Hungarian prosecutors found the lone culprit in the corruption scandal

Between October 17  and November 13, 2014 I wrote four posts on the corruption scandal that beset U.S.-Hungarian relations and contributed to the loss of popularity of Fidesz and the Orbán government a year ago.

It all started with an article that appeared in Napi Gazdaság, precursor of today’s Magyar Idők, then owned by the Századvég Economic Research Group headed by the economist-businessman Péter Heim. The article accused several American companies of tax evasion and fraud and indicated that an investigation into these companies by the National Tax and Customs Office (NAV) was underway. It turned out later that the information, wherever it came from, was wrong. If anything, the opposite was true. American companies found widespread VAT fraud in the food processing industry, where the VAT is exceedingly high (27%). They were the ones who complained in vain at NAV and other government agencies. The Hungarian government did nothing. The complaints of American businessmen eventually reached the U.S. government, which decided to invoke Proclamation 7750, an executive order signed by George W. Bush in 2004 that gives the State Department power to ban corrupt individuals and their families from entering the United States. The U.S. normally keeps such action quiet, but as a result of either Napi Gazdaság‘s or the Hungarian government’s misjudgment of the situation, the decision was made to reveal that six Hungarian citizens had been banned.

Soon enough it became known that Ildikó Vida, head of NAV, was on the list. We also learned that an unnamed businessman, who in total panic ran to ATV to tell his sad story, was among the six. Vida admitted that some of her high-ranking colleagues at NAV were also on the list. Another man whose name was often heard in connection with the infamous list was Péter Heim, owner of Századvég Economic Research. This suspicion found some support when, a month after the the scandal broke, Heim sold his shares in Századvég. My opinion at the time was that, in addition to Vida and the unnamed businessman, two officials of NAV (both women) and Péter Heim were most likely on the list.

The Hungarian government insisted that they could not investigate the cases of these people because the U.S. government refused to release the names of those on the list. Of course, as we learned from some cabinet members, the upper echelon of the Fidesz team knew full well who had been banned.

It turns out that, after all, an investigation of the case began immediately after the scandal broke. And now, after a whole year, the prosecutor’s office of the capital district announced their findings. They didn’t reveal the suspect’s name but gave enough information about him that in no time everybody knew that the man is Viktor Tábor, a successful businessman, the sole proprietor of Advanced Network Technologies (ANT) whose yearly revenue is over a billion forints. ANT has an excellent reputation with a well-known and well-respected clientele. Tábor is being indicted for committing bribery while pretending to have influence over a certain person. And who is this person? Péter Heim, head of Századvég.

According to the story of the prosecutor’s office, Bunge, an American company that produces cooking oil under the name Vénusz, hired a lobbyist to convince the Hungarian government to lower the VAT on cooking oil and other basic foodstuffs from 27% to 5%. The lobbyist turned to Viktor Tábor, whom he knew had many friends in government circles. Tábor informed the lobbyist within a few days that he had approached Péter Heim, head of Századvég. Heim, he said, would be able to help if Bunge deposited two billion forints into the bank account of the Századvég Foundation. (A former employee of Századvég, the well-respected professor of economics Tamás Mellár, described Századvég as a “money laundering operation.”) However, after an investigation that the prosecutor’s office called very thorough, it was determined that Péter Heim didn’t know Tábor and therefore had no role to play in the corruption scandal. The only suspect is thus Viktor Tábor.

Péter Heim of Századvég

Péter Heim of Századvég and other media outlets expressed doubts about the accuracy of the prosecutor’s office’s version of the story. They called attention to the fact that Napi Gazdaság, owned by Századvég, was the newspaper that tried to divert attention away any Hungarian involvement in the case by accusing the American companies of wrongdoing. They also found it suspicious that Heim sold his shares in the company within a month after the outbreak of the scandal. And third, they noted that Tábor said he was asked to deposit the money into the Századvég Foundation bank account, not into his own.

Doubts about the veracity of this official story were further heightened by a telephone interview conducted by Antónia Mészáros of ATV with Péter Heim.‘s headline read: “Nobody spoke less convincingly about the expulsion case than that.” Heim kept repeating in answer to every question that “he doesn’t pay any attention to such matters.” He knows that he is innocent, and since he didn’t want to travel to the United States, he never inquired from the American Embassy whether he is on the list. He doesn’t know anything about the ban or any corruption cases. Although he is still the CEO of Századvég, he is not involved in the day-to-day running of the business. He has no idea whether lobbyists approach Századvég or not, and he has no idea why his name popped into Tábor’s head in connection with Bunge’s efforts to reduce the VAT on its products.

The most interesting development in the case is an interview with the so-called lobbyist hired by Bunge. His name is Tamás Torba, and he is an economist who has in the past written articles on economic matters for Magyar Nemzet. So, it was not surprising that Torba approached the paper for an interview in connection with the case.

