State Audit Office of Hungary
Here you can find documents directly and indirectly related to the audit of Hagyó Miklós' deputy mayoral office and administration. The audit was conducted by the SAOH while Hagyó was in pretrial detention.
Legal Summary of criminal procedure initiated upon the denunciation of the State Audit Office
against Miklós Hagyó
Initiation of the procedure
In June 2010, shortly after Miklós Hagyó's - currently already at the Kecskemét tribunal in criminal
proceedings - after being suspected, the State Audit Office (SAO) held a so-called comprehensive inspection
at the Metropolitan Municipality. In doing so, among other things, the State Audit Office examined at the
Metropolitan Municipality of persons in non-to staff employees agency contracts and the commission fee
paid to them. Following the completion of the investigation, in 2010 on the 16th of December, the SAO
filed charges - among others - against Miklós Hagyó because of two contracts, furthermore, drew the police
attention to a third errand, which they found suspicious. According to the denunciations, Miklós Hagyó, in
2011 on the 24th of August, with all three contracts have been suspected, with continuously committed,
caused a significant financial loss, and unfaithful treatment.
The essence of the insinuation
Two out of the three contracts, Miklós Hagyó, - Urban and Asset Management - as Deputy Mayor
concluded in the name of the Mayor’s Office. The first was, to fulfill the communication expert activity,
between the period of 2008. 17th of December and 2009. 31th of March. Based on this contract, the
mandatary's responsibilities were, the elaboration of communications strategy, the organization of public
appearances of Miklós Hagyó, speeches, statements preparation and interpretation. From the contract
stipulated commission fee of 500.000 gross HUF, to the office manager of Miklós Hagyó, based on the
certificate of performance, the Mayor's Office finally paid off a total of 277.250 forints.
The second contract was concluded in 2009 on the 26th of June, with the ranging effect of 2009 31st of
December, the Deputy Lord Mayor sport professional activities and technical consultancy work, under
which the contractor had to perform organizing, coordination, analysis and commenting, as well as the
compilation of presentations and publications related tasks. In this case the fee was 5.500.000 gross HUF,
from which the registrar based on the certificate of completion the Mayor's Office paid off a total of
The third contract was concluded by Miklós Hagyó also in the name of the Mayor’s Office for the period of
between the 2009. 18th of June and 2009. 31st of December. Based on the contract, the contractor, the
Metropolitan asset and economical company associated expert tasks had to perform. The parties agreed
in a gross HUF of 4.500.000 fee, from which the Mayor's Office based on the certificate of completion,
eventually transferred 1.964.887 HUF.
Based on the three contracts, the Mayor's Office paid off a total of 5.230.845 HUF, and since these
payments were burdened with incidental expenses, the contracts to the office all together cost 9.375.000
However, according to the insinuation, these were fictitious contracts, which Miklós Hagyó concluded with
the stakeholders, to give them an undue pecuniary advantage, actual work was not done.
According to the Penal Code on the 1978 Act IV. 319§, he has been entrusted with extraneous fund
managing, and for this reason breaches his duty a causing financial disadvantage, and is guilty of
misappropriation of funds. The insinuation is in this case was that Miklós Hagyó, as the authorized officer
of the municipality empowered to administer, asset management - ie, the normal rules observance of
management - he breached his obligation, when with fictitious contracts from the assets of the Mayor's
Office, benefited his confidants with payments, and it is - obviously - has caused financial loss to the office,
since money is not actually received services.
The result of the conducted substantiation
The conducted substantiation during the investigation refuted this suspicion in everything.
The investigating authority first of all examined, that Miklós Hagyó was entitled to conclude such expert
contracts. As it can be read in the decisions on the elimination of investigation, it was found that both the
Lord Mayor and the Deputy Lord Mayor was at the disposal of a certain size, according to the agency's
budget envisaged, free to use financial framework, on which, the stakeholders with agency contracts
consultants could apply to perform the necessary tasks. The termination decision records, that other
Deputy Mayors communication work were helped by the individuals or companies acting under an agency
Subsequently, the police examined the actual work that was in the contract, and behind the payments.
