Hungary's central bank files police report over renovation of headquarters

Hungary’s central bank has filed a police report over the renovation of its headquarters, citing suspected fraud, negligence and other wrongdoing that it says caused financial harm, the bank said on Thursday.

In March, Hungary's State Audit Office published a report on the central bank's real estate investments worth hundreds of millions of dollars under previous Governor Gyorgy Matolcsy, which the SAO then said lacked proper controls and oversight.

Governor Mihaly Varga, Prime Minister Viktor Orban's former finance minister, who took over from Matolcsy in April, filed the report based on the findings of an independent enquiry commissioned by the bank's supervisory board.

"The National Bank of Hungary (NBH) has filed a police report due to suspected misuse of funds, negligence, fraud and abuse of office related to the renovation of its headquarters," it said in a statement.

"The report also states that the NBH suffered financial harm, prompting the bank's board of directors to pursue all available legal avenues to remedy the damage."

Varga, who has recently come under pressure from Orban's government to lower interest rates from the European Union's joint-highest 6.5% level, has pledged to cut back on the central bank's non-core activities, which mushroomed under Matolcsy.

The SAO's report had said the budget of renovating the bank's headquarters in central Budapest had nearly doubled, while the number of employees it could accommodate had halved, labelling the process as "wasteful."

In a letter to the audit office, a scanned copy of which was attached to the SAO's report, Matolcsy then said the bank had acted within the confines of the law in all of its activities.