Corruption and conflict of interest in Hungarian politics

Although Medián came out with a new poll on voters’ party preferences, it tells us practically nothing new. Fidesz is still leading and the united opposition has no more support than before even though a majority of people would like a change of government.

So let’s move on to two embarrassing cases, both involving leading MSZP politicians. The first is the easier to deal with. Gábor Simon, one of the deputy chairmen of the party, is accused of having two bank accounts, totaling €700,000, in an Austrian bank which he didn’t reveal in his financial statement. At the time Simon deposited the money he told the bank officials that the money was acquired by selling a piece of real estate and a firm he owned. The problem is that Simon didn’t own or sell any real estate or a company.

It was only on Monday that Magyar Nemzet published this explosive story, the timing of which was most unfortunate for MSZP. Attila Mesterházy, József Tóbiás, and Csaba Horváth are currently in the United States, but word already reached Budapest that Simon must give up all his important positions within the party. Simon, realizing his untenable position, “suspended his party membership.” A few days ago he was still a candidate in electoral district XIII, but according to rumors Ágnes Kunhalmi will run there in his stead.

Up to this point one could say that Simon was a bad apple and MSZP an innocent victim, but the situation is a bit more complicated. The prosecutor’s office has been investigating Gábor Simon in another case ever since last March. This particular case involved little money, only 300,000 forints. But his immunity was suspended despite MSZP’s protestations in committee. Although the two cases are not connected, the MSZP leadership should have been more cautious early on and not just say that it was a baseless accusation against one of the leading politicians of MSZP.

Apparently Simon’s downfall was caused by his wife, whom he divorced recently. (One has to be careful with estranged wives. Just think of the former wife of Attila Szász, Aranka, who spilled the beans about Viktor Orbán’s questionable business deals in Tokaj.)

The second case is a great deal more complicated. It involves István Józsa, an important MSZP politician who is the energy expert of the party. The background is as follows. Fidesz desperately wants to prove that MSZP always wanted to build one or two more reactors in Paks and that they also wanted to use Rosatom and Russian technology. This is what, they contend, Gyurcsány, Bajnai, and Mesterházy said before 2010, but now that the Orbán government made this fabulous deal with the Russians they are suddenly against it. Yesterday Fidesz came out with another “discovery.” István Józsa, who had a 42% share in a company called Gépkar Kft., received 6.6 billion forints worth of orders from Paks between 2000 and 2010. The Fidesz politician György Balla charged that Józsa’s opinions on Paks changed with his financial interests. Before 2010 he was for building the new reactors but now he is against it.

Józsa, who gave an interview to Hír24 on the fly in one of the many corridors of the parliament building, sees nothing wrong with his company getting work from the state-owned Paks nuclear plant. He pointed out that in 2002 when he became a member of parliament he withdrew from the actual management of the company. The company got the bulk of its orders from Paks between 2000 and 2002 when Fidesz was in power. Moreover, the sum of 6.6 billion forints in ten years may sound like a lot of money but anyone who is familiar with this industry knows that it is not considered to be a large amount. In 2010 they sold the company because they no longer got any orders. Zsolt Nyerges, a close business partner of Lajos Simicska, made their situation untenable. The man who bought the company eventually went bankrupt; under the circumstances the business was no longer viable.

ethics

The reporter inquired from Józsa several times whether selling his stake in the company wouldn’t have been more appropriate once he became an MP, but the politician indignantly refused the suggestion. He is upright man; he had nothing to hide; he didn’t do anything illegal; the company received work from Paks through competitive bidding. He doesn’t understand what’s wrong. I fear Józsa is not the only one who seems to be unable to grasp the inappropriateness of such arrangements.

On this score one could congratulate the Orbán government’s decision to forbid outside business or professional activities for members of parliament. However, as we know, in the political structure Viktor Orbán set up members of parliament are not the ones who truly matter. Fidesz MPs currently function as puppets or robots and most likely will do so in the future as well. The money and power are elsewhere, in the financial and economic circle of oligarchs around Viktor Orbán. They are the ones who matter.

Tomorrow I will investigate a case involving close friends of the prime minister in one of the shadiest business dealings of late.

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Istvan
Guest

It’s always dangerous to campaign on honest government and denounce the crooks in power. It can come back to bite you as in the cases Eva just documented. Here in Illinois in the USA we have had Governors from both the Republican and Democrat party put in jail for corruption over the last ten years. Tax evasion and insider deals exist in all nations among conservatives, liberals, socialists, and outright Fascists too I suspect.

tappanch
Guest

From the median poll:

Are things heading in the right or wrong direction in Hungary?

