Nine countries warn Hungary over corruption

Nine embassies in Hungary warned in a joint letter that recent instances of what they called "non-transparent behaviour" would discourage foreign investment and hamper growth in the central European country.

The release, sent by the United States, Britain, Belgium, France, Germany, Japan, Norway, Switzerland and The Netherlands late on Wednesday, said instances of non-transparent actions may hinder foreign investment - key to expected future growth.

"It is therefore with great concern that we hear of significant new instances of non-transparent behaviour affecting investors in such areas as public utilities, broadcasting and elements of the nation's transport infrastructure," it said.

The letter did not name specific cases or companies involved and the British Embassy said in an emailed response to Reuters, "We cannot give any specific examples of non-transparent behaviour as cases may still be subject to legal procedures."

"We are genuinely concerned that at a time when the government is trying to promote an anti-corruption programme, these worrying reports surfaced. They affect our investors and make them less inclined to do business here in the future."

"That is not good for them or for Hungary," it said.

Hungary is in the throes of a deep recession and expects its economy to contract by 6.7 per cent this year.

"As friends of Hungary, we hope that the investment climate here remains one that makes the nation an attractive destination for those resources, rather than the opposite," the joint statement from the embassies said.

Prime Minister Gordon Bajnai had invited the ambassadors of the nine countries to Budapest next Monday to reaffirm the country's commitment to improving the investor climate and hear their proposals on the subject, a government spokesman said.

"Hungary is an integral part of the international economic blood flow. It needs investments like a piece of bread," spokesman Domokos Szollar said. Mr Bajnai said last month that the government would mediate in a dispute between France's Suez Environment and the city of Pecs which took control of a Hungarian water utility company in which Suez had a minority stake.

The German-Hungarian Chamber of Industry and Commerce said in an email to Reuters that with respect to investor confidence, transparency in authorities' decisions and legal security in the field of public procurements was of vital importance.

It also said it trusted that the great degree of legal safety investors had got used to in Hungary would prevail in the future.

Hungary was ranked 46th most corrupt in Transparency International's 2009 corruption perception index, slightly better than regional peers Poland, Czech Republic and Slovakia. New Zealand in first place is the world's least corrupt country.

Foreign direct investment in Hungary in the first half of 2009 was minus €500 million as minimal fresh inflows failed to offset seasonal profit repatriation in the second quarter.