The Gripen affair redux

I don’t think we will ever find out who bribed whom in 2001 when the Orbán government suddenly decided to purchase the Swedish-British Gripen fighter jets instead of the American F-16s.

In the last ten years there was off and on coverage of this strange case. I myself dealt with it at least three times. My first piece on the subject was written on August 13, 2007. Shortly afterward, on November 26 of the same year, I had to return to the topic because of a parliamentary committee that was investigating the questionable purchase of the Swedish planes. And finally on March 4, 2009 I wrote at some length about 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. According to Swedish and Austrian newspapers, the Count, who speaks Hungarian fluently since his mother is Hungarian, worked as a lobbyist for BAE Systems and spent millions on kickbacks to Czechs and Hungarians who “convinced” their governments that the best buy would be the Saab-built Gripen planes.

SAAB JAS 39 Gripen

In my first piece on the Gripen affair I mentioned that Ágnes Vadai, then undersecretary of the ministry of defense, was named to head an investigation of the matter. They investigated and investigated but found nothing specific that would point the finger.

Two years later Ágnes Vadai told the public a little more. The first problem the committee faced was the lack of documentation. Every important piece of paper concerning the purchase of these fighter planes was gone. The letter in which the minister of defense asked for bids was gone, the bids themselves couldn’t be found, and naturally there was no mention of Mensdorff-Pouilly in any government document. The only thing she could come up with as indirect evidence was the suddenness of the decision and the fact that the prime minister went against the advice of the military experts and alone decided in favor of the Gripen planes.

Meanwhile the Hungarian prosecutors were seemingly uninterested in the British, Swedish, Czech, and Austrian court proceedings concerning this bribery case although, according to the latest information, the Hungarian prosecutor’s office did get in touch with its counterparts in those countries where Mensdorff-Pouilly’s illegal activities were discovered. Allegedly they were assured that there was no Hungarian connection to the Mensdorff-Pouilly case.

I must say that I am skeptical of the veracity of this new information that was shared during György Bolgár’s telephone interview with Pál Sinku, a counselor from the chief prosecutor’s office. Although Sinku was very different from the usual spokespersons of the prosecutor’s office–he was friendly and tried to be helpful, I still doubt that the Hungarian inquiries were specific enough.  Why would Péter Polt’s prosecutors be eager to shed light on a bribery case that might involve Viktor Orbán and Fidesz? After all, the purchase of the Gripen planes took place during the fall of 2001.

Profil, a well respected Austrian weekly, has been after Mensdorff-Pouilly for a long time. Unfortunately, the latest article entitled “Count Ali and the weapon billions” is not available online. However, a Hungarian translation of the article was published this morning on Galamus. Although it is rather difficult to decipher the exact meaning of the references, a few telling details might advance our understanding of the Hungarian bribery case a bit. The minutes of the meetings of the “lobbyists” talked about “payments to the socialists” and about “the swine” who must receive 5% of something that I find difficult to interpret: “ipari elem.” Industrial element? As a result of this extra 5% to “swine” the deal was going to be more expensive. That is, the bribe would cost more. The original price was $8 million but because of this extra 5% they will need another $4.7 million, so the phony off-shore company the lobbyists set up for money laundering purposes must receive extra cash. In addition, Mensdorff-Pouilly had to pay off five other people who allegedly received 1% of the purchase price. That amounted to 180 million Austrian schillings or 13 million euros.

And now let’s go back to Ágnes Vadai, who today is a member of DK and thus an independent member of parliament. Not surprisingly, she was interviewed by Olga Kálmán last night. She couldn’t say much about her investigation because it was declared to be a state secret at the time, but when she was asked whether she has any suspicions about who the five people were who received this incredible amount of money Vadai answered in the affirmative.

Let me add something here. My suspicion is that among these five there were not only Fidesz people but socialists as well. First of all, there are the minutes that specifically talk about “payments to the socialists.” Second, looking through the Hungarian newspapers of the time it seemed to me that the socialists didn’t complain as loudly about this very suspicious Swedish deal as they should have. Ferenc Juhász, who later became minister of defense (2002-2006), was outright enthusiastic. At least Hungary wasn’t buying the “obsolete” American F-16s.

