Hungarian thread in the Polish scandal

This time we will make a trip to Poland, a country that in the last two weeks has been in political turmoil. It all began with some tapes released by Wprost, a news magazine, on which Marek Belka, governor of the Polish national bank, and Bartłomiej Sienkiewicz, minister of the interior, have a conversation in June 2013. During the conversation, one can hear Sienkiewicz asking Belka whether the central bank would help the government by cutting interest rates if Poland faced an economic meltdown before the elections this year. It appears that Belka says that “his condition would be the removal of the finance minister, Jacek Rostowki.” Rostowski was indeed removed in November 2013, but the national bank did not lower interest rates. Jaroslaw Kaczyński, the leader of the opposition Law and Justice party, said he would call for a no-confidence vote.

But what does all this have to do with Hungary? Well, as it turned out, Wprost had other tapes in its possession in which Polish politicians can be heard talking about international affairs. They certainly don’t mince words when talking about the United States, David Cameron, or, as it turned out, Viktor Orbán. The discussion is studded with such expletives and sexually explicit language that when I wanted to read the details of these conversations in IndexI was confronted with a page on which I had to attest that I was over eighteen. That will give you an idea.

But let’s first introduce you to the cast of characters. First and foremost, there is Radosław Sikorski, Poland’s foreign minister, who just threw his hat in the ring to replace Lady Catherine Ashton as high representative of the Union for foreign affairs and security policy and vice-president of the European Commission. On the released tape Sikorski has a conversation with Jacek Rostowski, the man who lost his job as finance minister last November. I have the feeling that after these revelations, Sikorski can forget about any position in Brussels. I even doubt that he will remain foreign minister of Poland for long.

Perhaps the  most damaging part of Sikorski’s remarks is what he had to say about U.S.-Polish relations, especially after Barack Obama’s visit to Poland and his promise of a billion dollars to beef up defenses in central and eastern Europe. Sikorski asserted that “the Polish-American alliance is worthless, even harmful, as it gives Poland a false sense of security. It’s bullsh..t.” Sikorski on the same tape allegedly said that the Polish people have the mentality of “murzyńkosć,” a derogatory and racially-loaded term meaning roughly “like a Negro.” “The problem in Poland is that we have very shallow pride and low self-esteem,” he added.

It turned out today when the whole tape was released by Wprost that Sikorski also has a very low opinion of David Cameron. The embarrassing details were  immediately reported by the British media. To get the full flavor of the conversation one should read an article published a few hours ago by The Guardian.

These are  juicy stories that are spreading rapidly in the international press. But other tapes were also released, one of which is about Hungary. Russian-Hungarian relations and the legal difficulties of Zsolt Hernádi, CEO of MOL, the Hungarian oil and gas company, were discussed by Dariusz Jacek Krawieć, CEO of PKN Orlen S.A., the Polish refinery, and Włodzimierz Karpiński, current minister of finance. It is that conversation that Index refuses to allow people under the age of eighteen to read. The upshot of it is that Orbán made a very bad deal and that Hungary by this loan agreement became a “vassal” of Russia.

And now on to Zsolt Hernádi, who is being accused in Croatia of paying €5 million to Ivo Sanader in exchange for a 48% stake in INA, the Croatian refinery company owned by the Croatian state. Soon enough formal charges were leveled against Hernádi and an international warrant was issued for his arrest. Hernádi was stuck in Hungary. Otherwise Interpol would have arrested him. It also seems that a former employee and a small investor in MOL sued Hernádi for damages she allegedly suffered as a result of the bribery charges leveled against Hernádi. In the first round, not terribly surprisingly, the court decided in his favor.

