Citizenship for sale for the benefit of private individuals

It was in 2013 that the Hungarian government introduced a program aimed at boosting investment in government bonds. Like many other countries, they embarked on “selling” Hungarian citizenship to well-heeled foreign businessmen. In the Hungarian scheme, foreigners had to buy €300,000 worth of five-year government bonds. This was a cheap way of becoming a Hungarian citizen within six months of the bond purchase and of thereby gaining free access to all the EU member states. In other countries that “sell” citizenship, the bar is set higher. In the United States, for example, in order to qualify for a EB-5 visa, a foreigner must invest $500,000 in a project or business that will create at least ten new jobs in a high unemployment or rural area.

Yes, Hungarian citizenship is in fact dirt cheap, even when a handling fee of €40,000-50,000 is added. Who profits from this program? Not the government, as I will show below. The beneficiaries are the foreigners who gets the citizenship and, more worrisomely, private companies that handle the transactions. The task of granting citizenship was handed over to intermediaries that make a fabulous profit. Not only do they receive a handling fee, but the government sells them these special government bonds worth €300,000 for only €271,000. Thus on each bond the intermediary makes about €70,000. According to Magyar Nemzet, between 2013 and 2015 3,358 such settlement bonds were sold.

The Hungarian government entrusted the sale of these bonds to six companies, each assigned a geographically defined area. The luckiest of all is the Hungary State Special Debt Fund (HSSDF), which is responsible for applications from Russia and China. In last three years it sold almost 3,000 settlement bonds for a very handsome profit of 2 billion euros. VolDan Investments (former Soviet republics) sold 233, Arton Capital (Islamic countries) 176, Discus Holdings (Azerbaijan, Kazakhstan, Thailand, Indonesia) 45, Euro-Asia Investment (Singapore) 50, and Innozone Holdings (India) 22. All of these companies are registered offshore–in the Cayman Islands, Liechtenstein, Cyprus, Singapore, and Malta.

It doesn’t matter how you look at this arrangement, it is a bum deal for the government. Instead of encouraging direct investment of the sort the United States introduced about 30 years ago, in the Hungarian scheme the future citizen merely lends some money for five years which will have to be paid back with interest. It is almost as if the whole scheme was designed to siphon off public money and pass it on to select individuals. After all, the government gives a 10% discount on the bonds to the intermediaries, who also receive the very steep handling fee. The loss to the Hungarian treasury (assuming the government processed the applications) is about €70,000, or 23% on each bond. The explanation at the time the scheme was introduced was that the Hungarian government needs local people who know the lay of the land.

Although the issuance of settlement bonds is certainly not a new story, it came to light recently that Viktor Orbán’s mystery advisor, Árpád Habony, may be connected to the three most profitable companies involved with the government bond business: HSSDF, Arton Capital, and VolDan Investments. The owners of the first two are known, but we know practically nothing about VolDan. According to Heti Válasz, the owners of VolDan are Shabtai Micheli, a Georgian-Israeli businessman, and Michael Gagel, owner of a chain of bakeries located at Budapest metro stations. Heti Válasz discovered that these two people have close connections to Andy Vajna, Árpád Habony, and their families. It also looks as if Habony has something to do with Arton Capital through his lawyer. Finally, HSSDF’s Chinese management back in 2013 wanted to acquire the coveted TV2 television channel from the German owner with the assistance of the influential advisor to Viktor Orbán, Árpád Habony.

One of the very few photos Viktor Orbán and Árpád Habony can be seen together

One of the very few photos where Viktor Orbán and Árpád Habony can be seen together

Of course, Heti Válasz is grasping at straws. Hungary is a small country, and it is quite possible that businessmen with ties to Fidesz and Viktor Orbán are in close contact with one another. But the question of how Habony earns a living has been an intriguing puzzle for the Hungarian media.