Mind you, today Ágnes Vadai claims that Hungary didn’t need any new fighter jets, period. The MiG-29s needed only the once-every-nine-year general service, but the Ministry of Defense in the hope of purchasing new jets simply neglected their upkeep. Moreover, Viktor Orbán at that point hated everything Russian. Thus they spent an inordinate amount of money on fourteen used Swedish planes.

At the time government members declared repeatedly that the planes were practically free because of promised Swedish investments in Hungary. I must say that I am not aware of any really large Swedish investments after 2001. Moreover,  just about a year ago Hungary had to renegotiate the deal because the Hungarian government was unable to meet the payments. The price is getting steeper and steeper.

56 comments

  1. I would like to bring attention to a peculiarity: In 2001, when Orban was Prime Minister,
    a decision was made against the counsel of the ministry advice and costing millions with
    widely held suspicion of huge bribery. in 2012, Orban decides on something against the decision of a ministry in the release of the Azeri axe-murderer. I suggest that the similarities
    does not end there…

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  2. Prime Minister Orban reversed course and decided on the Gripen purchase on September 10, 2001.

    The Bribery Conference at BAE took place on October 3, 2001.
    Bribes converted to US dollars at the exchange rate at that time (1 $= 15.20926 ATS):

    to Czechs = 3% of 38.3 billion ATS purchase price = 1.149 billion ATS = $75.546 million
    to Austrians= 1% of 25 billion ATS purchase price = $16.437 million
    to Hungarians= 1% of 18 billion ATS = $11.835 million
    (per Mensdorf’s remark)

    “Swine” of Hungary gets S= 5% of the “industrial element”,
    The 5 Hungarian recipients get S + $4.7 million together, so

    we can conclude that “Swine” was allocated a $7.1 million bribe.

    On November 16, Orban’s smaller cabinet approved the purchase of Gripen fighters.
    On December 20, 2001, the Orban government officially signed the agreement.

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  3. A couple of minor points:

    First the Gripen/Griffin is not a “Swedish-British” plane, it is entirely a product of Saab, BAE just got involved in the marketing and support side.

    Second, the Hungarian planes were not purchased, they were leased – with an option to buy “eventually”.

    None of this affects Éva’s piece, but, here in Pedant’s Corner, we can now relax and go to bed happy.

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  4. OT – but I am having some aggravation with WordPress and I wondered if it was just me?

    Almost every time I post, I have to re-log in with WordPress, and without fail the first attempt never succeeds – I get “Internet Explorer cannot display the webpage” first time, second time it’s OK.

    I’m not clearing down temp files/cookies/etc and I haven’t changed any security settings, so why is this suddenly happening? Quite often WordPress forgets who I am as well – although whether it remembers me or not, I still get the log-in problem.

    Also, every time the page refreshes I get an IE error message teling me that it’s blocked content because of “certificate errors”. But, as I said, I haven’t altered any security settings (or anything else).

    This is getting very annoying and rather tedious, so if anyone can tell me how to stop it I would be pathetically grateful.

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  5. Somehow, I put my posts in a previous Gripen thread, so I am reposting here. I am sorry.

    I guess some money in a Nokia box is small change compared to what some of these deals could bring into some boxes.
    I have a question. Are there any requirements in Hungary of full disclosure of received donations? Where can someone check that list of that is exist? You say that there is a possibility that “BAE paid millions of dollars to the major political parties in Hungary to win the contracts there.” Which parties? Would this be in a form of donation? If it is not in the books, then it is gone to various people versus to various parties. Those people maybe took their cut, but at any case if any of the money was filtered into any party via third parties, that is a clear case of money laundering.

