What’s happening at the Buda-Cash Group? No one knows

On the evening of February 22, an entire police squad arrived at the headquarters of the Buda-Cash Group, a financial institution established in 1995. Despite its unfortunate name, it is not a payday lender. Among other things, Buda-Cash (BC) owns a network of eleven brokerage firms with 200 employees and about 20,000 customers and engages in financial advising and portfolio management. It also owns four small banks that formerly functioned as credit unions and that managed to remain independent at the time other credit unions were nationalized in 2013-2014.

The following day, February 23, László Windisch, one of the deputies of György Matolcsy, head of Hungary’s central bank (Magyar Nemzeti Bank), described in dramatic terms what he considers to be the greatest financial scandal in Hungary. The National Bank suspects that over the last fifteen years the top management of BC siphoned off as much as 100 billion forints of its customers’ money.

The National Bank is new to the business of supervision. Until about a year and a half ago a separate governmental body, Pénzügyi Szervezetek Állami Felügyelete (PSZÁF), supervised the financial sector. The last time there was a thorough inspection of BC was in May 2010, when some small irregularities were discovered but nothing substantial. By that time, PSZÁF had a Fidesz-appointed chairman, Károly Szász.

From day one people who know something about the world of finance in general and Hungarian finance in particular had their doubts about some of the details of the case. First of all, it soon became evident that the Hungarian National Bank, into which PSZÁF was incorporated, has not yet done any investigation. The police were gathering documents even as Windisch’s press conference was in progress. The second fact that bothered financial experts was the size of the alleged loss, as much as 100 billion forints. The sum total of securities currently held in Hungary is only 250 billion forints. To steal almost half of this amount without anyone realizing it is hard to imagine. Moreover, there were in Windisch’s announcement several indications that the Hungarian National Bank knows very little about the whole case. He talked about a “suspicion of possible wrong doing.” And when he referred to the size of the loss, he cautiously noted that “it may even be 100 billion.” Clearly, he was groping in the dark.


The following day came a new announcement. All four small banks owned by the Buda-Cash Group had to be closed. The response to this announcement was understandable panic. After all, the four banks have roughly 120,000 customers, among them about 80 municipalities which now can’t even pay their employees. Eventually, the National Bank decided to reopen some of these banks but limited withdrawals to 60,000 forints. Well, the municipalities won’t be able to do much with that amount of money.

Why were these banks closed? One theory is that the government through the Hungarian National Bank wanted to punish BC for managing to save its four credit unions from nationalization. Those holding this view are convinced that the four banks are in fact in good financial shape. They claim that in the last few months the Hungarian National Bank checked one of these banks at least six times and found everything to be in good order. Others are not so sure. They believe that the banks are in trouble and should be closed after their customers are fully compensated, as guaranteed by the bank law. And since the fund (Országos Betétbiztosítási Alap = OBA) that is supposed to make all depositors whole is financially strapped because of an earlier bank failure, the Hungarian National Bank would most likely have to come to the rescue. Therefore, according to those who dismiss the conspiracy theory, it is not in the interest of the National Bank to create a case out of thin air.

It remains unclear what’s going on with the Buda-Cash Group and its affiliates. Is the scandal real or imagined? The suspicion that it may be imagined was heightened this afternoon when Antal Rogán, head of the Fidesz parliamentary delegation, called the BC case a “socialist brokerage scandal.” Rogán claimed to know the details of the case. According to him, the owners of BC stole the money deposited in its banks by people of modest means. And BC had to be closely linked to the socialist-liberal government because, for example, Gordon Bajnai asked the chairman of BC’s board to become government commissioner in charge of the restructuring of MÁV (Hungarian State Railways). Bajnai also appointed Miklós Andrási, former manager of BC, to be the CEO of MÁV. Rogán added that Andrási was one of the founders of Fidesz, but once they discovered that he was “Bajnai’s man” the party broke all ties to him.

Fidesz is trying to make political capital out of a case we know practically nothing about. Understandably so. The top leadership of Fidesz was badly shaken by the loss the party suffered in Veszprém, a defeat that came less than two months before another by-election will be held in the same county. Moreover, there is the rapid loss in popularity of Viktor Orbán, his government, and his party. Orbán’s attack on refugees and migrants was allegedly devised to counter this trend. Some people are convinced that the idea came straight from the most important spin doctor of Fidesz, the American Arthur J. Finkelstein. Admittedly, it’s a clever move since Hungarians are not at all keen on immigrants. If the government can also show that its opponents are linked to an egregious financial scandal, so much the better.