In the right direction: 40%, a year ago: 22%
In the wrong direction: 52%, a year ago: 70%

The performance of the Orban government (100= best)
45% (a year ago 33%)

Do you want a change of government?

Yes: 45%
No: 43%

http://median.hu/object.d30af761-8a4d-46b6-a13c-e030e1ce7ab4.ivy

qaz
Guest

Members of the Hungarian political apparatus are corrupt to the bone. The only difference between the old and the new is that the old were stealing within an institutional framework mimicking that of a liberal democracy while the new decided to get by without that pretense. The name of the game was and is to (ab)use political power for personal gain. In that respect one group is not better than the other, which may explain voters’ apathy; their choice is between Scylla and Charybdis.

Extreme corruption is of course not specific to Hungary as illustrated by a report from the European Commission published a couple of days ago pointing out that the extent of corruption in Europe is “breathtaking” and it costs the EU economy at least 120bn euros.

Maria
Guest

Tappanch: these are extremely positive developments for Fidesz. It is difficult to understand why people would feel so much better than last year, but these figures certainly do not bode fell for the opposition — even if people tend to hate the government most in mid-term and get a more favorable view approaching the elections.

Fidesz will cut utility rates further with its Russian friends and build Paks 2 and the dams, meanwhile it will finance (subsidize) energy from the central budget.

It seems that people are rather easily satisfied by utility rate cuts.

tappanch
Guest

The community of the synagogue on Frankel street has not waited for the MaZsiHiSz to make up their mind:

They reject the money the government offered for the Holocaust Memorial Year.

Their reasons:

The Orban government has
1. tried to show the Horthy era in a positive light.
2. placed Arrow Cross (Nazi) writers in the public school curriculum
3. called massacres “alien handling measures”

“Naturally, we will hold events of remembrance, but we are not willing to accept money from a turncoat government that scandalizes the overwhelming majority of the Jewish people of Hungary…”

http://www.szombat.org/hirek-lapszemle/a-frankel-zsinagoga-visszautasitja-az-emlekev-palyazaton-elnyert-penzt

delp
Guest
Simon must be an idiot to have an account with his own name on it, but then again MSZPniks are not the smartest tools in the drawer. I can promise you that no smart fidesznik has such accounts, not even in Switzerland. These info can get back to Hungary very easily, even without a disgruntled wife, as there are many Hungarians working at various foreign banks who might have access to these info. People like Simicska set up several layers of shell companies with unknown shareholders, and such entities open the accounts, and you could not legally connect them to him. He and his minions go extreme lengths to conceal what they have. And they have a lot. I am sure Simicska’s friends have great fun with this story, they know that only an MSZPnik can get busted with that ‘low’ amount. On the other hand, why would Jozsa’s business with Paks indicate that he or MSZP supported the Russian extension of Paks? I just do not get the connection. They may have skimmed money off of Paks, although incomparably less than what Simicska/Nyergs companies did, but why does it have to do anything with a decision to spend at… Read more »
petofi
Guest

Another scenario for the Gabor Simon fiasco: the money was deposited by Fidesz assets under his name to embarrass MSZP. Simon stayed quiet for a few days to discover whether, in fact, he gets to keep the money or not!

Ahh, Hungary! What fairy tale could invent it?

An
Guest

@tappancs: Are these Median numbers from before or after the Paks deal?

Mr. Paul
Guest
To my mind the Józsa case is not that serious. Nobody proved that the Józsa company skimmed of the top or overcharged. The deals were over a 10 year period and the 6.6 billion represents revenue, not profits. I think this case is more about Józsa’s political ineptness. His company does well and then he immediately sells it in 2010, just as his party is out of power? Usually it is completely the other way around. Politicians sell their companies once they get elected not the minute they are out of office. His other mistake is that he spoke up on Paks, offering himself up as a target. It was probably (rather surely) known that he had this company and received these orders even in 2010. Yet it was never brought up in the election campaign or any time since. It is the fact that Józsa speaks on the floor of parliament on Paks which was the mistake. But the original story is not damaging to the extent of the Simon story I think it is not even in the same ballpark. I draw this conclusion from the MSZP party’s reaction mostly. Simon case MUST be much more severe since… Read more »
Ldis
Guest

Well, if Simon’s EUR 700k is party money, then I guess MSZP is in serious trouble, but not for the reasons Mr. Paul thinks. Simicska’s and Nyerges’s hundreds of billions or Garancsi’s 50 billion HUF on just one of the MOL-related natural gas schemes (I guess this is the topic Prof Balogh will write about, I hope she mentions the more intriguing angles too), well that can finance a lot of things in quite a few election campaigns. Simon’s money? It would not even be enough for a week of CÖF’s ‘civil’ anti-Left campaign. Mr. Paul starts from the assumption that at MSZP corruption was as centralized as it is at Fidesz. Never had been the case. At MSZP, everybody was doing their own little thing and they behave how average people behave, whereas fideszniks are paranoid and very legal-minded.