Zsolt Hernádi, a close ally and friend of Viktor Orbán / Source; maszol.ro

Zsolt Hernádi, a close ally and friend of Viktor Orbán / Source; maszol.ro

Jacek Krawiec adds spice to this story. Let me quote:

Listen, I’ll tell you a case which shows how different our situation is from that of the Hungarians. I visited Hernádi because he cannot leave Budapest. I asked him: “How many years will you get?” He was cool as a cucumber and smiled broadly. “Listen”–he said–“my lawyers found something. If in any one of the EU countries I am acquitted of these charges then all EU states must accept the verdict and so I can travel again in Europe.” I asked him: “Will this trial take place in Hungary?” He said, “Yes.” So, I told him that this might mean two or three years. His answer was: “There will be a verdict by April.”  Next to him sat a character, a legal director, a puffed-up character, Ábel somebody or other [actually Ábel Galácz, director in charge of sales]. Hernádi turned to him and said, “Ábel, tell Jacek who will bring the suit.” Ábel told me that it is his own wife! Do you understand? Imagine such a situation. The wife is the plaintiff, comes the acquittal, and all is taken care of. Can you imagine something like that happening in Poland?” To which Karpinski added: “This is what Kaczyński is dreaming of in Poland.”

The dates seem to support his story. In the middle of December Krawieć with a large delegation did come to Budapest to conduct business negotiations with MOL. It was on December 6 that MOL announced that a former MOL employee and small investor had sued Hernádi for bribery, corruption and damages resulting therefrom. By January 11, Népszabadság reported that something was fishy about this suit and learned from international legal experts that if Hernádi wins, Croatia must drop the charges and withdraw the warrant issued by Interpol against Hernádi.

So, the suit was a clever charade as even the right-wing press suspected. A reporter for Heti Válasz told Hernádi point blank that “allegedly you move Ilona Bánhegyi [the plaintiff] in order to get an acquittal and the appeal is just part of the ‘game.'” To which Hernádi answered, “I don’t wish on anyone that half an hour I spent waiting for the verdict. Who would place one’s fate in the hands of a judge in such an uncertain and politically charged case? I am only the incidental victim of this story.” Ilona Bánhegyi is appealing the case. I wonder what the judge of the appellate court will say once he reads this story in the newspapers.

Sort by:   newest | oldest | most voted
Minusio
Guest

Foul language we already know from the Nixon tapes. I wonder why politicians seem to be so fond of it.

But apart from the language, the Polish assessments seem pretty accurate, especially on Cameron. He really painted himself in a corner domestically, and his only continental ally seems to be a pariah, Orbán.

It is also true that with Obama the US has the first post-war non-Atlantic president. That had to happen sometime – and it’s hurting the British especially. But because of that non-policy the USA lost a lot of goodwill and credibility in other areas as well – including Poland.

petofi
Guest

Re Orban and the Russian deal…

So the question is this: which of the ‘great’ interviewers of Hungarian media will seek out government personnel to answer this assessment of the Paks deal?
I already know the answer: none.

Member

About the over the 18 details … The poles simply alleged, that Orban blew Putin when he was in Moscow to negotiate the Paks deal. Now the anti-Orban internet media unleashed a bonanza of internet jokes about Orban’s oral skills …

tappanch
Guest

The 141-year old opposition daily “Népszava” has appealed for help.
They can maintain the paper in its present form for only 2 months.

daily: circulation; ad revenue from state-owned companies in 10^6 HUF from Jan 2013 to Jun 2014

Magyar Nemzet: 37,000; 1068
Magyar Hirlap: 7,000; 406

Népszabadsag: 45,000; 91
Népszava: 14,000; 29

http://nepszava.hu/cikk/1024963-mecenast-keres-nem-hagyja-magat-a-nepszava

tappanch
Guest

Most profitable media companies in Hungary in 2013, in 10^9 HUF

RTL (2 companies): 4.9
HBO : 3.3
Publimont (Simicska): 3.2
Springer: 2.4

Note: the new media tax is not based on profitability, but on ad revenue.
RTL will pay about 60% of the tax.

