The company responsible for the Hungarian red sludge tragedy has received a record penalty

The Directorate of Environmental Protection and Water Management for Central Transdanubia has imposed a fine for infringement of waste management regulations of around HUF 135.14 billion (470 million euros) on Hungarian Aluminium Production and Trade Company (MAL Zrt.). The level of the fine was arrived at in accordance with relevant legislation. Minister of State Zoltán Kovács told our editorial team that the Directorate imposed the highest penalty possible, with regard to the scale of the disaster and the amount of pollutant released.

MAL Zrt. is obliged to pay the fine of more than HUF 135 billion for ‘environmental damage committed in the course of operating a waste facility for the storage of red sludge’. In determining the level of the fine the Directorate took into account the amount of waste – red sludge and alkaline solution – which escaped from the storage reservoir: a total of 1,876,622 tonnes.

The amount of the fine was arrived at through a mathematical formula which forms part of the legislation, taking account of the fact that environmental damage clearly occurred, more than 1.8 million cubic metres red sludge flooded out, and several people died as a result. When setting the fine for infringement of waste management regulations one consideration was that environmental damage of such severity and extent had never before occurred in Hungary.

MAL Zrt. must pay the fine within 15 days of the decision’s ratification as legally binding. The company may appeal to the National Directorate of Environmental Protection and Water Management within 15 days of reciept of the judgement.

The State is ready to stabilise the situation of a company which provides work to 6,000 people

In view of the record fine imposed on the privately-owned MAL Zrt., and the Government’s sense of responsibility for restoration of the region’s residential and natural environment and its economic viability, the Government will review the company’s financial situation and will do everything needed to ensure the operability and financial viability of a company which indirectly provides work to 6,000 people – despite the high fine. In other words, it will ensure that MAL does not become inoperable as a result of the fine.

The Government has an interest in MAL Zrt. being able to continue to provide jobs, that its market situation stabilises and that it continues production, said Mr. Kovács.

The Government thinks that with appropriate management and business strategy the company can operate successfully, and by ensuring continuing operation it can repay the funds already provided by the State to meet salvage and rebuilding costs, and other costs which need to be paid to the State.

Mr. Kovács said that the Hungarian government is committed to safe industrial production in Hungary. After the red sludge tragedy on 4 October last year the Government put the firm under state supervision for several months to ensure the local population’s safety and the viability of the company, guaranteeing that the plant converted to safe dry technology, completed several improvements and took part in the rehabilitation of the area affected by the disaster.

Currently the company is not under state supervision, but the Government is ready to pursue a solution to retain jobs by continuing discussions already carried out with the present owners and the management. Through the Hungarian State Holding Company (MNV) the State is in continuous contact with the management of the company, and since February MNV has conducted intensive negotiations with the owners regarding possible ownership restructuring.

A high priority investigation is being carried out to determine responsibility for the disaster

The National Bureau of Investigation has been carrying out a high-priority and intensive inquiry, the Bureau has named as suspects four people involved in MAL Aluminium, and a court has frozen the assets of the former directors, though at present nobody is in custody. The court has ruled on the cause of the disaster, but there has not been a final legally-binding decision.

More than 30 legal actions have been launched by those affected, with the plaintiffs claiming a total of more than HUF 6 billion in damages from MAL Hungarian Aluminium Zrt.

Background

On 4 October 2010 Hungary’s largest ever industrial and environmental disaster occurred, when one of the reservoir walls at the privately-owned MAL Hungarian Aluminium plant ruptured, and 1 million cubic metres of strongly alkaline liquid red sludge flooded out to cover the nearby settlements of Kolontár, Devecser and Somlóvásárhely. Ten people died in the tragedy, around one hundred and twenty needed hospital treatment, and more than 300 families lost their homes. The red sludge flooded the Torna brook, and through that polluted the Marcal-Rába-Duna river system.

By 30 June this year the Government had completely rebuilt the area, had built and bought houses for affected families, restored the natural and built environment, and now sees preservation of the area’s economic viability as a priority.

More on the rebuilding work.

(Ministry of Public Administration and Justice)