The establishment of this structure is due to the fact that the European Commission has recently proposed to freeze almost three billion HUF allocated to Hungary because of its poor anti-corruption performance. In order to be able to continue receiving the EU funds, it was suggested that the country take a number of steps to comply with the principles of the rule of law, one of which implied the establishment of a body to ensure integrity, prevent, detect and counter fraud, conflicts of interest and corruption, as well as other misconduct and offences in the use of any EU financial assistance.

Under Law of 10 October 2022 No. XXVII “On Control over the Use of the EU Budgetary Funds” (2022. évi XXVII. törvény az európai uniós költségvetési források felhasználásának ellenőrzéséről), the Integrity Authority and Anti-Corruption Working Group will be established to this end.

Integrity Authority

The Integrity Authority (Integritás Hatóság, hereinafter, the Authority) will have the following functions:

• conduct investigations initiated at the request of competent authorities autonomously because of its powers or based on whistleblowers’ reports of fraud, corruption, conflict of interest or other violations that can impair the effective use of the EU budget or EU financial interests, also in the course of implementation of projects partly financed by the EU; furthermore, the Authority will be able to conduct investigations with regard to the offences committed before it is established;
• inform competent authorities, including the European Anti-Fraud Office and the European Public Prosecutor's Office about the outcome of investigations; it is necessary to take into consideration the fact that the Authority is not neither a judicial nor a law enforcement body, which means that it cannot initiate criminal proceedings autonomously;
• send requests of investigation to the bodies responsible for monitoring the use of EU funds or other competent authorities and file lawsuits;
• assess risks in public procurement by using internationally recognised methodologies and with the participation of international organisations, including the provision of advice;
• draft annual report for the government on compliance with the principles of integrity; the paper will provide, in particular, recommendations on how to preserve integrity in the use of EU funds;
• put forward recommendations on how to ensure integrity in the use of EU funds for the organisations funded by the EU and the supervisory bodies in the area;
• control public procurement partially or fully funded by the EU also by receiving all necessary information from procurement organizers and bidders;
• suspend procurement for up to two months in case of suspicion of misappropriation of EU funds or impose administrative fines if violations are detected;
• maintain the register of persons suspended from public procurement for having committed offences;
• conclude agreements on interaction and exchange of information with other bodies, including EU ones, to facilitate the achievement of its objectives etc.

The president and vice presidents of the Authority are appointed by the Hungarian president, following the recommendation of the president of the State Audit Office, (Állami Számvevőszék) for a six-year term with no possibility of reappointment. The candidates should meet the following requirements:

• have higher legal, economic and/or financial education and considerable professional experience also in international relations or conduct academic research in public procurement and/or anti-corruption from the legal or financial point of view;
• are not dependent on other persons or bodies;
• have not held senior public positions (president, prime minister, secretary of State, mayor, member of the EU Parliament etc.) for five years preceding the application;
• have filed declarations of assets and interests.

The president and the vice presidents of the Authority are prohibited from:

• owning shares in economic partnerships;
• having any other paid employment except for academic, teaching, artistic, proofreading, editorial and intellectual activity subject to legal protection undertaken free of charge;
• undertaking party political activities and participating in public interventions on behalf or in the interest of a party.

It is planned that the Authority will be operational by 19 November 2022.

Anti-Corruption Working Group

The Law provides for the establishment of the Anti-Corruption Working Group (Korrupcióellenes Munkacsoport, hereinafter, the Group) that will conduct analytical work free of charge in parallel with the Authority.

The main objectives of the Group will consist in:

• exploring the domestic system of anti-corruption measures and elaborating proposals on how to improve them in line with Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union's financial interests by means of criminal law, the United Nations Convention against Corruption and the Hungarian Criminal Code (2012. évi C. törvénya Büntető Törvénykönyvről);
• drafting analytical reports on the effectiveness of existing anti-corruption measures;
• drafting annual reports that would include the analysis of corruption risks in public administration and key trends in countering corruption, putting forward recommendations on how to enhance the effectiveness of the measures adopted and incorporate best practices in the prevention, detection of and liability for corruption offences.

The Group will have 21 members, namely the president of the Group and equal number of representatives of non-governmental organisations active in the area of anti-corruption, provision of access to public information, control of public procurement and protection of human rights, and public authorities, including the Ministry of Justice (Igazságügyi Minisztérium), the Ministry of Finance (Pénzügyminisztérium), the National Tax and Customs Administration (Nemzeti Adó- és Vámhivatal), law enforcement bodies etc.

The Group will be set up by 1 December 2022.