http://www.mmonline.hu/cikk/profitverseny_elen_az_hbo

Member
@tappanch I found your date confusing agh this time. (Maybe because I did not have my coffee yet.) The staggering thing is that while the Fidesz government and their minions fill the head of those who who let it with the untrue PR that “media freedom is all and well in Hungary, and Fidesz supports media freedom than no others before” they are systematically and slowly starve opposition media to death. If they don’t starve them, they simply kill them directly by taking away the way they can operate (Klubradio). Name Circulation Advertising revenue from government Nepszava (opposition paper) 14,241 € 94,842 (29 mill. Ft) Magyar Hirlap (govern. support) 7,435 € 1,327,763 (406 mil. Ft) Nepszabadsag (opposition paper) 45,051 € 297,616 (91 mil. Ft.) Magyar Nemzet (govern. support) 37,113 € 3,492,902 (1068 mil. Ft) Nepszabdasag has 6x times more readers as Magyar Hirlap but they receive 25% of the advertising from the government then Magyar Hirlap. Nepszava has almost twice the readership of Magyar Hirlap, the Hungarian government does not want those readers to be as informed as the readers of Magyar Hirlap? Nepszabadsag. So, either Fidesz admits that Nepszabadsag and Nepszava does a way better job to inform the… Read more »
petofi
Guest

@Eva

“Not their fault..”

Perhaps. But I still can’t forgive the media types who, when Orban declared that the Azeri matter was ‘over and done with’….had shut up, closed their tents, and quietly took their way home like the good little sheep that they are. (Of course, I’m a real stickler: I can’t forgive Olga’s bad manners in never addressing the lead-in news-reporter by his/her fist name. Boorish.)

buddy
Guest

@Minusio “It is also true that with Obama the US has the first post-war non-Atlantic president.”

What do you mean by this? What is a “non-Atlantic President”?

Minusio
Guest
@buddy After WW II, all American presidents until Obama showed an interest in good, constructive relations with Europe. The trans-Atlantic Alliance (NATO) was only the military side of it. There were many more ties in many other fields such as science, scholarships, regular consultations on economic and political matters – and then there was the “special relationship” with Britain. It also had to do with many government people and advisors having had European roots, diplomatic experience, etc. Under Obama that has changed. It is sadly true that the US doesn’t have much of a foreign policy to speak of now, and in spite of NSA the knowledge about regional situations and conflicts seems to be dwindling. A recent example was Kerry proclaiming that within nine month he would have hammered out a deal between Israel and the Palestinians. Everybody who knows the region, the persons involved and their principles could only but chuckle. A more recent example is how to treat the Ukraine crisis. Owing to lack of knowledge on the ground, the US unilaterally began with sanctions and threatening gestures. In earlier times, there would have been much more consultation and fine-tuning of measures to contain this conflict. George… Read more »
petofi
Guest

@Eva,

When the newscast lead-in asks says, “Hello, Olga”, she never responds by name; only say, “Hello”. Bad manners.

But let’s get back to reporting: on the Azeri, Olga’s attempts at getting at the story rates a 1 out of 10. Why didn’t she interview some Turks on the alleged investments etc.? Or some Azeris regarding investment in Hungary? Nothing. Olga is almost as self-serving as the mutants on Echo and HirTV and the rest.

tappanch
Guest

Internet location of the RTL 2 newsreel, broadcast at almost midnight to the less than broad audience:

http://www.rtlklub.hu/most/rtl2/musorok/rtl_ii_hirado

tappanch
Guest

Remark: Most people I know (including my humble self) cannot get RTL 2 on the cable. It is a recent, post-[media tax] decision on RTL’s part to rebroadcast the newsreel on RTL 1 around midnight.

Istvan
Guest
Since Eva did such a nice job of presenting to us in English new additional information about the Zsolt Hernádi Croatia affair I noticed something in the business news today that perked my interest. I just read that Pactera Technology International Ltd owned by a US investment group called the Blackstone Group is opening what is called an Offshore Development Center (ODC) in Hungary. Blackstone has evolved into one of the world’s largest private equity investment firms specializing in the dangerous practice of leveraged buyouts. The Blackstone Group, now is the largest owner of single-family rental homes in the USA, they believe the money to be made in the housing market lies in snapping up cheap homes in the cities where housing prices crashed most spectacularly. In general Blackstone is called a “predatory” investment group which Le Monde diplomatique also called among the “new vultures . . . with vast amounts of capital at their disposal and an enormous appetite for more.” The Hungarian Ministry of External Economy and Foreign Affairs indicated that Hungary has long-term plans for cooperation with Pactera, saying that the government would support the American company in raising the number of employees to the 800 and… Read more »
gdfxx
Guest
Istvan:”Blackstone has evolved into one of the world’s largest private equity investment firms specializing in the dangerous practice of leveraged buyouts. The Blackstone Group, now is the largest owner of single-family rental homes in the USA, they believe the money to be made in the housing market lies in snapping up cheap homes in the cities where housing prices crashed most spectacularly. In general Blackstone is called a “predatory” investment group which Le Monde diplomatique also called among the “new vultures . . . with vast amounts of capital at their disposal and an enormous appetite for more.” ” I question some of the above. Why would the leveraged buyouts be dangerous practice? It reminds me of all the similar propaganda about Romney during the last presidential elections. Although “predatory” sounds very negative, in the investment business it is generally not considered to be a negative term. It means that the “predator” firm has the financial strength to absorb the risks associated with the acquisition of a “prey” – or financially much weaker company. And finally, just as in the wilderness vultures have a positive role, by getting rid of dead animals. The same is true in the real estate… Read more »
Ron
Guest