We know very little about Habony’s background, and the little that is available is not very believable. Here is one example. According to the bits and pieces of biographical fragments about him, his grandfather was a high-ranking officer in Miklós Horthy’s army. But this fact couldn’t possibly explain why his parents in 1982 wanted to take him out of school after eight-grades to become an auto mechanic. By then the days were long gone when the grandson of a high-ranking officer couldn’t attend gymnasium or receive a university degree. The story doesn’t ring right. At the end he attended a high school, specializing in fine arts, at night. By the end of the first Orbán government he worked in a museum restoring works of art. It is not known how, but after the municipal elections of 2002 he became a communication and campaign strategist for Fidesz. He was the one who came up with the 2006 Fidesz slogan that “We live worse” than in 2002. Since it was a blatant lie, the whole campaign became an object of scorn. And yet, after the lost election, he became the “personal strategic chief advisor” of Viktor Orbán.

Árpád Habony is known for his extravagant life style despite no sign of any legitimate income. He has a small business called “Color Inks,” which in 2011 and 2012 made no profit and in 2013 actually lost money. Yet in 2015 he established a political advisory company, Danube Business Consulting Ltd. in London, along with Arthur Finkelstein, the strategic advisor to such Republicans as Richard Nixon and Ronald Reagan. The man has money, but no one knows from where. Or, to put it differently, most people are convinced that his money comes from the Hungarian government through some secret channel which has yet to be discovered. It is possible that Habony is one of the beneficiaries of the settlement bonds scheme. He may have been instrumental in the final selection of the lucky companies that sell bonds for Hungarian citizenship, companies that may in turn return a portion of their profits to their facilitators. So far this is mere speculation.

March 20, 2016
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Istvan
Guest

Totally of topic and related to the March 30 education action. This Népszabadság article http://nol.hu/belfold/nem-lesz-kockasinges-part-a-tanitanek-mozgalombol-1607085 is a summary of a discussion that took place on Saturday at the Round Table for Democracy through Participation (Sword) Association forum basically on the goals, objectives, and complexities of the March 30 actions around education in Hungary. Pukli was present at the forum along with Mendrey from PDSZ, Gabor Krasznai (the Parents Uniting Our Children’s Future organization), and others, Galló was not there. The description of the discussion in the article is very interesting and it was video taped, but as yet I have not found it on line.

Lastly yesterday, this article by Daniel Mikecz (research fellow at MTA Társadalomtudományi Kutatóközpont Politikatudományi Intézet)appeared http://tablet.magyarnarancs.hu/republikon/a-sztrajk-mint-politikai-eszkoz-98653 which in its tone raises let us say potentially revolutionary implications for the March 30 actions which I suspect Eva will be in harmony with, and I believe is an over reach. But in any case is well worth reading.

Member

Habonyi’s money is coming from the same place where the money to Andy Vajna, Lorinc Meszaros, Aniko Lendvai, and Gyozo Orban came from. It is very likely arrived indirectly from the Hungarian and the EU taxpayers. Money that is tied to embezzlement, bribery, money-laundering, and deceptions are also contribute to shortchange the taxpayers one way or another. What methods these members of the mafia use to shortchange the public is reported on the daily basis, but with Peter Polt at head of investigations the truth will only come out when a new government will lead the country.

Observer
Guest

Who exactly benefited how much may be still a speculation, but the whole set up is criminal since hundreds of millions of dollars are handed over to private entities by way of the extraordinarily high profits secured by regulation. The state trade missions or the recently established “trading ” could have perfectly well handled the matter in line with their purpose of being.
But in the Orban mafia state everything is corrupted to enrich the pitentates.

