Ties with Hungarian government increase public procurement win chances sevenfold – EURACTIV.com
The chances of winning a public procurement contract are seven times higher if you have links to the governing elite according to research published by the Corruption Research Centre Budapest, Telex reported.
The article uses data on Hungarian public procurement between 2011 and 2020 to show how connections to the System of National Cooperation (NER), the name for the self-proclaimed political community created by Fidesz after 2010, have influenced the chances of winning public contracts.
An often-used indicator of corruption risk are tenders in which only one bid is received. This metric is 39% of tenders in Hungary, compared to the 20% the EU considers to be ‘green’.
However, anomalies can be detected even more subtly by observing the number of times a company has entered and won and the number of times it has lost in the public procurement market.
“If this rate is abnormally high compared to the market average, it may indicate an anomaly,” Tóth István János, director of CRCB, argues.
For example, in 2011-2020, the company Elios (and its predecessor) had a winning probability of 1.26, while the median winning probability of firms in the market was 0.46.
However, odds of winning for Elios changed significantly between the periods when Hungarian Prime Minister Viktor Orbán’s son-in-law István Tiborcz was among the owners, to when he left the enterprise.
Between 2011 and 2015, when Tiborcz was among the owners, the company’s odds of winning were 1.97, after he sold his stake, this value fell to 0.18, well below the market median.
Similar results are seen for different companies in which NER elites had stakes.
In the NER periods, the odds of winning public tenders for companies on average were seven times higher than in the non-NER period.
According to Tóth István János, it would be a stretch to assume the “higher success rate associated with the NER period would be due to an increase in the efficiency or the knowledge of the public procurement market of these firms”.
(Vlagyiszlav Makszimov | EURACTIV.com with Telex)