budget deficit and the damage caused by taking a bank loan of HUF 178 billion the interests of which must be paid by the taxpayers.

Translated by Péter Szentmihályi Szabó