First, Torba was not employed as a lobbyist. He has been a business partner of Bunge ever since 2012. His job was to try to use communication tools against the widespread fraud in the industry. In early 2013 the Orbán government kept signing “strategic partnership” contracts with different companies, and the idea came up within Bunge’s management that perhaps it might not be a bad idea to see whether such a partnership agreement might help their disadvantaged position vis-à-vis those who cheat on VAT and are therefore able to sell their products cheaper. It was at that time that Torba turned to Tábor, an acquaintance of his. Tábor didn’t think that the government wanted to sign a partnership agreement with Bunge, but perhaps they would be able to achieve a reduction in VAT. The price was 2 billion forints. Bunge immediately distanced itself from such an illegal practice. Instead, Bunge developed its own strategy that involved getting together with all the domestic producers of basic foodstuffs to attack the problem. Torba became the spokesman of this organization.

Torba also talked to important people in NAV about the problem at the request of the American Embassy in Budapest. The diplomats were trying to penetrate the wall of silence in NAV, and they hoped that perhaps Torba could do something. The message Torba delivered was that the U.S. would lend all possible help, including financial and technical, to combat VAT fraud. However, if NAV continues stonewalling, they are ready to use sanctions against those persons they consider culpable.

The prosecutors have made it clear that Ildikó Vida is not a suspect. As they put it, “she is not involved in this case,” which of course doesn’t preclude the possibility that she is involved in some other case. But then, why is she on that infamous list, the reporters asked. The only answer the prosecutor in charge of the case could give was that perhaps the “Americans supposed that no investigation was taking place” and that was the reason Ildikó Vida’s name appeared on the list “when in fact behind the scenes an investigation had been going on ever since the winter of 2013.”

I have my grave doubts about the prosecution’s version of events. I can’t believe that the United States on such flimsy evidence would invoke Proclamation 7750 against these six people. I have the feeling that this will not be the end of the story.

♦ ♦ ♦

Further readings from Hungarian Spectrum:

(1) “Ten Hungarian businessmen and government officials can never enter the United States”

(2) “American-Hungarian relations are crumbling”

(3) “No end to the saga of the Hungarian corruption scandal”

(4) “The tax chief Ilidkó Vida versus the Hungarian government: Who is lying? Most likely both”

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December 20, 2015 2:15 am

So its business as usual in the Orban government –

Control, control, control
Corruption, corruption, corruption
Lies, lies, lies
Cover-up, cover-up, cover-up
Nothing to see here folks, nothing to see here…

December 20, 2015 3:48 am

And don’t forget the Hungarian maxim:
It wasn’t me – it’s always someone else’s fault!

December 20, 2015 5:54 pm

Hungarians never admit a fault.

Hungarians NEVER apologize.

Albrecht Neumerker
December 20, 2015 4:16 am

Andras Horvath made the prosecutors office aware of the VAT fraud business, I think sometime in October or November 2013. He gathered the information in the well known “Green file”. He missed his job at NAV and he and his family were threatened. I was really worried for the guy. He is a Hungarian I could be proud of. He doesn’t sell his soul for money. He looks smart to.

December 20, 2015 6:00 am

Eva – George W. Bush couldn’t have signed any executive orders in 2000. He didn’t become president until January 2001.

December 20, 2015 11:01 am

I suspect Eva is correct, the US had developed evidence against NAV. It was provided to the Hungarian government without revealing covert sources. The Hungarian National Bureau of Investigation sat on this information and then the US Embassy made its move.

What must be frightening for the corrupt Fidesz officals in all of this is how easy it was fro the US Department of Justice and the FBI to follow the money trail up to the top of NAV. If they know this, what do they know about Swiss bank accounts held by high level Fidesz officals? For crooks these kind of thoughts can cause one to lose sleep, especially since it could involve international law enforcement agencies like Interpol and Fidesz politicans could get picked up while on their Swiss vacations.

Let’s recall the US government broke open the hidden Swiss bank accounts of US multi-millionaire tax evaders and forced the Swiss to report income hidden in these accounts producing billions in revenue for the IRS. In the Western movies it’s called the long arm of the law.

December 20, 2015 12:40 pm
So, after a year of “investigating” during which the Hungarian government, which has been kicking and screaming like a two-year-old that it doesn’t know anything about corruption, seems to acknowledge that it has had evidence of criminal corruption all along. And yet, surprise!! no one in either the NAV or Szazadveg is involved — just an hapless entrepreneur who, for some reason, rather than continuing to make billions from his tech acumen, came up with a one-off scheme ou of the blue to solicit a bribe from a major US company. After more than a year spent saying that rather than the rampant corruption, the major issue was lack of accountability, the Americans must be shaking their heads in dismay at the predictable “point the finger at someone else” approach of the Hungarian government (so in line with its approach to its handling of migrants, or anti-Semitism and the Homan statue, etc.). And during that past year, the Americans began speaking not just of corruption among Hungarian government officials, but of systemic corruption, which is exactly opposite to the lone wolf corruption that the Hungarian government “investigation” would like to portray. Instead, it is clear that corruption is an integral… Read more »
December 20, 2015 6:23 pm

Orban regime =

= middle aged bumpkins’ kleptokratic retrograde revolution to the Middle Ages