Political “accounting”: The case of Club Aliga

Even before Viktor Orbán won the elections he and his men swore that there will be “accounting.” In their opinion the country’s financial and economic problems are due to thievery. The crooked socialists were stealing money right and left. The usual description of corruption was that “money was being carried away by wheelbarrows.” And these men must be punished since they are responsible for the sorry state of Hungary.

Originally the Orbán government entrusted the job of “accounting,” which I decided to call “political retribution,” to László Papcsák and Gyula Budai, two lawyer politicians with questionable pasts. But then Papcsák, who had to choose between this job and being mayor of District XIV of Budapest, opted for the latter. Perhaps he was smart because Budai who carries on with the job alone is coming up empty handed.

Budai is under the direct supervision of Viktor Orbán himself although his “secretariat” of seven people officially work under the Ministry of Administration and Justice. He was originally in charge of cases agricultural in nature. He investigated twenty-eight such cases out of which only three got far enough for indictment. In one instance, the case has already been thrown out. In ten other cases Budai had to settle for “investigation” on his own because there wasn’t enough evidence to even send the cases to the police. Altogether he has felt confident enough to send 38 cases to the prosecutors, but only a handful have resulted in charges being filed.

Here I would like to tell the story of one of these aborted cases. Today MTI reported that the police stopped investigation into the case of Club Aliga. The police came to the conclusion that the charge against an Israeli company that purchased the walled-in resort originally used for the exclusive pleasure of high party officials of the Kádár regime was baseless. The property was not sold under value in 2007. It was a fair price.

So, let’s see the story of Club Aliga that was extremely difficult to sell because by 2007 the compound was in very bad shape. Just to give you an idea, here is the famous Kádár villa (and the picture doesn’t even reflect how run down the place was):

Aliga, the Kádár villa

 

It took years before PRO-MOT Hungária Kft won the bid on December 19, 2006. The minister of finance approved the deal. Originally PRO-MOT offered 4.4 billion forints but since there were two other bidders PRO-MOT raised its bid to 5.5 billion forints. The compound is situated on 47 hectares with 55 buildings.

The new owner immediately announced that he was planning to invest 200-300 million euros into the property to develop it into a luxury wellness center. He also agreed that inhabitants of Balatonaliga and Balatonvilágos would be able to use the compound in order to be able to reach the lake. The mayor was pleased. The contract was signed in March 2007.

Two years went by but little came of the plans. Apparently there were so many permits to acquire and all the local and government offices were so slow that construction couldn’t be started. The Fidesz member of parliament from the region was clearly in favor of slowing the development and invoked environmental considerations. He was supported by the chief architect of the Balaton region. In his opinion plans put too much of an environmental burden on the place. According to the socialist MP of the district there were “too many superfluous requirements” that made development slow and difficult. There was nothing surprising in the divergent attitudes. Fidesz in those days tried to slow down or prevent development because they were against anything that might be considered a success story for the government.

Soon enough environmental groups also raised their voices. The most vocal was an association representing the interests of vacationers owning property at Lake Balaton. Already in 2004 the association wanted to make sure that in case Club Aliga is privatized the formerly closed compound would be open to the public. By 2009 they were also worried about the number of buildings that according to plans would be constructed. In addition, they wanted a change in ownership of parts of the compound. There was a promenade and a park that now was owned by PRO-MOT but the association insisted that these two parcels of land be taken over by the local government. As far as I know, nothing came of that demand.

This is where things stood until August 2010 when Jobbik went to the police and insisted on an investigation into the purchase of Club Aliga. PRO-MOT is an Israeli firm and that fact seems to be a very important consideration for Jobbik. They like to bring charges against Israeli firms. Enikő Kovács (Jobbik MP), wife of Loránd Hegedűs, the anti-Semite Protestant minister, claimed that the contract between PRO-MOT and the Hungarian state became secret after its signing and that was illegal.  She added that “there are rumors that the compound was sold way below its actual value.” According to her “it was sold for a tenth of what is was worth.” She added that the sale of such tracts of lands to the Israelis was “illegal according to Hungarian law.” And if that weren’t enough, she inquired whether it was not a “national security risk that the owner is an Israeli officer, or at least he used to be an Israeli officer once upon a time.” Well, given the compulsory military service in Israel I would be very surprised if he hadn’t once been an officer in the Israeli army.

As time went by the charges multiplied. According to Mrs. Hegedűs the Israeli bank involved with the purchase was not reliable and had been charged with illegal activities in the past. Suddenly, they also discovered that the lakeside property had “strategic significance.” The deal, according to her, was “a hostile attempt at purchasing Hungarian land” and she was hoping that Viktor Orbán would launch an investigation.