    Just a ‘bit off topic. I made an off topic post last week regarding an item that showed up on every single government supporting media (go to Google and enter” Mesterhazy, Veres, IMF). The Fidesz explicitly requested Attila Mesterhazy and ex-Finance Minister János Veres to provide the parliamentary economic committee information on the 2008 IMF agreement and on the measures taken to comply with its condition on this past Monday in the parliament. I had not heard anything since then, and any search regarding the subject does not bring up any new items. THis makes me believe that that Fidesz took a shot in the dark again. I would assume if there would of been something that MSZP did at the time that would of compromised Hungary, Fidesz and their friendly media would be going wild on the subject, but there is silence, and today is Wednesday…

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  6. See http://magyarnarancs.hu/belpol/gripmadartortenet_-_visszapillantas_a_vadaszgeptenderre-64734

    The Russian would have overhauled the 28 MiG-29s they gave to Hungary in 1993 for $91 million, extending their lives by 10 years.

    The Americans would have sold the F-16s for HUF 110-140 billion.

    Orban’s personal decision was to spend two and a half times that amount on the Gripens.

    The Orban government leased the 14 used Gripens for 12 years for $84.5 million a plane, i.e. HUF 337 billion total, a waste of at least HUF 200 billion ($700 million) of taxpayers’ money, while a $7 million bribe was flowing to “Swine”.

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  7. Paul :
    A couple of minor points:
    First the Gripen/Griffin is not a “Swedish-British” plane, it is entirely a product of Saab, BAE just got involved in the marketing and support side.
    Second, the Hungarian planes were not purchased, they were leased – with an option to buy “eventually”.
    None of this affects Éva’s piece, but, here in Pedant’s Corner, we can now relax and go to bed happy.

    The world needs pedants…

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  8. Pleased to see that you consider it likely the Socialists were bribed as well, because that is certainly how things often work, as I explained on an earlier thread. I’m surprised to see Juhász praising the Grippen purchase – certainly when in power he lost his temper with Simicskó in a live television programme which was really quite remarkable!

    I’m sure most contributors will fed up with me sniping at Eva for what I consider her credulousness with regard to Gyurcsány. But if anyone is interested, Mong Attila has contributed a piece for Átlátszó.hu as part of its survey of oligarchs, which is a good starting point for having ones illusions stripped: http://atlatszo.hu/2012/09/27/kis-oligarchatarozo-gyurcsany-ferenc/

    Attila is one of the few journalists in Hungary who takes his job seriously, wrote a book on the broker scandal, was kicked out of Hungarian Radio for his silent protest of the media law, and now works for Átlátszó.

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  9. tappanch :

    The Orban government leased the 14 used Gripens for 12 years for $84.5 million a plane, i.e. HUF 337 billion total, a waste of at least HUF 200 billion ($700 million) of taxpayers’ money, while a $7 million bribe was flowing to “Swine”.

    Any guesses who “Swine” could have been?

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  10. Paul :
    OT – but I am having some aggravation with WordPress and I wondered if it was just me?
    Almost every time I post, I have to re-log in with WordPress, and without fail the first attempt never succeeds – I get “Internet Explorer cannot display the webpage” first time, second time it’s OK.
    I’m not clearing down temp files/cookies/etc and I haven’t changed any security settings, so why is this suddenly happening? Quite often WordPress forgets who I am as well – although whether it remembers me or not, I still get the log-in problem.
    Also, every time the page refreshes I get an IE error message teling me that it’s blocked content because of “certificate errors”. But, as I said, I haven’t altered any security settings (or anything else).
    This is getting very annoying and rather tedious, so if anyone can tell me how to stop it I would be pathetically grateful.

    You’re problem is Internet Explorer sorry to say… as much as I don’t like MS bashing, developing for IE is a like a train wreak in slow motion. It demands you setup a separate development track to support it and is much likely less favoured by those that are developing wordpress. I would suggest you try FireFox or Chrome. They are both more committed to open web standards and as such, behave more predictably.

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  11. Eva S. Balogh :

    tappanch :
    The Orban government leased the 14 used Gripens for 12 years for $84.5 million a plane, i.e. HUF 337 billion total, a waste of at least HUF 200 billion ($700 million) of taxpayers’ money, while a $7 million bribe was flowing to “Swine”.

    Any guesses who “Swine” could have been?