Late this evening the Budapest Stock Exchange restored Buda-Cash’s right to continue its activities, admittedly with major restrictions. They can trade only in derivatives (currencies), not stocks, and can only close out positions they hold, not initiate new positions. This might be intended to be an orderly liquidation of the firm or simply a way to buy time for the investigation to play out. We’ll have to wait to see what the National Bank comes up with. I don’t expect any quick answers. As we know, the Orbán government is skilled in dragging things out.

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Hungary–what a wonderful country!
Twice! Twice governments have allowed Malev to defraud the public purse.
Now, a financial institution that was to have major inspections every five years turns out
to have been defrauded continually over the last ten years.

(And don’t you worry, little kiddies, as soon as the Russians get here you’ll get borscht
every day.)



(Hungary–the stinkhole of human existence.)


Oh yes, I’ve discovered a unique anthropological fact: Hungarians are not really from ancient
Mongol stock.
You see, the first Hungarian was not born of woman–he was written into existence by Moliere.

HAJRA MAGYAROK! (And pass the dog legs-)




“The last time there was a thorough inspection of BC was in May 2010, when some small irregularities were discovered but nothing substantial. By that time, PSZÁF had a Fidesz-appointed chairman, Károly Szász.”

The date of the Szász’s reprimanding letter is September 17, 2010.



Károly Szász headed the financial supervising authority PSzAF twice:

2000-2004 and 2010-2013


Szász was part of the Fidesz troika still in powerful position during the Socialist government after 2002.

(Polt – chief [defender-prosecutor], Járai – MNB chairman, Szász)

He was fired on May 18, 2004. His dismissal was judged unlawful on December 9, 2007.
He was re-appointed by Orban on July 1, 2010.


There is so many hints of insider trading all round you do have to wonder, why these guys and why now? When is the next by-election?


Question? Does anyone know who the auditor of this firm is? And did they gave a clean opinion? Normally, I would find this on http://www.kim.gov.hu, but this website is down, as well as other governmental websites, such as birosag.hu (it is up again, but without information on companies).

The biggest financial scandal today was Globex Holding. The total damage was HUF 8 billion. Fyi the liquidation started in 1998 and finished in 2011. 13 years? According to HVG and Gazdasagi.hu. And it took about 3 years to unravel what was going on? This comes out of the blue. There is no such thing.



A bit OT, but I am sure that it’s a relief for everybody that despite the outstanding performance of the national bank as a supervisor of financial institutions, the bank still has time to focus on it’s core business: buying art.



“Buying art”, and, lest we forget, ‘properties’ as well. Now, in the great mind of Matolcsy, it is necessary to open branch offices of the central bank in foreign countries.

I’ve never heard of the Bank of Canada, or other central banks, opening offices in foreign lands…
What geniuses Hungarians are!

(And in the meantime, the great unwashed go back to sheeping and mulling grass while ‘knowing’
that “it’s the jews… it’s the jews!!”

Seriously now, the mental state of Orban has to come into question:

a) How could he not ask Putin not to refer to 1956? It is really suggestive of their relationship–king to vassal–that Putin handled Orban so cavalierly;

b) Orban getting grossly rebuffed in Poland–a traditional ally of the right wing–suggests that
the great new Foreign Ministry didn’t properly prepare the trip…no doubt because Orban hasn’t
directed them to. In other words, Orban is plainly, masochistic.


The inherited and still current “Hungarian Way of Thinkibng” is the communist rhetoric about Capitalism” being a territory of evil trickery and deceipt.

The population still wakes up each day believing it is necessary to practice such behavior in order to surive in the “new” (25 year old system).

Hence you get Buda-Cash, or Fidesz, and the other previous power brokers. Adn in society you get the interpersonal hatreds at all functions and levels.

It is a lighter version of ISIS going nuts.

Consequently the average population suffers seriously


Possibly Hungarians have heard of Bernard L. Madoff Investment Securities LLC and the fact that Mr Madoff embezzled $65 billion from the 1980s through 2009. Just like the Buda-Cash Group case the supervision of the US government was superficial as was the supervision of the Hungarian National Bank over Buda-Cash.

