Public interest information of the State Audit Office of Hungary

2019-01-16 08:42   |   Author: Kispéter Adél
Last updated: 2019-01-16 08:56

The State Audit Office of Hungary publishes the following public interest information – formatted into Sections – in connection with party political statements and media news attacking the constitutional operation and independence of the auditing activity of the SAO and wilfully misleading the public opinion and containing false statements. The requirements for transparency and accountability are applicable to every organisation using public funds, including political parties. It is a prime public interest to ensure that the financial management of parties operating mainly from public funds – including the utilisation of campaign funds – be lawful and exemplary. The false statements and misleading media news attacking the audits conducted by the SAO based on legal provisions represent attacks against the constitutional state. The SAO wishes to emphasise that law-abiding behaviour is a fundamental principle of the constitutional state, and ignorance of the legal provisions does not exempt one from liability.

• On the revision of campaign funds


The SAO wishes to emphasise that the statutory audit of the campaign funds of the parliamentary elections of 2018 is currently in progress. The draft reports sent to the audited entities and the findings of the audit office set out therein are only drafts and are not yet public. Only the State Audit Office is entitled to disclose the reports to the public. The public disclosure of the findings and other information set out in the draft reports qualifies as unauthorised data processing, and jeopardises the operation of the constitutional state. The SAO sets out all its findings related to the parties in reports, which it will publish on its website as soon as possible after it has evaluated the comments of the audited entities.


• On the schedule of the audits


Pursuant to the legal provisions, the State Audit Office must perform the statutory audit of campaign funds within one year after the parliamentary elections held on 8 April 2018. All this means that the audit conducted by the SAO is not connected to the elections to the European Parliament to be held in May at all. The party political statements and media news making a connection between the audit conducted by the SAO and the elections to the European Parliament wilfully mislead the public opinion.


• On the audits concerning the parties


The State Audit Office does not recognise parties as oppositionist or pro-government, it only sees them as audited entities whose financial management it is obliged to audit based on the law. The SAO plays a prominent role in and is responsible for the enforcement of societal control over parties, and its audits promote the regularity of the financial management of the parties, and, ultimately, a clean political environment. In the course of its audits, the SAO proceeds strictly in accordance with the relevant legal provisions for the protection of the constitutional state and to ensure compliance with the law, and it ensures proceeding in accordance with the legal regulations in the framework of the relevant laws. The SAO audits each party based on the same legal provisions and rules of procedure.


Note that in its report prepared regarding Hungary in 2010, the Group of States against Corruption established by the Council of Europe (GRECO) suggested that the State Audit Office perform more frequent, proactive and rapid audits in the field of political funding, including the preventative measures and the larger-scale identification of financial irregularities. In its 2010 report, the GRECO also proposed that Hungary review the sanctions on breaching the rules of political funding as in effect at the time, and that the sanctions should be efficient, proportionate and dissuasive. All this means that the body of the European Council expected stricter supervision and more severe sanctions for irregularities from Hungary. As a result of the international suggestions and the experiences of the SAO accumulated in the course of the audits, since 2010, the Parliament has made the legislative environment of the financial management of parties and the provisions relating to campaign funding stricter in several phases. As a result of the legislative changes, the control of political parties became stricter in recent years, which also determines the audit methods and practices of the SAO, having regard to the fact that the SAO conducts audits based on the relevant and effective legal provisions in every case. The GRECO confirmed the advances of the Hungarian legislative environment and the auditing function of the SAO too: in its 2015 report, it stated that "the State Audit Office achieved considerable advances in the field of the supervision of campaign funds and the parties".


• On the auditing of parties that received less than one percent of the votes


Pursuant to the provisions of the Act on Political Campaigns, the State Audit Office may audit individual candidates who gained a mandate, as well as nominating organisations (parties) that received more than one percent of the votes cast in the election held on 8 April. The law also provides that the SAO may also audit other candidates and nominating organisations upon the request of other candidates and nominating organisations. Pursuant to the law, the request for audit could be submitted within three months after the election – i.e. by 8 July 2018 –, with the request for evidence attached.


