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28 May 2013
Hungarians are presently asking whether they can trust their government's determination to fight corruption. Since the present governing party Fidesz was elected in 2010, its law-making process has been criticised by the European Union; several regulations initiated and subsequently implemented by the government (it has a two-thirds majority in Parliament) have been questioned for their undemocratic foundation. The issue of corruption has again arisen with the recent announcement of the winners of the tobacco concession tender.
In 2012 the government decided that the sale of tobacco products would in future be limited to around 5,000 points of sale, compared with the previous 45,000. Approved in September 2012, the Act on Measures Against Juvenile Smoking and the Sale of Tobacco by Corner Shops (134/2012) created a state monopoly on the retail sale of tobacco products with effect from July 1 2013.
Of the 15,633 concession bids submitted, 5,415 were accepted. The tender was unsuccessful for 1,417 locations in communities with fewer than 2,000 inhabitants. On May 2 2013 a second tobacco concession tender was launched. The deadline to submit bids in the second round is July 1 2013.
Initially, the government's primary aim was to prevent minors from smoking by restricting tobacco sales to designated corner shops. The secondary aim was to help small family businesses, people with disabilities and the permanently unemployed. The government claimed that the profits from the sale of tobacco products had previously been divided among multinational companies instead of businesses owned by Hungarians.
The new system is set to commence on July 1 2013. However, changes to the 2012 law have caused much controversy. The scope of small shops' applicable sales activities has been extended from strictly tobacco to almost all bottled and canned food products and soft drinks. The initial goal of the government thus seems to have taken a twist. It is now believed that the government (controlled by Fidesz) created a monopoly with this small shop regulation in order to provide lucrative business opportunities to its own loyal supporters instead of the original target group. Most of the winners of the tobacco concessions are allegedly people in close connection with Fidesz. The prospect of next year's parliamentary elections makes these allegations even more significant.
The conditions of the concession tender were further changed during the processing period. Originally, the government had announced a guaranteed 4% profit margin; this was later raised to 10%. This change has raised further doubts over the legality of the government's actions. The government's previously announced 'honest' intentions seem unjustified, as the bids of applicants with many years of experience in the tobacco retail industry were rejected. The evaluation principle of the nationwide tender was supposedly based on the 'best bid', but the public now questions the government's evaluation methods. There has also been widespread suspicion that Fidesz has attempted to cover up the details surrounding the tender process.
On April 30 2013 Parliament approved in a fast-track procedure an amendment to the Freedom of Information Act to limit access to certain information that is defined as 'of public interest'. It is believed that with this amendment the government has effectively prevented the public from ascertaining the details of the tender evaluation process. The act was sent to the president for his signature, but he refused to do so, sending it back to Parliament for reconsideration; Transparency International has welcomed the president's decision.
The ongoing saga with small tobacco shops effectively illustrates the kind of responsibility that any government must assume when selling state concessions. The government's behaviour in such cases sets not only a legislative precedent, but also a moral one for the public. The fight against corruption in Hungary – which is by no means a negligible phenomenon – has suffered a major setback with this controversy. The government was unable to show an honest face and the expectation that it acts in the best interest of the people seems to have diminished greatly.
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