    I need help in Austrian German. In Hungarian slang, swine= disznó = ace in a deck of cards.

    If my calculations are correct, and “Swine” got the bulk of the bribe, then s/he could be identified as the head of the ruling party in 2001, i.e. Victor de Felchoute.

    Correct me, if “Schwein” has a different meaning in Austrian slang.

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  12. Kingfisher :
    Pleased to see that you consider it likely the Socialists were bribed as well, because that is certainly how things often work, as I explained on an earlier thread. I’m surprised to see Juhász praising the Grippen purchase – certainly when in power he lost his temper with Simicskó in a live television programme which was really quite remarkable!
    I’m sure most contributors will fed up with me sniping at Eva for what I consider her credulousness with regard to Gyurcsány. But if anyone is interested, Mong Attila has contributed a piece for Átlátszó.hu as part of its survey of oligarchs, which is a good starting point for having ones illusions stripped: http://atlatszo.hu/2012/09/27/kis-oligarchatarozo-gyurcsany-ferenc/
    Attila is one of the few journalists in Hungary who takes his job seriously, wrote a book on the broker scandal, was kicked out of Hungarian Radio for his silent protest of the media law, and now works for Átlátszó.

    There is no deus ex machina here Kingfisher. There are plenty of posts written on the blog that despises corruption on both sides. What more interesting to me is that how Fidesz fans deal with any and every accusations(like kindergarten children) the same way, like “but the MSZP did such and such”. Many of the times those accusations become unfounded. EVa dealt with those stuff regularly.
    In reality the chances that it was Fidesz that took some bribe in this particular case is very likely. Let’s face it if the MSZP would of sided with Gripen, Orban would of gone out of his way to scrap the deal, just because that is his personal vendetta from day one. So what is your take on the high possibility of bribe given to Fidesz?

    I also asked but I did not get an answer, (so maybe I should just stop posting, because my posts becoming monologues versus totally unrelated subjects on some threads that get twenty unrelated responses), is there a procedure in place where the various parties need to report where from and how much donations they received? Is there a place where this is published? Thanks.

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  13. “The word Schwein (“pig”) is possibly the most used word in the German language: you can attach it to almost anything. Sometimes it’s a noun by itself, as in kein Schwein war da (“nobody was there”), or kein Schwein hat mir geholfen (“not a single person helped me”), but it can also be added to nouns to make new words.

    Eine Schweinearbeit is a tough job. Something that kostet ein Schweinegelt is ridiculously expensive. If you call someone a Schwein, that’s as insulting as it is in English. But if someone is an armes Schwein (“poor pig”), he is a person you feel sorry for. And most confusing of all, Schwein haben (“to have pig”) means to be lucky! “

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  14. Eva S. Balogh :

    tappanch :
    The Orban government leased the 14 used Gripens for 12 years for $84.5 million a plane, i.e. HUF 337 billion total, a waste of at least HUF 200 billion ($700 million) of taxpayers’ money, while a $7 million bribe was flowing to “Swine”.

    Any guesses who “Swine” could have been?

    Swine? Cleaning ‘istalo’?

    Freudian slips, anyone?

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  15. German Wikipedia comes to help:

    “Das Wort Daus als Bezeichnung für die zwei Augen auf einem Spielwürfel oder für die höchste Spielkarte des deutschen Kartenspiels, das Ass, ist seit dem 12. Jahrhundert in Gebrauch.”

    The word Daus as a term for the two eyes on a dice or card game for the highest of the German card game, the Ace is, since 12 Century in use.

    “Auf der deutschen Spielkarte […], dem Daus, ist häufig ein Schwein oder eine Sau ”

    On the German card game […], the Daus, often is a pig or a sow

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  16. tappanch :

    German Wikipedia comes to help:

    “Das Wort Daus als Bezeichnung für die zwei Augen auf einem Spielwürfel oder für die höchste Spielkarte des deutschen Kartenspiels, das Ass, ist seit dem 12. Jahrhundert in Gebrauch.”

    The word Daus as a term for the two eyes on a dice or card game for the highest of the German card game, the Ace is, since 12 Century in use.

