LOBBYING LANDSCAPE IN HUNGARY

The lack of comprehensive lobbying regulation and the practice of lobbying are worrisome signs that indicate the vulnerability of democratic decision-making processes in Hungary. In the current Hungarian situation, state capture is combined with cronyism. In this special type of state capture the extensive and expansive state has been in symbiosis with some powerful business groups and oligarchs.

Prior to adopting the Lobbying Act, a voluntary lobbyist registry was introduced in Hungary in 1994. In an attempt to regulate lobbying the government had proposed a draft law on Legislative Lobbying to the Parliament, but this was later withdrawn. The Lobbying Act entered into force on September 1, 2006, accompanied by the government’s decree on the implementation of the Lobbying Act. The Lobbying Act provided a mandatory registration system for lobbyists, envisioned a common code of conduct, and prescribed reporting requirements for both lobbyists and executive decision-making bodies. The law provided sufficiently deterrent pecuniary sanctions that could be applied in the event of non-compliance, i.e. the Lobbying Act foresaw a maximum fine of HUF 10 million (approx. EUR 33 thousand) to be imposed on any person doing lobbying without registering as a lobbyist. In case of reoffending, the fine was to be multiplied. The registry was maintained by the Central Office of Justice, a subordinate to the Ministry of Justice and Law Enforcement. By September 2010 there were approximately 600 lobbyists registered in Hungary (OECD ), however, there were market suggestions that this number might only have been the tip of the iceberg. The current (and recently re-elected) Hungarian government repealed the Lobbying Act. Though Act CXXXI of 20102 and Government Decree No. 50 of 20133 partially regulate some lobbying practices, the present legal context lacks effective regulation on lobbying in Hungary.

The “Lobbying Act was unsuccessful, and its drawbacks became visible when it was applied. The majority of actual lobbyists in Hungary judged that the Lobbying Act had a negligible impact on the transparency of lobbying. There were various reasons behind this: first, it was technically easy to circumvent the regulation, because it had a jurisdiction only in regard of registered lobbyists, as a result of which anybody who omitted to register itself as a lobbyist fell out of reach. Had the authorities enforced the sanctions as prescribed in the Lobbying Act, anyone who did lobbying without prior registration could have defended itself by simply denying the perpetration of any wrongdoing.

The Central Office of Justice failed to elaborate any guidelines or principles to establish, who qualifies a lobbyist, even in lack of registration, and therefore there were no on-hand tools to call the defense used by non-registered lobbyists into question. There has not been any evidence that indicated that the Central Office of Justice took non-registered lobbyists to court claiming that the persons concerned wrongfully omitted to register so as to circumvent legal prescriptions and obligations. In the end, the Lobbying Act placed a huge burden on those who registered themselves as lobbyist, while it made easy for anyone to avoid any attention of the authorities. Second, the majority of Hungarian stakeholders perceived that the new lobbying regulation did not take into account the Hungarian context and therefore it was not appropriate for the country’s legal and political culture, and that moreover, there was no attempt to adapt the regulation to Hungarian practice . In this respect, it is important that neither the actors of Hungarian public administration nor business stakeholders were involved in the process of making the regulations. Consequently, support for the Lobbying Act was rather moderate among stakeholders, it was never properly implemented, and the government also failed to in enforcing its regulations.

Reporting obligations placed a large administrative burden both on lobbyists and public officials. Another unresolved issue was the treatment of confidential information. As a result lobby meetings were often held unofficially, without official reports, or the reports contained very little specific information about the meetings. Even registered lobbyists reported very little actual lobbying activity. In practice, licensed lobbyists had very few advantages while they carried a large bureaucratic burden, a reason why their number remained moderate.

The apparent dissatisfaction with the lack of regulation on lobbying is coupled with a socio-cultural context that favours informal and shadow lobbying practices. Thus at present, the predominance of emotions and the trust in personalized social capital does not favour the classical form of lobbying regulation in Hungary. The controversial attitude of Hungarians probably reflects not only the dissatisfaction with the lack of regulation, but also the past negative experiences of the previous lobbying regulation as well as the general uncertainty concerning regulation changes in Hungary at present.

