No evidence of fraud in Hungary funding freeze - EU official

Published August 14, 2013

| Reuters

European Union development aid to Hungary has been temporarily suspended over failings in the country's financial control systems, but there was no evidence of fraud, a European Commission official said on Wednesday.

On Monday, Hungarian Prime Minister Viktor Orban's office said the EU had suspended 13 of 15 programs funded with EU money, including projects such as road building and social cohesion programs.

A Commission official said the funds had been frozen because of deficiencies in Hungary's financial management and control systems for the programs in question, identified in an EU audit in 2012.

"There are currently no indications of corruption or fraud, but rather this is a systemic problem relating to the controls not working properly," said the official, who spoke on condition of anonymity as she was not authorized to speak on behalf of the Commission.

Budapest has said it would be ready to accept an EU fine of between 50 and 100 billion forints ($443 million)to regain access to the money which is vital for the central European country's economy.

While Hungary may be forced to pay a sanction to restart the funds, the official said it was too early to say whether this would happen and, if so, how much the fine would be.

The timeframe for resuming the payments will depend on how quickly the government can correct the failings identified in its control systems, the official added. ($1 = 225.5506 Hungarian forints)

(Reporting by Charlie Dunmore; editing by Stephen Nisbet)

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