    “Auf der deutschen Spielkarte […], dem Daus, ist häufig ein Schwein oder eine Sau ”

    On the German card game […], the Daus, often is a pig or a sow

    Wow! You guys are really great. Now it makes eminent sense and we can guess fairly safely on the identity of “Daus” or Schwein/Sau.”

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  17. Ron :

    Julie :
    Honestly, it’s a surprise to learn that Hungary even has an air force.

    Your surprised about this? What about the fact that they also have a Navy.

    We do?

    I went and asked someone, apparently even some soldiers weren’t aware of this until they were studying the MOD’s branches in a course.

    The navy is a very small branch though, I was told only 1 ship (?) and it is located in Bp.

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  18. @Kingfisher, Re Gyurcsany: Thanks for posting this, finally something somewhat more specific. I really like Atlatszo, they usually do a great job of presenting facts. So I read this piece with great interest, even followed the links… but if this is all we have on Gyurcsany, this is mighty little. Unlike most of Atlatszo’s pieces that I read, this particular piece is full of insinuations and allusions and very thin on actual evidence.

    Don’t get me wrong, I am not arguing that Gyurcsany is a saint; but to make him sound like the resident evil is a mistake. I wouldn’t want him to be PM again; I think he made some serious mistakes while he was in the job. And he is not running for such a position, either. Btw, I think that was an excellent decision on his part.

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  19. An :

    @Kingfisher, Re Gyurcsany: Thanks for posting this, finally something somewhat more specific. I really like Atlatszo, they usually do a great job of presenting facts. So I read this piece with great interest, even followed the links… but if this is all we have on Gyurcsany, this is mighty little. Unlike most of Atlatszo’s pieces that I read, this particular piece is full of insinuations and allusions and very thin on actual evidence.

    I wanted to say the same thing but I’m “suspect” in Kingfisher’s eyes. This is mighty little. Just because Gyurcsány, the politician, didn’t tell the whole truth about the state of the economy before the elections he must be also lying about being an oligarch. Tenuous at best.

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  20. So, if anyone cares…
    THis is from the Fidesz’ website:
    Az 500.000,- forint feletti támogatás/adomány esetén a Támogató nevét a Szövetség köteles minden év április 20-ig a Szövetség előző évi pénzügyi beszámolójában és a Magyar Közlönyben közzétenni.
    WHat it very much says that any donation/support received by political parties above EUR 1,700 should be reported in the year end financial statement by April 20th and published in the Magyar Kozlony.
    (Below EUR 1,700 gives a lot of wiggle room for a group of people to donate a substential sum, if you ask me.)
    What was more interesting on this page is this:
    1%: A Fidesz-Magyar Polgári Szövetség részére nem adható. Adható viszont a Szövetség a Nemzetért Alapítványnak. Az Alapítvány adószáma: 18177428-1-42.
    (In Hungary there is a 1% voluntary donation with taxes, that can be directed to any charities or not for profit organizations.)
    Fidesz says that although you cannot put the 1% toward any political party, they suggest that you direct that sum to the Association for the Nation Foundation. So, what is this foundation? It was started by Makovecz, their last financial breakdown was published online in 2009. They spent approximately EUR 2,000/year on maintaning the website of http://www.szna.com. (please take a look on it, as it is very easy to figure out that it is probably EUR 20/year to maintain that site), and on http://www.polgárokhaza.hu, that is clearly and advertising channel of Fidesz. TAke a look on the right side menu bar that in suggested sites, like Fidesz products shop, Magyar Hirlap, Orban Viktor, and a nice nationalistic book shop with wide selection of offerings. My favourite on this website is the Married Life link “Ebben a menüpontban a Polgárok Háza életébe nyerhet betekintést: hogyan telnek a hétköznapok, munkával és jókedvvel, kollégák és háziasszonyaink körében. Háziasszonyaink és Kolléganőink receptjei között is böngészhet!”
    Back to szna… guess who is the head of the trustees?
    Csaba Hende, current Minister of Defence.

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