Observer
Guest

Sorry
“trading houses” and “potentates”

webber
Guest

Habony was convicted a few years ago for beating a pensioner.
The man and his wife were crossing the street in Budapest when Habony came along in his car, had to stop, and shouted something nasty at them because they were walking too slowly for his taste. The man shouted something back and went on their way. Habony turned after them, jumped out of his car, and knocked the man to the ground, then kicked him while he was lying there.
I can’t recall the sentence – suspended, I believe.
Magyar Narancs wrote it all up a few years ago.
That is Habony.

bimbi
Guest

Was it not so that the current propaganda minister Rent-to-Buy Rogan was in charge of the off-shore citizenship scam? Certainly looked like a good way of filling an off-shore bank account…

bimbi
Guest

In his “Open Letter to Zsolt Bayer”, (http://budapestbeacon.com/featured-articles/an-open-letter-to-zsolt-bayer-fidesz-publicist/18076) Richard Field of the Budapect Beacon wrote in 2015:

“…the government of Hungary has no problems issuing residence permits to foreigners willing to purchase EUR 250,000 (now EUR 300,000) worth of Hungarian residency bondsso long as they are also willing to pay a EUR 40,000 “processing fee” to (mostly) off-shore companies approved by Fidesz parliamentary caucus leader Antal Rogán’s parliamentary committee on economics.”

This surely is not the sort of Hungaricum plum that Rogan would let slip through his fingers?

webber
Guest

One of the companies, ostensibly run by a Chinese fellow, is registered in the Caiman Islands.

jozsef-benedek
Guest

We talk about tens of billions of HUF which is hundreds of millions of USD here, and counting. All syphoned off from Hungarian taxpayers – legally.

And there is no clear info on where those monies actually went.

Note however that the Hungarian intelligence agencies are almost certainly deeply involved: they surely want to know about new citizens from “exotic”countries, who are rich and potentially influential in their own countries.

By the way on at least one occasion Habony publicly drove a car that was registered to the name of one of the Hungarian intelligence agencies.

I guess this is like Russia, the intelligence agencies working together with the most corrupt people in the government, protecting each other.

What do you think, will the top siloviki let the public know about their shenanigans or will they protect Orban, Habony, Rogan, Vajna till the very last bullet?

webber
Guest

Why do you say “legally”? How do you know, “legally?”
Nobody knows that. I doubt it. They wouldn’t try to hide the details so hard if it were all legal.

Manu
Guest

There are explicit laws that allow the structure to operate. See below.

The Parliament – as the supreme body representing the people of Hungary – enacted a law and authorized the minister to regulate the matter in detail. All perfectly constitutional. The president signed the law and did not find any constitutional issue.

The selected companies buy the bonds for X and then sell the bonds for X+20% and they make a profits. It’s all legal.

Sorry to say, but the “boys” prepared. It’s all legal.

Those billions are on safe Dubai and Singapore accounts.

http://mkogy.jogtar.hu/?page=show&docid=a1200220.TV and

see also

4/2013. (II. 19.) NGM rendelet
a harmadik országbeli állampolgárok beutazásáról és tartózkodásáról szóló törvényben meghatározott államkötvény kibocsátásának részletes szabályairól

szálka
Guest

There is a law (Act CCXX of 2012, amending another act) and a decree (4/2013 NGM decree) on the matter. It’s a legal. Vox populi, vox dei. The Parliament enacted the law and authorized the minister. This is democracy. Everything is completely legal. Fidesz has a lot of lawyers who know how to handle these matters.

The lefties are just blinking, they never had the imagination to do that, they are really just envious of the money. Sorry guys, better lawyers make more money.

Member

@szalka = TTT, please ignore till deleted

webber
Guest

Why do all these trolls use identical verbiage??? Not similar – identical – lawyers, lefties, completely legal, blah, blah, blah – not a word of it is relevant true, but they keep saying the same things.
Have they all got the same instructions? Or are they all the same fellow? I doubt the latter. No single person could be that dull. It takes a collective of idiocy to get this sort of repetition.