This anticipates that a future lobbying regulation may only be effective and sustainable in Hungary if it positively finds long-term support on behalf of all stakeholders concerned. To make it functional, the implementation of a future lobbying regulation needs to be controlled by an independent organisation. Moreover, the process of reregulation should also be inclusive and legitimate, which expects the legislator to involve all potential parties concerned.

In Hungary only one professional association exists as a quasi-lobby association, however the main activities of the Hungarian Public Relations Association (“HUPRA”) are not related to lobbying. The HUPRA provides training and educational services to its member and non members relating to CSR activities and overall public relation topics, but no ethics training and/or lobbying specific educational services.

Recommendations (TI)

1.  Reinstating democratic checks and balances: Advocacy in the present Hungarian context should focus on the underlying issues of democratic transparency and anti-corruption measures (as opposed to the formal compliance approach of the government and a wider segment of the Hungarian political elite). To facilitate the creation of ethical and transparent lobbying, first institutional autonomy and independence needs to be enhanced to build equilibrium in the public life. To this end, the government needs to immediately restore the independence of state institutions designed to create checks and balances by law.
2. Better access to government information: Citizens and civil society have the right to be informed about all relevant public decisions, first and foremost about the ones that allocate public funding to business actors. Therefore the scope of business secrecy, bank secrecy and other different forms of confidentiality, which are often misused by the government to hold information of public interest back, should be limited to the minimum. Government references to classified, confidential or restricted information should be subject to judicial review. Provisions scandalously included in the Law on Freedom of Information to restrict access to government information must be repealed.
3. Effective future lobby regulation: Promoting a new lobby regulation could easily result in a stand-alone law on lobbying, which the government could use to portray its efforts and successes in controlling corruption, a clear risk in a country where cronyism and state capture prevail. Failure of previous regulation has left many stakeholders skeptical about the usefulness of another regulation, a clear danger again. Still there is room for a future regulation on lobbying in Hungary and there is reason to believe that this can be effective and sustainable, provided, that it finds long-term support on behalf of all stakeholders concerned. Moreover, the process of reregulation should also be inclusive and legitimate, which expects the legislator to meaningfully involve all potential parties concerned, including public officials, business and civil actors, and the academia, even if this likely implies a slow process of lawmaking.
4. Intransigent enforcement of lobbying regulation: To make a future lobby regulation functional, the implementation thereof needs to be controlled by an independent organisation. Besides introducing a new lobby control office, the law should also compel all public officials of whatsoever kind to attach a comprehensive and informative ‘legislative footprint’ to all decisions they are in charge of. Citizens and civil society have the right to be informed about who lobbied whom in the course of the preparation and elaboration of public decisions, including decisions on the allocation of public money and public contracts. The envisioned new lobby control office should examine if the reports on lobbying are duly enclosed to draft public decisions. Without the stamp given by this new office, no drafts should be introduced or adopted. Thus a future lobby control office should act as a kind of co-introducer or consignor of all public decisions.
5. Legislative footprint: The law does not require the publication of a legislative footprint of lobbying, i.e. a report on who lobbied whom and on what purpose prior to adopting the respective piece of legislation. Executive summaries attached to legislative proposals are not accessible publicly. Even though the executive summary does not contain the legislative footprint of lobbying either, it includes important information concerning the reasons why the specific legislation was needed. These summaries, as so-called ‘prepping documents’, are deemed non-accessible public data under the Law on Freedom of Information. As a first step towards transparency, a lobbying report should be required as a compulsory element of legislative proposals. Such reports should be made publicly accessible.
6. Encouraging self-regulation: Even though there is tangible reluctance on behalf of business actors, lobbying self-regulation can effectively mitigate the consequences of politically generated uncertainties. Therefore, market players and their respective professional organisations should apply lobbying self-regulation tools and promote responsible lobbying practices in general. In this respect, at present, self-regulation seems the only solution that could compel the government to normalise its relationship with business actors.