I have been remiss in the last few weeks in not following up on the collapse of a number of Hungarian financial institutions. I did write about the bankruptcy of the Buda-Cash Group, which owned several credit unions that were shuttered as well as a brokerage firm. But I said nothing about Hungaria Értékpapír (Hungaria Securities), which declared bankruptcy soon after Buda-Cash’s announcement. And then on March 9 came the collapse of the Quaestor Group. In the case of Buda-Cash, Fidesz politicians and officials of the Hungarian National Bank claimed that its problems started at least fifteen years ago and therefore the socialists were responsible for its financial demise. The same trick couldn’t be used to explain away Quaestor’s problems because the CEO of the Quaestor Group, Csaba Tarsoly, had for years worked closely with the Fidesz government and people close to Viktor Orbán himself. Tarsoly also had a role to play in the government’s “eastern opening” and all the corruption cases that surfaced there.
I’m not even going to try to map out the complicated business arrangement that will most likely enable Tarsoly to save his skin and keep the money he stole from his unsuspecting customers. After all, the Quaestor Group had 68 affiliated companies, among which large sums of money changed hands.
At the center of the current controversy is the sale of billions of forints worth of Quaestor bonds. Hrurira, one of the Quaestor Group companies, handled the issuance–60 billion of bonds that were approved by the National Bank and 150 billion that were “fictive.” Quaestor Értékpapír Zrt. sold the bonds to unsuspecting clients. The money that came from the sale of the bonds was transferred to Quaestor Pénzügyi Tanácsadó/Quaestor Financial Consulting, the parent company, in the form of a loan. The company that is now under scrutiny, Quaestor Hrurira, has no assets. It could repay the customers that bought bonds from Quaestor Értékpapír Zrt. only if it could collect money from the Quaestor Pénzügyi Tanácsadó, from which Csaba Tarsoly departed. On March 16 he named a new CEO–Béla Orgován, a penniless, unemployed man with a prison record. Déjà vu all over again. Josip Tot, Kaya Ibrahim, and the halcyon days of Fidesz.
There is a strong indication that the Hungarian government has been lending a helping hand to Tarsoly so he can keep at least part of his ill-gotten money. While business associates of Buda-Cash and Hungaria are in custody, Csaba Tarsoly is free and, according to neighbors, is in the process of packing. Over the last few days we kept hearing that he will be arrested soon, but he hasn’t even been questioned by the police.
And who is Béla Orgován? 444.hu found the man who will have to face the music when Quaestor’s customers demand their nonexistent money. And, according to some sources, a lot is at stake: 150 billion forints, presumably the amount earned from the sale of the “fictive” bonds, disappeared on Csaba Tarsoly’s watch. Orgován is a 38-year-old unemployed man who lives in the village of Tápióság in Pest county. He apparently has been in jail several times, mostly for robbery but once for attempted murder. His children are already grown, and he and his wife have several grandchildren. I would say he is a perfect person for the job. In the last twenty some years there have been several down-and-out, often homeless people who for a few thousand forints were tapped to serve as CEOs of bankrupt companies.
The Hungarian government’s less than rigorous pursuit of the Quaestor case and its generosity toward Tarsoly most likely has something to do with the fact that the government and Quaestor had some joint business deals. As we just found out yesterday, the Hungarian National Trading House that functions under the ministry of foreign affairs and trade had an account at Quaestor. (In Hungary, where hometowns often matter, it may not have been irrelevant that both Foreign Minister Péter Szijjártó and Csaba Tarsoly are from Győr. Moreover, until March 9, 2015, Tarsoly was the owner of the Győr ETO FC team, which is a good recommendation in today’s Hungary.) For the Trading House to have money invested with Quaestor or any other brokerage firm is against the law. All state money must be kept in treasury bonds. The amount of money involved is unclear. Some people talk about 25 billion forints. According to Tamás Katona, former undersecretary of the ministry of finance, for such a large amount of money to have landed at Quaestor must have had the blessing of Szijjártó himself.
So, we have the illegal deposit of a large amount of government money at a private firm, which is bad enough, but what follows is truly outrageous. A day before the collapse of the firm an official of the Trading House decided to take out its money, thereby saving the taxpayers’ money. What a coincidence! What fantastic financial acumen! It will be hard to deny the likelihood of insider information.
Apparently, the Trading House was not the only one that had large amounts of money at Tarsoly’s firm. There were other state companies as well, and it seems that they were all affiliated with Szijjártó’s ministry. We don’t know whether they suffered losses or whether Tarsoly warned his friend from Győr ahead of time, thereby protecting the accounts of such institutions as the Hungarian Export-Import Bank and Hungarian Export Credit Insurance.
Naturally, the ministry spokesman denies any wrongdoing. First of all, he claims that these state companies had a right to place their capital with an outside firm. The spokesman also claims that they chose Quaestor because it was the only firm that provided its services without any charge whatsoever. Well, yes, I scratch your back, you scratch mine. We all know how it goes. And if there’s a problem, Quaestor may offer a lifeboat to the government while individual bondholders are left to sink.