An official of a company linked to the company of a Hungarian leftist MEP has been questioned by the National Tax and Customs Administration of Hungary (NAV) as a suspect in the ongoing case of alleged budget fraud.

The daily Magyar Nemzet has reported that the EU tax fraud scandal that broke out earlier around the company of leftist MEP Katalin Cseh now has a suspect. The Budapest Metropolitan Prosecutor’s Office informed the newspaper that the investigating authority had questioned a man as a suspect in the budget fraud case. The suspect lodged a complaint against the accusation. No arrests have been made, and the Metropolitan Prosecutor’s Office is exercising the powers of control in the investigation, which, after the accusation, entered the investigative phase. The Prosecutor’s Office also stated that the subject of the reported allegations does not concern any company linkable to the MEP.

Magyar Nemzet understands that the suspect is an official of a company linked to the Cseh family.

Hungarian press began covering the affairs of the network of companies linked to Ms Cseh last summer, following revelations by a masked figure known as Anonymus. Based on official and other public data, it could be concluded that the members of the network had coordinated their operations and systematically bid for EU funds to the tune several million forints in dubious circumstances, and won the tenders. Magyar Nemzet reports that NAV experts have reviewed the EU tenders submitted by the network of about half a dozen companies in recent years.

The investigators found that the companies were bidding for EU and national funds in a coordinated way. In several cases, the companies had the same headquarters, branch office or managing directors. The suppliers and the location of the project were often also the same. The tenders included so-called holographic devices and technologies. The latter element is quite significant, as the tax authority’s investigators believe that the members of the network of companies participated in ten tenders with at least partly the same technological improvements. This means that they may have requested funding for the same machine, the same technology, more than once.

This assumption is supported by the fact that the tax authority believes that two tenders were submitted for the same equipment and that several tenders had identical invoices to prove the utilisation of EU funds. It is also interesting to recall that Ms Cseh’s circles may have applied with an existing technology, the Bennfentes.net portal revealed last year. The portal looked at HoloTech Switzerland AG, a Swiss company in the group, which was found to have developed a hologram technology back in 2013. Bennfentes.net also recalled that Pannonia Nyomda Kft., a company linked to Ms Cseh, also applied for holographic technology and won 68 million forints. In addition, in the tender documents, Pannonia Nyomda Kft. claimed that this is a completely new technology that did not exist before, although this is clearly not true in the light of the above. This was the project that Katalin Cseh claimed could help the Hungarian Olympic bid (which was later torpedoed by her party, Momentum) to succeed.

In addition, the financial investigators also found evidence of carousel fraud within the group.

As the name of a Czech company also emerged in the cases, NAV requested the prosecutor’s office to contact the Czech prosecutor’s office for legal assistance in obtaining bank data, tax returns and contracts.

The response to the request for legal assistance was sent to the Hungarian authorities in June by the Prague District Prosecutor’s Office, and the document has since been translated and analysed by the competent authorities. We understand that the Czech authorities’ response may confirm the suspicion.

The National Tax and Customs Administration of Hungary has recently initiated new legal assistance requests related to Lithuania and Poland. As for the former country, it became necessary to interview as a witness a Lithuanian citizen in charge of the assembly of the machines sold to Holotech Hungary Kft., which is part of the network of companies. He can provide information about his contract and the assembly of the machines.

As regards Poland, the tax authority also suggested that legal assistance should be requested for the acquisition of cash flow data of the Polish company Pawama sp zoo, Magyar Nemzet wrote. On the other hand, they would like to contact the Polish authorities regarding the acquisition of documents, emails and accounting records relating to business transactions with Pannonia Nyomda Kft. and Unitech Kft., which are linked to the group of companies of the Cseh family.

It is also important to note that the Hungarian Public Procurement Authority (KH) has filed a complaint with the police. The authority suspects that three companies involved in the network coordinated their conduct in a manner that violates public procurement rules and constitutes a criminal offence.

In its complaint addressed to the Pest County Police Headquarters, KH specified its suspicion – an agreement restricting competition in public procurement and concession procedures – which constitutes a criminal offence. Before filing the complaint, KH requested information on the case from NAV and the Hungarian Competition Authority (GVH). The two agencies provided the information at their disposal, leading to a well-founded suspicion that the firms within the company network – Holotech Hungary Kft, Mondat Kft and Fernside Trading Ltd – were colluding with each other.

For example, Holotech Hungary requested an offer from an economic actor whose owner and senior manager is the same as the manager of its parent company.

The authorities also noticed that Holotech Hungary Kft. and Mondat Kft. were registered at the same premises, and that the firms employ the same person as their accountant. This information raises the suspicions that the companies involved may have coordinated their conduct in a way that constitutes a criminal offence. The information in the complaint is also being investigated by the NAV instead of the police.