Jano
Guest

An:

“A felmérést 2014. január 24-e és 28-a között készítette a Medián Közvélemény- és Piackutató Intézet,”

So this is during when the news about Paks were already out. I understand why Eva would try to downplay the importance of this sad news, but this is a huge success for Fidesz. Other than some getting rid of some administrative obstacles, the unification didn’t expand the opposition voter base at all. On the other hand – as I feared all along – it mobilized the right even further.

We still have a campaign left, but a miracle is needed. I understand that by now holocaust topics don’t bring any votes (and therefore picking up on that thread is a huge tactical mistake from the opposition even though it’s morally understandable), as horrible as it sounds, even I’m struggling with a certain fatigue about the topic. On the other hand, it surprises me a little that Paks and the deal with the Russians doesn’t change the trends a bit. The people are definitely against it, yet they hate the opposition so much that most of them just swallows it anyway.

An
Guest

@Jano: The numbers are not good… but, just as in baseball, it ain’t over ’til it’s over 🙂

hungarian february
Guest

who is not aware of the huge corruption in the fidesz circles?

who is ready to vote for fidesz in 2014 if the fidesz corruption is true?

Jano
Guest

An: True, I wish my pessimism was in vain 🙂 I actually don’t think very highly of the current opposition either and I would understand people not wanting to vote at all, but this overwhelming and increasing support for Fidesz is just making me really sad.

Mr. Paul
Guest

Ldis :
Well, if Simon’s EUR 700k is party money, then I guess MSZP is in serious trouble, but not for the reasons Mr. Paul thinks.

It is always nice to learn about what I think or do not think. Care to elaborate in some detail? Ah but wait there is a more interesting topic.

What do you think about the Simon case? Why is MSZP overreacting to this case? Giving out statements to the press about how he “does not have a place in public life” within hours of the case. Convening a so called “Crisis Council”? Suspending him from all party positions even his party membership? Why are they doing all this, and so fast?

Ron
Guest
The last 13 years Hungary went from position 31 to position 47 in the Corruption Perception Index (CPI) CPI Place Score 2001 31 5.3 2002 33 4.9 2003 40 4.8 2004 42 4.8 2005 40 5.0 2006 41 5.2 2007 39 5.3 2008 47 5.1 2009 46 5.1 2010 50 4.7 2011 54 4.6 2012 46 5.5 2013 47 5.4 http://www.transparency.org/cpi2013/results
Ron
Guest

Ldis: Well, if Simon’s EUR 700k is party money, then I guess MSZP is in serious trouble,

Not only the MSZP also this Austrian Bank or one or group of employees if the money is received after 2004. In that case the Bank should have carried out a compliance test.Just asking were the money comes was not sufficient.

http://www.fma.gv.at/en/legal-framework/rules-of-conduct-and-compliance/standard-compliance-code-of-the-austrian-banking-industry.html

This was the result of Basel II in 2004.One of the other reasons was to combat terrorism, and black economy.

Marcel Dé (@MarcelD10)
Guest

qaz :
Extreme corruption is of course not specific to Hungary as illustrated by a report from the European Commission published a couple of days ago pointing out that the extent of corruption in Europe is “breathtaking” and it costs the EU economy at least 120bn euros.

I find commendable that the EC decided to issue regular reports encouraging all member states to fight corruption. Yet this report is anything but, well, “breathtaking”. And though in the lower tier, Hungary doesn’t fare that bad in it, except in the ‘petty bribes’ department which is not the point here.

What are we talking about? Mainly, four subjects: political financing, personal/family undue enrichment of politicians, distortion of competition by public officials both in the private sector and the public tender/procurement sector, and anti-corruption policies.

