received a $143,000 "consultancy fee" from
Private Sector and
Gresco, the police dropped the charges.44
Big Government
Viktor Orban's Fidesz-dominated govern-
ment of Hungary (19982002) had its share of
corruption scandals as well. In 2001, Zoltan
In Central Europe, the state remains the
Szekely, who served as chairman of the Public
most important economic actor. According
Procurement Committee in the Hungarian
to the Eurostat, the EU's statistical arm,
Parliament, came under investigation for
between 1995 and 2005, government spend-
accepting a bag containing $107,000 from a
ing as a percentage of GDP fell from 54.38
businessman who previously applied for a gov-
percent to 44.08 percent in the Czech
ernment contract. Similarly, Attila Varhegyi,
Republic. It fell from 47.72 percent to 42.77
chairman of Fidesz's Executive Board, state sec-
percent in Poland and from 54.12 percent to
retary at the Ministry of National Cultural
36.83 percent in Slovakia. In Hungary, it rose
Heritage, and mayor of Szolnok, came under
from 49.92 percent in 1999 (the first year for
investigation for bribery of a senior official and
which the data is available) to 50.61 percent
in 2005.49
misappropriation of funds. Allegedly, Varhegyi
tried to cover up fictitious invoices related to his
In fact, much of the reduction of govern-
In Central
political campaign and made money out of a
ment spending in Slovakia can be attributed
Europe, the state
real estate sale, the terms of which were disad-
to changes in the methodology for measur-
vantageous to the municipality.45
ing Slovak spending. As Martin Chren of the
remains the most
Hayek Foundation in Bratislava explains:
In 2001, the police arrested Zbigniew
important
Farmus, who served as an assistant to the
economic actor.
The Slovak budget was not "consolidat-
Polish deputy minister of defense Romuald
ed" prior to 2001. That meant that when
Szeremietiew, for soliciting bribes from bidders
the Minister of Finance transferred 10
in an arms deal intended to supply the Polish
billion Slovak crowns to the Minister of
air force with new fighter aircraft. The estimat-
Economics in order to pay for farming
ed value of the contract in question was
subsidies, the money appeared twice in
between $2.5 and $3.5 billion. The newspapers
government accounts. First, it appeared
alleged that Szeremietiew was involved in the
as an expenditure of the finance min-
scam. Jerzy Buzek, the center-right Polish
prime minister (19972001), fired him.46
istry and second as an expenditure of the
economics ministry. That means that
The above examples aside, evidence sug-
government statistics before and after
gests that public perception of corruption
2000 are not comparable.
among public officials is widespread through-
out Central Europe. The Corruption Percep-
Still, Chren admits, there has been a real
tion Index, which is published by the German
reduction in state spending of between 2 per-
nongovernmental organization Transparency
cent and 4 percent of GDP between the end
International, confirms that, some 17 years
of the Meciar era in 1998 and his return in
after the end of communist rule, corruption
2006.50
remains a serious problem in the region. The
CPI is measured on a scale from 0 to 10.47 The
Considering the size of the public sector
higher the number, the lower the corruption.
under communism, it is not surprising that
Between 1996 and 2005, the Czech CPI went
the state played a major role in the economy
from 5.4 to 4.3 and the Polish from 5.6 to 3.4.
at the start of the transition process. In 1989,
Over the same period, it went from 4.9 to 5 in
the European Bank for Reconstruction and
Hungary. The Slovak CPI improved from 3.9
Development estimates, the private sector in
in 1998 to 4.3 in 2005. (That slight improve-
the Czech Republic, Slovakia, and Hungary
ment did not save Dzurinda's government
generated 5 percent of GDP in each of those
from punishment in the polls.)48
countries and 30 percent in Poland. By 2005,
10