The history of what we call in the USA Ponzi schemes is probably as old as capitalism itself. Really none of our investments are fully secure in this world whether they be in Budapest, Zurich, or here in Chicago. We hope various insurance programs protect our investments from outright theft, but those have there limits too. The best policy is diversification of investments and hope for the best.


Madoff was the comeuppance for rich man’s greed: only a very few circumspect individuals escaped Madoff’s trap, and all one had to do was ask: how does he do it? One wise investor’s counsellor posited that simple question and when he couldn’t find the answer, advised that his client should not invest.

Of course, Barnum was right: ‘there’s a sucker born every minute’. But the con man’s dictum that you ‘can’t cheat and honest man’ is also right. One could add to that: ‘you can’t cheat a non-greedy man’, either.

I remember that one of Madoff’s victims was an eighty-some lady who lived alone in an apartment and invested all 3 million of her dollars (3,000,000!!!) and lost it all. Now, pray
tell, what did an 80 year old want with an extra 100 or 200 hundred thousand dollars?
Beats me. But I had zero sympathy for her plight.


Place of the speech is most appropriately chosen: the Castle-Court Bazaar!

Here, here! Everything on sale – for a price! This is the country, where even the corruption ‘getting stronger’, here, here..!

@Istvan: I read your offerings with a jaundiced eye: several times I’ve noticed your backhanded insults of the US. Madoff is nowhere comparable to what Buda-Cash has perpetrated. For one thing, in Hungary,there were a lot of people in decision-making positions involved. The connivance of the government, whether MSZP or Fidesz, and of course some judges, is part of it. Madoff was a one -man operation in which, maybe, only his sons and a financial officer was aware of what was going on. Sure, oversight was mishandled, but Madoff himself was once the head of the oversight office of the stock market in New York. We all know that Republicans with their hand-off policy of investment institutions were guilty of what has happened since 2008. But that was liberality disguised as making it possible for ‘everyman’ to own his own home. Still, there’s no comparison between US malfeasance and the toxic version of Hungaricoes. For one thing, the missing 100 billion forints represents 40% of all invested money in the country. The magnitude of the harm is in no way comparable. What’s more, America has a population of 350 million, and they have resources with which to recover. Hungary, with… Read more »

Orban is flooding his audience with lies.


I make no back handed insults to my country, but I do not cover up for its short failings either. Embezzlement is a world wide reality, it is not limited to the Hungarian genetic code, if such a thing exists.

Mr. Madoff the former non-executive chair of NADAQ, but not the governmental body called the SEC. For a good article on this see http://www.forbes.com/2009/01/27/bernard-madoff-sec-business-wall-street_0127_regulators.html


Fidesz lost in Veszprem, this proves that there is democracy in Hungary, according to Orban.


The lawyer of two of the owners of Buda-Cash has confirmed that the 100 billion number is the right order of magnitude of the missing assets.



According to the official story the broker Buda-Cash has been closed because vast amounts of its customer’s money have been disappearing over a period of more than ten years. In addition some small regional banks owned by the same persons who own Buda-Cash have been temporarily closed in connection with the investigation of Buda-Cash.

The press has dutifully kept its focus on Buda-Cash and not on the catastrophy and chaos created among villagers, who were silly enough to keep their money in the Takarek after the savings bank was confiscated by the Fidesz government and given to friends.

Don´t worry about the customers of Buda-Cash. They know about risk. Worry about the customers of the stolen savings banks that seem to have been ripped off once more. It began two years ago, not 10+ years ago.


A primer into fidesznik gerrymandering aka how to steal the elections “legally” so that even election observers will give their stamps of approval.



The Orban speech, I think he showed that he’s not conceding an inch, protects Habony, Szijjarto etc. to the last bullet (after all he has nobody he can trust besides them), everything is perfect in Hungary, there are no problems, Hungary leaps from triumph to triumph.

I think very soon nobody will give a sh*t about what he says, about anything really.

I wonder if people like Martonyi (who of course were in attendance) think, don’t they realize that Orban will soon be like Kádár mumbling crazy shit? Come to think of it, Janos Martonyi was one of the last (if not the very last) person to apply for and receive the communist party membership in 1989, when on Szabad Európa Rádió (Radio Free Europe) everybody could hear about the establishment of new parties etc.

People will sooner or later say: yeah, that’s just, you know, what that crazy, deranged, clueless leader says, never mind him.

Orban will still be mumbling about victory when the prison door will close behind him.


11 DEC 2014