Istvan: I was curious as to why they picked Hungary, was it so many unemployed IT professionals in Hungary I could find no evidence for that. So why Hungary for a company that only thinks about profit and lots of it?

-Easy access to the EU (Hungary is becoming a hub for China), probably the Chinese (management?) will receive easier a visum in Hungary than any other EU country.
-To operate from Hungary you reduce culture clashes, time zone differences.

Other things that might have an impact:
Hungarian government is willing to co-operate with China, Russia, etc.
Tax reduction
Under the contract with students they need to work for the government, and this qualify as government. So cheap labor.

imri
Guest

@Eva, Origo reported on the Hernadi charade case (including the fact that Banhegyi was Galcz’s wife) already back in December, before you say Nepszabadsag did. I bet Lazar didn’t like that story, either.

http://www.origo.hu/itthon/20131211-beosztottja-pere-nyoman-menthetik-fel-hernadi-zsoltot.html

Istvan
Guest
Why would the leveraged buyouts be dangerous practice? A leveraged buyout or LBO is a type of aggressive business practice whereby investors or a larger corporation utilizes borrowed funds (junk bonds, traditional bank loans, etc.) or debt to finance its acquisition. Both the assets of the acquiring corporation and acquired company function as a form of secured collateral in this type of business deal. Often times, a leveraged buyout does not involve much committed capital, as reflected by the high debt-to-equity ratio of the total purchase price (an average of 70% debt with 30% equity). In addition, any interest that accrues during the buyout will be compensated by the future cash flow of the acquired company. If the acquired company’s returns are less than the cost of the debt financing, then bankruptcy can result. In addition, the high-interest rates imposed by leveraged buyouts may be a challenge for companies whose cash-flow and sale of assets are insufficient. The result cannot only lead to a company’s bankruptcy but can also result in a poor line of credit for the buyout investors. An example of an unsuccessful leveraged buyout is the Federated Department Stores. The Federated Department Stores had many stores in… Read more »
gdfxx
Guest

All I have to add to the topic of leveraged buyout (it’s not strictly a Hungarian topic, but I do think it applies to all countries based on capitalism) is that yes, there are dangerous, dangerous to the managements of poorly run companies (that’s why they try to save themselves with so called poison pills). Those who do the buyout generally do it with the intent of making these companies profitable. It doesn’t always work, but the targets of buyouts would most likely disappear anyway, this is their last chance. And yes, some of these buyouts do result in job losses (at least initially) and closings but the reason usually is that the level of employment and the size of the company are not supported by the company’s finances.

Steven
Guest

The wife was not the plaintiff (“felperes”). She was the “pót-magánvádló”, as far as I know, whatever it is in English. This person can be anybody, any private individual. His relation to the Abel does not matter.

Steven
Guest

(If it mattered, believe me, they could find someone else. Probably, they have more people than Abel and his wife.)

Steven
Guest

OK, to be honest, Croatia is a very corrupt country. However, in this particular case, the details of the charges against Hernadi were ridiculous. Based on these, the prosecutor’s office did nit start the case. (Even if it would have been good for Hernadi.)

I would say, this is a factoid, a non-case, a nothing.

wpDiscuz