The SAO thought that the contracts attached written documents are not properly supported to this subject.
The police, however, came to a different conclusion. Several colleagues of the Mayor's Office were heard,
and several leaders of the capital owned public companies.The witnesses unanimously confirmed that
the first two contract agents were present at the office and worked, his tasks related work materials
received for review, participated in the General Meetings and organized the appearances, statements
and programs of Miklós Hagyó. It is also confirmed that the third contract's agent, received for review the
relevant materials, attended at the General Assembly meetings, and on negotiations related to the capital's
economic companies, moreover he led these negotiations, - "absolute business basis, taking into account
the economic aspects."
Since the mandates the agents properly performed, obviously the Mayor's Office did not reach financial
loss, as the Office received compensation from the paid agency fee. Consequently, apparently misconduct
can't be attributed to Miklós Hagyó, nor to the certificates of completion signing office manager.
In this regard, the investigating authority in the absence of a crime has terminated in connection with both
entrusted mandates- meanwhile in a separate investigation - procedure (the earlier one on the 5th of June
2012, the latter on the 23rd of July 2012).
Special features of the procedure
One interesting feature of the procedure, that the basis of the denunciation SAO investigation from the
Mayor, and in the Deputy Mayor competence concluded "freelance" agency contracts despite only covers
the agreements which are concluded by Miklós Hagyó, - once the investigation has revealed - the Lord
Mayor and Deputy Lord Mayor had exactly the same freely used financial framework for consultancy
contracts, like Miklós Hagyó.
The investigating authority also noticed this, to which in March 2012 specifically asked at SAO, whether
they investigated the press and communication contracts concluded to perform the task with sole
proprietors and companies by the other Deputy Mayors, and if so, then why did they not object, and if they
have not been investigated, then what was the reason.
In response, the State Audit Office stated that in order to have an effective use of resources, based on
risk analysis checked in the areas where (based on past experience) most likely there was the occurrence
of errors, however, certain contractual payments (accounting entries) were already randomly selected
which they examined in detail. According to the SAO this randomness resulted that none of the number of
consultancy contracts by the other two Deputy Mayors were not included in the sample, and three from
the contracts of Miklós Hagyó.
The other interesting feature in the case is, that - although we have not received any official information
about it - as far as we know, the SAO complained the termination decision with the first two contracts
related investigation. (Of the complaint the prosecutor decides, and in approving the complaint can order
to continue the investigation.)
The facts of the complaint - if true - is quite special for the following reasons.
SAO is the denouncer in the case, but not aggrieved. According of the criminal proceedings 1998 XIX. Act
(CCP) 51§, indeed, the aggrieved is whose rights or legitimate interests of the criminal act is infringed
or threatened. In the present case, as it is suspected to be that Mayor's Office had financial loss,
misappropriation of corporate assets, if this has happened, the office would have been the aggrieved, not
This is of significance, because basis of the CCP 195 § (1) paragraph, against to the decision of the
termination of investigation may lodge a complaint only to whom the decision consist direct provision. As
the basis for investigations aggrieved party of the act the Mayor’s Office would have been, the maximum
termination decision to the Office contains the direct provision, not to the denouncer SAO, so the SAO has
no right to complain of the case.
But even if we set this aside, it is not clear what SAO referred to in its complaint, because knowledge of the
case file as denouncer is not eligible. According to the CCP 70/B. § (3) paragraph, during the investigation
to the denouncer - if it's not aggrieved at the same time - only a copy of the complaint can be given.
After completion of the investigation, only the aggrieved party is entitle by the CCP, to view the crimes
committed against his/her related official documents at the official premises of the prosecutor's office.
So if SAO actually complained, they could only have done it without the knowledge of the testimonies and
other evidences, which clearly confirmed by the investigating authority, that the contractor actually carried
out work with the respective merits of an agency contract activity. The big question is, how can such a
complaint be well founded.
It is also interesting to note that whether any complaints will be made in connection with the termination
issue of the third contract, since in this case, even SAO arguably does not see well enough to make a
complaint, only drawing the investigating authorities "attention" to the the contract and the payments