Guest

Legality has lost its meaning in Hungary, and it will not recover its meaning before all the crooks have been sentenced.

webber
Guest

Oddly, there are still laws on the book that make all that illegal and punishable.

nwo
Guest

The involvement of Micheli (who is also a major real estate investor in V ker) and Gagel, the owner of Princess [who are cousins I believe] are involved with Habony does demonstrate at least that the driving motive for the current Orban clique in power (Habony, Rogan, Vajna…) is just money not old school antisemitism (they are quite openly Jewish), Hungarian nationalism or patriotism or ideological purity etc. BTW, I understand and it has been written about frequently (though I cannot confirm nor have i tried independently to verify such a thing) that Mesterhazy Attila is also a shareholder of one of these businesses. The levels of corruption are just too deep to keep straight. Kover, Bayer Zsolt and the other “more pure” FIDESZneks must be quite sick to their stomachs.

webber
Guest

Bayer, “sick” to his stomach? Don’t be ridiculous. His greatest pain is that he’s not getting more of the pie. Just look at how much he has been given by this government in direct subsidies, ostensibly to make films and t.v. shows. The figures that have been made public are enormous – and you can be sure he’s gotten even more elsewhere.
Bayer is the first to support the creation of this “nationally dedicated elite.” He’s the greatest supporter of corruption on the airwaves.

Guest

Thank you Éva, for this latest exposé of the mafia state, invented by Orbán.
I wish it were not such depressing reading.

What does Brussels and the EU have to say about the billions they send, being misappropriated? Do they simply not care? Do they not know?

webber
Guest

They don’t care. They didn’t care about governments of Greece bankrupting that country either, really.

Guest

Incredible that the ‘corrupters’ can keep all this stuff juggling on along. At this point, if indeed Magyarorszag is a ‘mafia’ state it is a fantastic laboratory in the apparent efficiency and practice of the ‘goodfellas’ mind. All things tell me that the juggling simply cannot go on. There has to be a terminal point on this activity.

The ‘edifice’ we talk about points to the simple fact that indeed because the government looks away on corruption that in itself will bring upon its destruction. When that is not known. But if certain things happen it may not take much to bring this rotten machinery down. Such a sorry sorry state. Magyarorszag…..a geography for the aggrandizement of the very very few. The electorate and population are getting raw, soul crushing deals.

Istvan
Guest
Back on topic: Eva all is not well with the United States EB-5 visa program or for that matter the temporary E-2 visa program. More and more of these foreign investors are buying franchises that are generally creating low wage jobs. In some cases in the fast food sector. These types of investments and service sector job creation are not dynamic for our economy and in fact set a bad example to countries like Hungary emerging into capitalism. This Wall Street Journal article http://www.wsj.com/articles/SB10001424052702303465004579324104108839042 describes some of the problems with this program. There are numerous businesses here that set up, in particular for wealthy Chinese investors, with franchises that will meet the standards for the visa programs. See for example this article https://www.qsrmagazine.com/news/uscis-bolsters-growth-boardwalk-fresh-burgers Forbes has written about corruption in the EB-5 program http://www.forbes.com/sites/andyjsemotiuk/2015/01/05/the-eb-5-investor-program-risks-and-rewards/#330535141af3 Eva honestly I don’t think counterposing our problematic EB-5 program to the corruption in five-year Hungarian bond citizenship deals was valid, our program is far from ideal. US Sen. Dianne Feinstein has called for an end to,this program see http://www.rollcall.com/beltway-insiders/u-s-citizenship-not-sale-commentary/ Even though Sen Feinstein is a liberal Democrat of the worst kind as far as I am concerned I have to agree with her on the EB-5… Read more »
Observer
Guest

OT here, because it is late, but as you inquired about the crowd, here is a video from the site of the Orban speech on March 15. Very interesting. bhttp://propeller.hu/itthon/3201891-elkepeszto-felvetel-orban-marcius-15-beszederol-hivatasos-csapolokhoz

petofi
Guest

Thanks for the upload.

I thought the Polish woman dancing with the flag was great. Probably a hooker in her spare time…but she moved well!

Observer
Guest

petofi
You’re welcome, re dancing woman – my thoughts too, but pretty coarse. Last time I saw Polish claquers, they were quite under the influence.

spectator
Guest

Any idea, why János Arany (the statue) got the white skirt this year, while it was red-white-green, — the national colors of Hungary — last year?

