The Austrian count and the Gripen sales to Hungary

I was going through the news in Népszabadság on Monday, March 2, 2009, when I discovered a short piece on the arrest of Count Alfons Mensdorff-Pouilly, the "lobbyist" for BAE Systems, partner of the Swedish firm Saab in the sale of Gripen fighter planes. I usually don't read the comments of readers, but this time I noticed a long English-language piece that had a familiar ring to it. No wonder because it turned out to be my own! What I didn't notice is that the person who quoted me said: Copyright: http://esbalogh.typepad.com/hungarianspectrum/2007/08/the-gripen-affa.html It was written a long time ago. On August 13, 2007, shortly after I began this blog.

The story intrigued me as soon as I heard about the Swedish investigations that led to the Czech Republic, Austria, South Africa, and most likely Hungary. Alfons Mensdorff-Pouilly has Hungarian connections. His mother is Hungarian and he speaks the language well. He is known as an avid hunter and spends quite a bit of time on his Hungarian estate.

One of the allegations against Mensdorff-Pouilly is that, in order to procure the sales of the fighter planes, he passed on quite a bit of money to politicians as well as to businessmen. From the latest news items it seems apparent that the Swedes and Austrians have proof of the Czech and Austrian connections. For the time being they are not talking about Hungary.

The first article I found on Mensdorff-Pouilly's arrest was in an English-language Swedish paper, The Local. Sweden's English News (February 28, 2009). According to the Swedish paper Mensdorff-Pouilly altogether received thirteen million euros for his services. British prosecutors suspect that he bribed Hungarian and Czech decision-makers to encourage them to choose the Gripen fighter aircraft for their countries' air force. The Swedish paper also seems to know that bail in Mensdorff-Pouilly's case is unlikely because of the "risk of him fleeing from justice and destroying evidence." In addition, APA reported that the count is also suspected of forging documents in order to make the payments appear legitimate.

Profil, an Austrian paper that was the source of a number of Hungarian articles on the subject, seems to know that the count is also accused of money laundering. In the Czech case, the paper specifically mentions Milos Zeman and Ivo Svoboda, prime minister and minister of finance of the Czech Republic, as recipients of Mensdorff-Pouilly's bribes. The Czechs just as the Hungarians had originally planned to buy F-16 fighter planes from Lockheed-Martin but suddenly the Czech government changed its mind. This is exactly what happened in Hungary. Viktor Orbán, then prime minister, against the advice of experts from the ministry of defense, abruptly decided to buy Gripen planes instead of the American ones. 

As I mentioned in my August 13, 2007 blog Ágnes Vadai, undersecretary of the ministry of defense, was named to head a investigation into the matter. In 2007 Vadai appeared several times in the media and reported "irregularities" but nothing specific. And then there was a huge silence. Most likely few people in Hungary today even remember the Gripen affair and those who do or whose memory was suddenly jiggled by the news about the arrest of Mensdorff-Pouilly simply say that this is what happens in Hungary. Political corruption is never punished. Everything is covered up. I must say that I was very disappointed in Ágnes Vadai at the time because the information she provided could charitably be described as wishy-washy.

Well, today Vadai was interviewed by György Bolgár in connection with Mensdorff-Pouilly's arrest and the old accusation of the count's possible bribe to Hungarian politicians. I must say that today's description of the findings of the committee was much more revealing. What are the findings? Missing documents. Every important piece of paper concerning the purchase of these fighter planes is gone. The letter in which the minister of defense asked for bids is gone, the bids themselves cannot be found, there is naturally no mention of Mensdorff-Pouilly in any government document. So there is nothing to implicate any of the politicians involved in the decision to buy the Swedish planes. The only thing Vadai could bring up as indirect evidence: the suddenness of the decision and that the prime minister went against the advice of the military experts and alone decided in favor of the Gripen planes. Just when everybody was sure that Hungary was planning to purchase the American planes. And this is mighty little to act upon.