The State Audit Office did not receive requests for audit within the deadline set out in the law. This means that pursuant to the relevant legal provision, the SAO may not audit nominating organisations that received less than one percent of the votes in the election held on 8 April 2018, because no candidate or nominating organisation requested this within the deadline set out in the law. Any of the parties that are now attacking the State Audit Office unjustifiably and are practically inciting for breach of the law could have requested audits, but none of them did so within the framework of the constitutional state. The nominating organisations that received less than one percent of the votes in the list election held on 8 April must repay the entire campaign subsidy to the Hungarian State Treasury based on the relevant legal provisions. As a result, based on the relevant legal provision, the State Audit Office has no audit mandate with regard to these nominating organisations, and it does not have competence with regard to enforcing and collecting the repayment either.


• On the audit of the parties Momentum and Párbeszéd


The Act on Accounting, the Act on Political Campaigns and the Act on Political Parties sets out mandatory provisions for nominating organisations with regard to the utilisation and accounting of campaign funds. Compliance with these provisions ensures the transparency and accountability of campaign funds. It is public knowledge that ignorance of the law does not exempt one from the consequences of breach of the law. The controversial and misleading statements of the parties Momentum Mozgalom and Párbeszéd Magyarországért Párt prove that they are not aware of the constitutional state framework, legal provisions and rules of procedure relating to the utilisation and accounting of the campaign funds drawn down by them.


The State Audit Office already sent the information regarding the suspension of the budget support and the draft report relating to the audit of the parties Momentum Mozgalom and Párbeszéd Magyarországért Párt earlier in order so that they could comment on them. Upon evaluating the comments of the two parties, the SAO will set out all its findings in reports, which it will publish on its website as soon as possible after it has evaluated the comments of the audited entities. The suspension of the budget support does not constitute a permanent withdrawal of state subsidy. If the parties concerned comply with the legal provisions relating to transparent and accountable financial management, the SAO will revoke the measure and the parties may receive the suspended budget support ex-post.


• On the prohibited support of parties


The SAO is not an authority, it has no sanctioning power, and therefore it does not impose "penalties" or "fines". It is only entitled to determine the value of any prohibited support accepted by the parties, as set out in the Act on Political Parties. The legal consequences of any prohibited support identified are not determined by the SAO, but the relevant legal provisions, and their enforcement falls within the exclusive competence of the authority set out in the law.


The SAO wishes to emphasise that if a party accepts prohibited support, the transparency of its funding is not ensured, it may gain unlawful financial advantage, and the acceptance of prohibited support also represents a danger of corruption. The parties where the SAO identified prohibited support in the part years prepared action plans, in which they undertook to take measures in order to avoid accepting any prohibited support in the future. In addition, in its decision made at the second instance, the Budapest-Capital Regional Court strengthened the constitutional position of the SAO, declaring that the reports of the State Audit Office may not be reviewed at court.


• On the press releases of certain parties published during the weekend and the misleading media news


The State Audit Office firmly denies the press releases of the parties Demokratikus Koalíció and Magyar Liberális Párt published during the weekend. The DK party, quite astonishingly, referred to the accounting for public funds in accordance with the legal provisions as "pestering", and expressed solidarity towards the breaches of law. In its press release, the MLP party encouraged the State Audit Office to overstep the limits of the constitutional state and to cover up the consequences of the breaches of law, and it also harshly challenged the independence of the SAO.


The State Audit Office conducts its audits based on strict international professional standards, in a transparent manner, independent of any other organisation – including the Government and the parties –, within the framework of the constitutional state. The SAO is independent of party politics, it does not take part in the political struggles of parties, and it does not consider party political considerations in the course of its auditing function. The SAO is one of the most important institutions guaranteeing that Hungary remains a constitutional state, however, the party political statements and false publications attacking the State Audit Office that are capable of undermining the public trust and harming the good reputation of the SAO circumspect the foundations of the democratic constitutional state of Hungary.

 


State Audit Office of Hungary