Could the reason be that main part of the crowd were Polish, and it wouldn’t be polite enough to show the ’true colors’?

Observer
Guest

OT but RECOMMENDED TO EVERYONE
Video from the site of the Orban speech on March 15. a video from the site of the Orban speech on March 15.
AMAZING – no more than 2-3000 people, looks like half of them Poles, blanketed site, police cordons, Triumphal March from Aida, dejected Fidesz faces – I haven’t seen anything like this in the last 20 years.

bhttp://propeller.hu/itthon/3201891-elkepeszto-felvetel-orban-marcius-15-beszederol-hivatasos-csapolokhoz

Member
Member

Herzliche Grüße aus dem Karpaten Keller!
comment image

Member
Observer
Guest

Pls help. How do you embed objects here? I always end up with a link only.

Member

I just put in the hyperlink — but maybe it only works if you sign in as member rather than guest. (But your hyperlink above was wrong: that’s why I posted it again. You left a “b” stuck on before the “http”… )

Observer
Guest

Tnx.

Guest

When I see this guy I always get a bad feeling. His gang if we bring him up to date always controlled the ‘passwords’ to get anything done in the country. When he lost control after they got ‘changed’ well he went pretty fast. ‘Pacman’ couldn’t have gobbled him up any quicker. You play you pay.

webber
Guest

That guy lasted longer in office than Orbán will.

spectator
Guest

“It is almost as if the whole scheme was designed to siphon off public money and pass it on to select individuals.”

Almost..!
Well, I’m still searching for the distinguishing feature between the “almost” and the “definitely”, who knows, I may find it.
Somewhere.
Somewhere elsewhere, so it seems.

Still amaze me though that the average — or garden — citizenry just don’t get it that it is their goddamn money what these crooks stealing on industrial level!

And still comments like “they are more clever than…”
Just how utterly stupid anyone must be to support these criminals at any price?
And many of them don’t even benefit from their mindless zealotry, go figure!

Observer
Guest

@ …many of them don’t even benefit from their mindless zealotry ..

Of course they don’t, they are the mules, the useful dupes and who would give them money if they’ll carry on for free.

Here comes the “mindless” part, a wise Hungarian friend observed once “OMG how many bruised souls” (sérült emberek)”.
The very high suicide, alcoholism statistics and the anti social/negative characteristics indicate troubled, complex ridden personalities, who are looking for compensation and would do mindless and worse things for their moment of feeling big, great, strong, historical (buzzwords in the Orban speeches) and, worse, for the chance at least to play act revenge, victories over ….. whoever.
This is how it works folks (and the end is sometimes bloodbath).

Guest
Re: the ‘serult emberek’ On this my eyes kind of pivoted back over here to my hemisphere and particularly the overture the US has just made to Stalinist Cuba. Jaysus. As the Cuban military keeps the nostalgia and people living lively under lock and key and penury, the US now engages with that totalitarian regime. We’ll see where this winds up as the deals have been signed up with the old decrepit regime encased in the rocks of communism. I can see all the American lucre which will inevitably go to the country simply flowing to the regime cadres. Perhaps things ‘poco’ will go to the Cuban people. If there’s a big payday likely to come it certainly won’t go to the people now working in their trenches. It’s asking too much as the robbers will be getting ready. Wouldn’t be surprised if Cuba looks with contempt at democracies where they appear to let themselves get taken for chumps in dealing with the tinpot autocrats around the world. The autocrats give nothing yet expect everything ….. and the democracies continue to plunge in. So on this watch…. same old same old in the hemispheres. And the ‘serult emberek’ , the… Read more »
Observer
Guest

You’re right, it’s not “almost”,
the whole scheme has been designed EXCLUSIVELY to siphon off public money – because the state pays upfront in total approx 9% per year AND offers residency. At the same time the state can sell bonds with half that yield or less.

Now this is a crime, clear cut. I hope Orban & his gang will be jailed sooner or later. Unless one of the dangerous old pensioners plotting on the Beloved Leader’s life succeeds before that.

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