Budapest metro | Attila Kidbenedek/AFP via Getty Images Budapest metro scheme tainted by fraud OLAF says money should be repaid after expressing concerns over long-running infrastructure project in the Hungarian capital.

Europe's anti-fraud authorities have recommended that Hungary refund the European Union nearly €300 million after an investigation into the construction of a metro line in Budapest.

The European anti-fraud office, OLAF, uncovered "serious irregularities — fraud and possible corruption" in financing for the €1.7 billion project, according to documents obtained by POLITICO. It recommended that the European Commission department responsible for regional and urban policy reclaim €228 million and that the European Investment Bank be repaid €55 million.

Planning for the M4 metro line began in the 1970s, but was only completed days before the 2014 national elections, when Viktor Orbán's Fidesz party won a clear parliamentary majority, providing him with a second term.

The project has long been politically contentious, with allegations of mismanagement and poor planning dating back to the early 1990s. The final route, running from the city's eastern rail terminus to a provincial rail station in the west, falls short of earlier designs. Second and third stages of the line remain undeveloped.

"OLAF can confirm that it has concluded an investigation into alleged fraud and irregularities related to the development of Metro Line 4 in Budapest, Hungary," a spokesperson for the anti-fraud investigator told POLITICO.

Opposition MEP Benedek Jávor points to the fact that the line has always run under-capacity as evidence of "the complete senseless nature of the metro line."

The European Commission's regional policy department had earmarked €696 million for the project, but earlier audits had resulted in some €322 million being reallocated from the metro to other projects in Hungary. Fiscal corrections in EU project financing are not uncommon, and funding is usually deployed on other projects within a country.

OLAF has also submitted judicial recommendations on the case to Hungarian and British authorities. The Commission has received OLAF's findings and is assessing its options, according to European Commission spokesman Jakub Adamowicz.

The EIB said it is considering how to respond to the recommendations from OLAF, and that in the past it has requested repayment of loans when corruption has been uncovered.

Hungary's deputy state secretary for transport issues, Flórián Szalóki, said the authorities in Budapest had received a hard copy of OLAF's 104-page report but warned that it would take months before any decision on money being repaid was taken.

OLAF's investigation covers a period between 2006 and 2015, according to judicial sources. This covers Orbán's administrations, but also two Socialist-backed governments that ruled between 2004 and 2010.

The Budapest municipal authorities and the city's metro system operator declined to comment on the financing issue.

Raulla Merhej, deputy spokeswoman of the Office of the Prosecutor General of Hungary said the office "has received the documents from the EU’s anti-fraud office (OLAF) including a judicial recommendation."

She said that as "there is already an investigation in progress in the same field conducted by the Central Chief Prosecution Office of Investigation, it is not necessary to open a parallel investigation."

Hungary's chief prosecutor's office is carrying out an investigation into a political figure connected with carriage procurement for the M4 line, according to local media. The investigation is expected to conclude in April.

A spokesperson for Orbán's cabinet office put the onus on the city administration: "The government has given the city full support for the implementation of the project, the rest has been up to Budapest to realize."