A month later the National Investigative Office (NNI) took over the investigation. The charge? I guess no one will be surprised that it was “breach of fiduciary responsibility.” Against whom? The Hungarian National Management of Properties (Magyar Nemzeti Vagyonkezelő) whose two high officials, Zsolt Császy and Miklós Tátrai, were already in pre-trial confinement for the Sukoró case of Ferenc Gyurcsány and Gordon Bajnai fame.

Gyula Budai couldn’t possibly be left out of this sortie. He started his own investigation. In September 2010 he received a complaint from a local resident. He sent over whatever he received from the local resident to the police.

Four years have gone by and the poor owner hasn’t been able to develop the land. He has had nothing but trouble, mostly at the hands of the members of the city council of Balatonvilágos. However, after the new elections in 2010 the membership of the city council has completely changed, even though the affiliation has not–independent. The mayor of the town (and he is a holdover) assured the owners that from here on everything will go smoothly and the town will do everything in its power to assist the development of Club Aliga. Well, different government, different attitude.

The investigators furiously investigated for a whole year and yesterday they found that there was nothing illegal about the deal. The price was fair and all is in order. Only four and a half years went by. And this case is not unusual. On the contrary, the new owners of almost all privatized state properties go through absolute hell. I have the suspicion that especially in the current political and economic climate fewer and fewer people will brave investing in Hungary.

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Ron
Guest
The Club Aliga case does not stand on its own. It is a combination of history (I believe the State try to sell this place at least twice before this party came on board), bureaucratic mumbo jumbo and jealously. All of the typical Hungarian political behaviors. Eva: And this case is not unusual. On the contrary, the new owners of almost all privatized state properties go through absolute hell. I have the suspicion that especially in the current political and economic climate fewer and fewer people will brave investing in Hungary. Not only new owners of privatized state properties go through absolute hell. When I came to Hungary in 1995 up to the period ending in 1998 my signature is approximately 15% on large deals made during that period. Once I was asking an American why his company came to Hungary despite all hell (bureaucratic issues, police, tax and state auditors raiding his office), he went through. He stated that he knew when he came in Hungary what was out there. But they went through with the deal, because of the potential profits that could derive of such a deal. This guy was not an adventurer, but a business man.… Read more »
Paul
Guest
A friend of ours (English) met a Hungarian girl and decided to try living out there and setting up a business. He was already very successful in the UK in real estate. He learnt Hungarian (mostly self-taught), spent some time checking out the real estate business/opportunities in Hungary and then moved to Budapest to set up home/business. He didn’t want to get tied up in the bureaucracy and corruption of actually buying and selling land/buildings, so he set himself up as a facilitator, helping foreigners to buy and build in Hungary and smoothing their paths as much as possible. This guy is the hardest worker I know, and lets nothing stand in his way (he’s a really nice guy, but totally determined). And in the early days, before his Hungarian was good enough to really know what was going on, he was very enthusiastic and as pro-Hungary as I am (was). But gradually he began to understand how the ‘system’ worked, how much it depended on who you knew and how much money you were prepared to put in the ubiquitous brown envelope or donate to the Mayor’s favourite ‘charity’. Being who he is, he just laughed, adjusted and carried… Read more »
Ron
Guest

Paul, you have no idea how many times I hear this type of story, and not only recently also in the period 1995-1998 (the golden years).
A friend of mine told me once a joke to sum up the Hungarian situation (btw I am not a good joke teller).
After an outbreak of Mouth and Claw Disease cows were killed in Holland, Germany and Hungary.
The EU went to the Dutch farmer and asked him what they could do.
The Dutch farmer said, just compensate me and I will continue to farm.
They went the the German farmer, and he stated just provide me with cows and he will continue to farm.
Then they went to the Hungarian farmer, and asked the same question. His answer was can you also destroy my neighbor’s cows.

Paul
Guest

Well it made me laugh!
My wife spends her time looking for faults in others or being envious of things they have/do which she see as ‘better’ than us.
And when anything goes wrong – her first reaction is to blame someone!
I never thought much of us Brits until I spent some time with Hungarians!

Member

St. Peter visits hell one day. He is showed around by Lucifer.
They stop at a large cauldron. People are cooking in the hot mess.
Armed guards are beating back the ones who try to escape.
“Who are are these?”
“These are the Russians.”
At next cauldron Pete sees a sign: “Climbing out Verboten!”. No guards.
“Who are these guys?”
“The Germans.”
Suddenly they arrive to a cauldron but there are no signs or guards.
“How come these don’t need signs or guards?”
“Well, these are the Hungarians. They pull each other back.”

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