Though these subjects may, and often do, overlap, I do not think they can nor should be addressed with a single line such as “politicians are rotten to the bone”, popular (and populist) as it may be those days. Be it only because such a line conveniently puts aside the responsibilities of the private sector – employees included, and that means a lot of people…

Earnest
Guest

hungarian february :
who is not aware of the huge corruption in the fidesz circles?
who is ready to vote for fidesz in 2014 if the fidesz corruption is true?

Well apparently a vast majority of Hungarians is.

Who can blame them? Isolated from the rest of the world because of their poor language knowledge that vast majority depends solely on Fidesz controlled Hungarian media. And according to those sources their country is doing great and their government is even putting up a fight with multinational companies to lower utility rates. That pensions were confiscated, civil rights destroyed, people have to pay absurd VAT rates and even bank transfers are heavily taxed is a story untold. Or it’s simply blamed on previous governments in cooperation with the big bad non-Hungarian speaking part of the world.

Everywhere, but really everywhere in the city (Budapest) I now see billboards with Bajnai Mesterházy, Gyurcsány and a clown in a police line up setting. Sickening and tasteless but a perfect illustration of the level Hungarian politics has sank to. And people still buy it. Hungary is one big Orwellian animal farm.

Marcel Dé (@MarcelD10)
Guest

Eva S. Balogh :
Apparently Simon’s downfall was caused by his wife, whom he divorced recently. (One has to be careful with estranged wives. Just think of the former wife of Attila Szász, Aranka, who spilled the beans about Viktor Orbán’s questionable business deals in Tokaj.)

The exposure might have come from the former spouse, but isn’t it fair to assume that Mr. Simon’s downfall was caused by… himself?

I seem to remember reading a study pointing at a gender gap in corruption, but only in parts of the world (such as Europe) where the corruption level was relatively low. It roughly said that women politicians in those areas were less prone to engage in illegal dealings… because the cost of being exposed was much higher for female than for male political personnel.

HiBoM
Guest

The elephant in the room is this: why do Hungarian businessmen go into politics in the first place?

Earnest
Guest

HiBoM :
The elephant in the room is this: why do Hungarian businessmen go into politics in the first place?

Keyword in this question is ‘Hungarian’. I know plenty of businessmen in my country who go into politics for the sole purpose of serving their country, not to acquire money or power. It’s sad and sickening the way Fidesz and friends are looting the country.

tappanch
Guest

The fifth Fidesz amendment to the Basic Law ordered the broadcasters to choose between no campaign ads at all or free campaign ads provided to each party.

Most commercial broadcasters have already stated that there won’t be any political commercial on their channels.

Street campaigning is effectively banned by a January decree.

There won’t be any television debate between Orban and the opposition either.

http://index.hu/belfold/2014/02/05/a_kereskedelmi_tevek_nem_kernek_a_kampanybol/

Pedro
Guest

But do not forget tappanch that the elections will be free.

It is all legal and in line with EU Directives, I do not get the criticism.

Marcel Dé (@MarcelD10)
Guest
Earnest : HiBoM : The elephant in the room is this: why do Hungarian businessmen go into politics in the first place? Keyword in this question is ‘Hungarian’. I know plenty of businessmen in my country who go into politics for the sole purpose of serving their country, not to acquire money or power. It’s sad and sickening the way Fidesz and friends are looting the country. In France businessmen almost never run for office – and you often hear people complaining “the political class hasn’t a clue about business”. 🙂 But the thing is, nowadays businessmen do not need to run for office or compete for govt-appointed positions in order to influence decisions. Lobbying, or even hiring cabinet staffers for instance is often a much better technique, which is why the broader ‘conflict of interest’ angle seems more relevant, as it involves high-profile civil servants. In most EU countries today high-profile civil servants are far more involved in the big public tenders than elected politicians. And in many sectors, even the most honest ones are having a very hard time mastering the fast-evolving technical complexities of the tenders, also identifying the business models of the contenders. This is a… Read more »
tappanch
Guest

The Court of Justice of the European Union ruled today against the special corporate tax the Orban government levied on the turnover of companies (not on the profit).

curia. europa. eu/jcms/upload/docs/application/pdf/2014-02/cp140014en.pdf

The entire ruling is here:

http://curia.europa.eu/juris/document/document.jsf?text=&docid=147342&pageIndex=0&doclang=EN

tappanch
Guest

The community of the biggest synagogue on Dohany street and the organizers of the “Jewish Summer Festival” joined the Frankel street synagogue by rejecting the Orban government’s money.

“We reject Nazi memorials, falsification of history and the desecration of the memory of our dead”

http://zsidonyarifesztival.hu/?lang=en

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