Back in August 2014 I wrote a post with the title “The Hungarian Central Bank goes on a buying binge.” If I had known what would follow, I would have chosen a more modest description. Spending has continued unabated. Up to that point the Hungarian National Bank had purchased only two pieces of real estate: a former castle-hotel in Tiszaroff for €1.3 million (415 million HUF) and the Eiffel Palace in Budapest for €57.5 million (18 billion HUF). Since then more property was purchased, not directly by the Hungarian National Bank but rather by the foundations the National Bank established. The purchases were made by György Matolcsy not as the chairman of Hungary’s central bank but rather as the CEO of these handsomely-endowed foundations. In my original post on the subject “only” 200 billion forints had been sunk into these foundations. The latest figure I heard was 300 billion.
Matolcsy has expensive taste. He seems to be especially fond of the pricey buildings in the Castle district of Buda. It is here that Matolcsy, or rather his “foundations,” bought three buildings not far from one another, ostensibly for educational purposes.
One of Matolcsy’s foundations, the Pallas Athene Domus Animae Foundation (PADA), purchased the first of the three buildings: the former Buda City Hall (Úri utca 21) that served the city until 1873 when Buda, Pest, and Óbuda joined to create Budapest. The price was 1.85 billion forints. Apparently, Matolcsy is planning to open a tavern, a wine museum, and a restaurant downstairs while a “doctoral school for economists” will be located upstairs. The idea of the National Bank running a tavern is quite a hit in Budapest.
The next building acquired by the same PADA foundation is the Lónyai-Hatvany house (Hunyadi János út 26), which is known to be the most expensive piece of property in Budapest. The foundation paid 11.2 million euros (3.4 billion HUF) for it. It was originally built for Menyhért Lónyai, prime minister between 1871 and 1872. The house was then purchased by Ferenc Hatvany, an art collector and patron of the arts. The place was once filled with paintings by El Greco, Cranach, Courbet, Renoir, Pissarro, Picasso, and the best of Hungarian artists. Many of these paintings were subsequently hidden in various bank safes, but 168 of them were “liberated” by the Soviet troops. They were discovered in 1991 in Nizhny-Novgorod. The building, which is only half-finished, is a replica of the original, which was leveled by a bomb. Apparently, Matolcsy would like to open a restaurant here as well.
The most fascinating story concerns the third building. It was acquired by the Pallas Athene Geopolitikai Alapítvány (PAGEO) and will be transformed into “a research and educational center.” The purchase price was 795 million forints. This building, which stands at the very end of Úri utca (number 72), has a most unusual history. Many old cities, especially those built on hillsides like Buda, had an underground labyrinth through which one could traverse practically the whole inner city. This is especially so in Buda, where there are several fairly large caves. Úri utca 72 is one of those houses beneath which there is an underground labyrinth that connects several larger and smaller caves. In 1936, when the Hungarian government began worrying about the possibility of war reaching Hungary, in great secrecy it purchased the property. It wanted to have a safe place to deposit Hungary’s gold reserves and the Holy Crown. Anyone who’s interested in the details and knows Hungarian should read the story of the “bunker” by Balázs Szabó. Perhaps Matolcsy was inspired by the fact that the underground “bunker” was once in the possession of the Hungarian National Bank.
The bunker under the building, according to the photos taken in the 1990s, is in pretty bad shape. But it looks as if the foundation has plans to utilize it in some way. The plans 444 got hold of are too general to know exactly what Matolcsy has in mind, but 444 is almost certain that it will be a three-story structure that will include a wellness center. The reporters detected several jacuzzis, a large swimming pool, and several saunas. That would be the lowest point of the “bunker.” From there a 150-160 m. tunnel, 35 m. underground, would lead to another building on Attila út.
Knowing the paranoia of Fidesz politicians, I wouldn’t be at all surprised if the real purpose of the “bunker” is to provide a safe haven for the treasures of the National Bank as well as a secure retreat for members of the government.
PAGEO denies the very existence of such plans, with or without a wellness center. But somebody drew up plans, and they look like this:
In addition to these valuable properties in the Castle district, I should mention two more buildings in Budapest. One is a four-story building in downtown Budapest (Kálmán Imre utca), which was bought in 2014 for 450 million forints. Of course, the buyer was one of the foundations (Pallas Athene Domus Scientiae Foundation). The other building is a luxury villa on Mátyás Király út in the expensive Svábhegy district in Buda. It is in close proximity to Matolcsy’s official residence. Naturally, it was purchased by a foundation, this time PAGEO. Previously the building was owned by the Budapesti Francia Iskola és Gimnázium.
The Bank is also planning to spend another 411 million forints to add an extra floor to the Eiffel Palace, which was purchased in 2014 for the very inflated price of 18 billion forints. This floor would be the exclusive space of the National Bank. Currently the whole building is rented out to various firms, but this top floor would serve as offices for the highest officials of the bank, including the office of the chairman. There would be conference rooms, a library, a large lecture hall, etc. So, basically, the top echelon of the bank would move to the eighth floor of the Eiffel Palace.
A less glamorous purchase was the building of the County Hospital in Kecskemét. The price of the 2015 purchase was 1.7 billion forints. The building is close to the already existing Technical School of Kecskemét College, established only a few years ago, where Matolcsy is planning to have one of his schools of “unorthodox economics.”
The Hungarian parliament, in near record time, voted to make all transactions of the National Bank and its foundations secret for thirty years. According to all responsible legal scholars, moving public money into private foundations is unconstitutional. Even President János Áder, who rarely has compunctions about bills the Fidesz-majority parliament sends him, was taken aback by the audacity of the whole affair. He had the courage to send the bill to the constitutional court for review. Sometime in April we will find out what the Fidesz loyalists of the court will do. Perhaps they will deem the bill unconstitutional. But even if they rule against the Hungarian parliament, the court is so tainted by now that most critics of the administration will be convinced that the decision wasn’t reached independently but at the order of Viktor Orbán, who came to the conclusion that Matolcsy had gone too far and that his business affairs reflect badly on him and his government.