Therefore one can only hope that the British and the Swedes have evidence or that Mensdorff-Pouilly will spill the beans. He has already admitted to bribing businessmen but so far remains tight-mouthed about politicians. In August 2007 I finished my blog saying: "Stay tuned; this one could be juicy." A fit conclusion for today's blog as well.

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Winettou
Guest

Switzerland is standing also before purchase of new fighters. The Army chief said last week, fighters are no priority at all, in view of more urgent needs! This should be the case for all of Central Europe. Think!

Mark
Guest

Ėva: “In August 2007 I finished my blog saying: “Stay tuned; this one could be juicy.” A fit conclusion for today’s blog as well.”
You are absolutely right. The Gripen purchases in Hungary have not yet been noticed (or implicated) in what is already a major international investigation into allegations of bribery in quite a breathtaking number of contexts by BAe systems (though I wouldn’t be surprised if they were added to what is already quite a long list). Not only are British prosecutors pouring over these allegations, but so are the US Department of Justice. The courts in the UK have already found against the government in London once for trying to impede investigations into BAe citing “national security grounds”. It is worth examining the international context of this story, and the following collection of articles is well worth a look:
http://www.guardian.co.uk/world/bae

Odin's lost eye
Guest
Generals teach their armies to fight the previous war. Senior officers are often blinded by their previous experiences. There were four aircraft for Hungary to choose from. These were the F16, the French Rafale, the Eurofighter (tyfon or typhoon) and the Swedish Gripen. Of these four the F16 was the militaries’ choice, the Rafale which has its problems, the Typhoon type 1 only has air to air interception abilities and the Gryphon. When the U.S.A. did not get the order they got the ‘Hump’ and started poking around, twisting arms etc. What they did not seem to realise that BAE Systems had ‘fingers in two of the pies’ (Typhoon and Gripen). Professor you report that *** “According to the Swedish paper Mensdorff-Pouilly altogether received thirteen million euros for his services.” *** It is often suspected that US plane makers have paid more to get a sale. But this often the way in the arms trade! The choice of the Gripen seems to be a good one all be it that it was made by politicians. In 1935 the British could have started work on a 600mph jet fighter but the military pooh-pooh it saying that the jet engine would be… Read more »
spectator
Guest

“…without interceptors a country can be attacked by anything that can fly…”
– So true…!
– As the fact that Hungary at the time of the purchase/lease – did have a working air-defence system. Furthermore, about the same time the russians proposed that – compensating long overdue payments – will supply more fighter jets, and will overhaul/refubrish the aging but still up to the task MIG fighters of the hungarian air force…
It means: the whole affair was indeed unnecessary, if one look at as strictly practical means…
Completely another question though, that this solution would indeed be something from the “east”, what would be – naturally (???!!!)- unacceptable by the leading forces in power…
In spite the interest of the country, I may say.

Mark
Guest

” “Stay tuned; this one could be juicy.” A fit conclusion for today’s blog as well.”
Indeed it is. The Count was charged today with “conspiring to make corrupt payments to promote the sale of fighter jets to Czech Republic, Hungary and Austria” in London today. The political circumstances are interesting as the government is clearly thinking about stopping the case on national security grounds:
http://www.guardian.co.uk/world/2010/jan/29/bae-mensdorff-pouilly-bribery

Eva S. Balogh
Guest

Mark: “Stay tuned; this one could be juicy.” A fit conclusion for today’s blog as well.” Indeed it is. The Count was charged today with “conspiring to make corrupt payments to promote the sale of fighter jets to Czech Republic, Hungary and Austria” in London today.”
Thanks you for the link to the Guardian. I’m sure that Orbán’s sudden decision to switch to Gripen (out of the blue) had something to do with the million/billions his party received from the count. However, the committee headed by Agnes Vadai came up with nothing. What I’m afraid of that the Orbán government was so cautious and careful that there are no traces are left.

