In the summer of 2013 an interview with Andy Vajna appeared in Gentleman Magazine, a Hungarian publication. The young reporter asked Vajna how he copes with the fact that “his life is an open book,” even though the public is normally interested only in directors and famous actors and actresses, not in producers. Vajna attributed the curiosity about his life to Hungarians’ desire to learn how he managed to go from a penniless refugee to a rich, well-connected businessman.
It is true that, in Hungary, the media attention on him is intense, but not because people want to find out how to become a multimillionaire. Vajna is an influential government official who is fast becoming a cog in the mafia state’s corrupt machinery. His business ventures have been so substantially aided by the Orbán government that one cannot help thinking that Vajna plays a critical role in the operation of Orbán’s mafia state.
I recalled a picture that appeared in Origo back in July 2000 when Arnold Schwarzenegger visited his old pal, Vajna. Orbán seemed to be more impressed with the Terminator than Schwarzenegger was with the prime minister of Hungary. How much Orbán knew about Vajna’s shadier side and his troubles with the law at that time is difficult to tell, but I suspect that by now he is fully aware of Vajna’s skill in hiding income in offshore companies. Vajna has had ventures all over the world, and he is a sophisticated international business player. For a country boy from Felcsút Vajna must be a tremendous asset.
Perhaps if American investigative journalists had scrutinized Vajna’s financial affairs as thoroughly as Hungarians have in the last four years the IRS would have had an easier time unraveling his “system of byzantine offshore companies.” It was Babett Oroszi of Átlátszó.hu who triumphantly announced in October 2014 that she could chart sixteen different businesses connected in one way or the other to Andy Vajna. Vajna is not listed as an owner of any of these companies but, as the chart attached to the article shows, all of the companies are supervised by Andy Vajna, not as an owner but as “chairman of the board,” “president,” or the beneficiary of a “revocable trust.” Who the actual owner or owners are remains a mystery.
I will not even try to reconstruct this “byzantine system,” which was after all devised to mislead. Instead, I would like to focus on how Andy Vajna managed to get hold of 80% of the value of Hungary’s casino industry, including one very profitable casino which until now was run by the state-owned Szerencsejáték Zrt. Szerencsejáték (Gambling) is the company that is in charge of the state lottery, lottó.
Last year it was announced that there will be eleven casinos in Hungary, five of which will be located in Budapest or in Pest County. These are the most profitable ones. And they are the ones that Andy Vajna will be able to operate for a ten-year period. According to calculations, once all five casinos are in operation Vajna will earn about $30 million a year. As Budapest Beacon rightly noted, “the state appears to have surrendered the whole industry to two or three players” and gave away its most profitable casino, Tropicana, currently operated by the state.
But that’s not all. While every itsy-bitsy store must have its cash registers electronically linked to NAV, the Hungarian tax agency, casinos will be exempt. János Lázár’s explanation for this exemption wasn’t convincing. According to him, casinos are exempt because (1) they don’t have to provide receipts, (2) they pay gambling taxes, and (3) electronic cash registers are supposed to monitor the proper payment of VAT and casinos don’t pay VAT. Well, yes, but these cash registers also monitor revenue. In the case of casinos, therefore, the state will have no way of electronically knowing how much money they take in and pay out. It will have to rely on self-reporting.
And that’s not the only fishy business here. Both the Hungarian state government and local governments are strictly forbidden to deal with any company whose ownership is not transparent or whose headquarters are offshore. And, as Átlátszó.hu showed, all of Andy Vajna’s companies are registered offshore. But the Hungarian government doesn’t seem to be at all bothered by this fact. When confronted with this discrepancy between stated principle and practice, Lázár didn’t even try to explain it away. He offered the feeble explanation that Vajna might pay taxes only in Luxembourg, but he is a Hungarian who spends his net income “at home.” Incredible.
Combing through the available evidence, I’m convinced that the government had a well crafted plan to hand over control of the gaming industry to trusted friends. Their plan started in 2010 when they closed down all small business franchises that operated slot machines. Then they granted the eleven casino concessions to people close to the prime minister and the party. Information coming from Fidesz circles indicates that it was Viktor Orbán and Andy Vajna who together reorganized the gaming industry. According to Heti Válasz‘s revelations, about one billion forints of Vajna’s casino profits have already been moved outside the country. Moreover, the latest reports claim that all of his Hungarian businesses are set up in such a way that their profits could easily be transferred abroad.
I assume that no one believes that all the money that comes from these five lucrative casinos ends up in Andy Vajna’s pocket. A recent article frames the question this way: “We have no information as to where the profit of the casinos after the redistribution will land. Does the profit stay with Vajna or it will flow to companies close to Fidesz or even higher? No other rational explanation can explain why it was Vajna who ‘was given’ the lucrative casino business.” Indeed. As far as the “even higher” is concerned, surely the writer has Viktor Orbán himself in mind.
I would add another possibility in addition to the above theory. Andy Vajna most likely not only provides invaluable information but actively assists Viktor Orbán in creating his own offshore paradise. I’d bet the prime minister has learned a lot from Vajna in the last fifteen years.