Mark
Guest

Eva: ” What I’m afraid of that the Orbán government was so cautious and careful that there are no traces are left.”
What is interesting is that the Serious Fraud Office and the Crown Prosecution Service have zeroed in on three countries in the indictment – and one is Hungary. Under British law to get to this stage they must have convinced a prosecutor that they could prove “conspiracy””beyond reasonable doubt” with these three states. That means evidence that links them to someone. Obviously the charge of “conspiracy” also means that they can’t prove anyone took under-the-counter payments. It will be interesting.

Mark
Guest

It is also interesting that he was “remanded in custody”, i.e. imprisoned pending trial. For white-collar crime this is fairly unusual as one would expect some kind of bail to be granted.

Eva S. Balogh
Guest

Mark: “It is also interesting that he was “remanded in custody”, i.e. imprisoned pending trial. For white-collar crime this is fairly unusual as one would expect some kind of bail to be granted.”
I was very happy to hear that and I wish that there would be a thorough and successful investigation in Hungary, but I’m not too optimistic.

Eva S. Balogh
Guest

Mark: “What is interesting is that the Serious Fraud Office and the Crown Prosecution Service have zeroed in on three countries in the indictment – and one is Hungary. Under British law to get to this stage they must have convinced a prosecutor that they could prove “conspiracy””beyond reasonable doubt” with these three states. That means evidence that links them to someone.”
That would be fabulous. This whole thing has been bugging me for a very long time. In fact, I signed up to Google Alert with the subject “Gripen,” because I wanted to be alerted. Almost every day I get something but mostly about sales of planes and such. Now at last there is something more interesting.

Vándorló
Guest

@ESBalogh: Terrible news I’m afraid: “The settlement came as the SFO admitted that it will not pursue a prosecution of BAE over allegations of bribery and corruption relating to Eastern Europe and Africa.”
This is dispite the fact that: “..in the Czech Republic and Hungary, BAE paid more than £19m to an agent to secure leases of Gripen fighter jets, despite a high probability that part of the payments “would be used in the tender process to favour” the company.”
http://bit.ly/bdyNr2

Eva S. Balogh
Guest

Vandorlo: “ESBalogh: Terrible news I’m afraid: “The settlement came as the SFO admitted that it will not pursue a prosecution of BAE over allegations of bribery and corruption relating to Eastern Europe and Africa.”
I read it. My heart sank.

Viking
Guest

What did you expect?
I am a Swede, I know one of the sons of one of the previous Sales Directors of Bofors, as Swedish company selling military technology for many years
He told me about a case with an Central-Asian state
Bofors won the tender fair and square
The week after Bofors was called by one of the brothers of the President
The message was “if you do not ‘renegotiate’ the deal, you will never ever be able to fulfil the delivery dates, then we will stop your performance”
Of course Bofors had to add a % to some ‘local agent paid out in Switzerland’
You would not believe how many countries have ‘local agents’ just in Switzerland
Seems to be a popular place, must be the weather
If this was the case in the Gripen-affair, I have no idea, but every time I hear the words ‘local agents’ I just assume…

Mark
Guest

Eva: “I read it. My heart sank.”
I don’t approve of the plea-bargain at all. As a British citizen, I’m rather concerned about a major British company close to government (it is an ex-state run company privatized by Mrs. Thatcher), bribing its way around the world. And I don’t think the press, especially the Guardian – which has been investigating stories in relation to BAe for over a decade now – will give up. The Hungarian deals are in their sights in a way that they were not before. See: http://www.guardian.co.uk/world/2010/feb/07/bae-chiefs-linked-bribes-conspiracy

Eva S. Balogh
Guest

Mark: “I don’t approve of the plea-bargain at all.”
Neither do I although people tried to explain me its benefits.

sildenafil
Guest

very interesting how these monsters and know the physical machines and logic with which are huge and heavy machinery after the heavens am extremely attention, congratulations on the excellent blog topic.

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