Corruption in Hungary is a cooperative effort between government and business

Before I return to the continuing saga of the corruption scandal surrounding one of many EU-sponsored projects, I would like to call readers’ attention to a relatively new website, Hírvonal (http://hirvonal.hu/index.html), which in my estimation might be the best newsreader in Hungarian. Unlike other similar Hungarian websites, it is organized along the lines of Google News, but with many extra features that make it more user-friendly. Unlike with Hírkereső, here one can find all the articles on the same topic in one place, which is a great time saver. One can look for domestic, foreign, and economic news as well as separate items on culture, sports, science, literature, home, lifestyle, etc. And what is perhaps its best feature, it has an archives going back to May 1, the day that Hírvonal launched, where one can find all the top news items for any particular day.

And now back to the troubles of Roland Mengyi, the honorable member of the Hungarian parliament. As was expected, Attila Rajnai, the well-known investigative journalist, had more up his sleeve than he let on in his article published in the August 4 edition of 168 Óra. In that article he wrote about Roland Mengyi’s attempted bribery in connection with a 500 million forint grant for a network of social cooperatives, allegedly serving the downtrodden in one of the poorest regions in the country. If the participants had succeeded, practically the entire amount of the grant would have ended up in the hands of corrupt politicians and businessmen.

I summarized the case right after the appearance of the article. At that point there was no direct evidence of Roland Mengyi’s involvement. The transcripts of telephone conversations Rajnai got hold of spoke only about Mengyi in the third person, so Mengyi’s attorney, Barnabás Futó, the super lawyer of Fidesz leaders in trouble, could easily brush the whole affair aside as nothing more than malicious hearsay by two or three crooks from Tiszaújváros. But then came August 11, when Attila Rajnai published his second installment.

There is no longer any question about Roland Mengyi’s involvement in this criminal act. A conversation between Mengyi and one of the accused, who is called Dementor in the transcript, attests to Mengyi’s direct participation in the attempted embezzlement of EU funds. From this conversation it is clear that Mengyi has someone inside the ministry of human resources who is most likely not just his source of information but also part of the ring of conspirators. The conspirators included Mengyi as well as the firm Public Sector Consulting Kft. (KSC), whose employee, Szilvia B., came up with the proposal.

And this is the other bombshell in Rajnai’s second article on the Mengyi case. Public Sector Consulting Kft.’s majority owner is Sándor Holbok, who is described by the media as an “ősfideszes,” or “primordial member,” of the party. Before he began his business activities he was chief-of staff of and adviser to József Szájer, who at that time was an important member of the Fidesz leadership. Holbok has worked with practically all the important Fidesz leaders, including Zoltán Balog. From 2006 he has been working closely with Árpád Habony on campaign issues. A high Fidesz official described him as “a good guy who has been for the longest time one of our contacts between the leadership of the party and the business world.”

János Ádár, Mihály Farkas, László Kövér, Tamás Deutsch, and next to him on the right Sándor Holbok

János Ádár, Mihály Farkas, László Kövér, Tamás Deutsch, and next to him on the right, Sándor Holbok

Ákos Hadházy (LMP), who is the foremost expert by now on Fidesz corruption, claims that Public Sector Consulting Kft. is one of the firms specializing in what Hadházy describes as a racket by which an incredible amount of EU money finds its way into the pockets of project management companies. In a conversation with ATV he told the story of two cases in which Public Sector Consulting Kft. was involved. The municipality of Cece invited KSC and two other companies to bid to manage a program called “Let’s live healthy lives!” which would include screening tests, for which the village received 16 million forints from the European Union. KSC had the winning bid, at 16.2 million forints. Many hundreds of kilometers away the village of Lajoskomárom invited the same three companies to bid on exactly the same project. Again, the winner was KSC for the same amount of money. Neither KSC nor the other two companies had anything to do with the health sector. KSC won bids for all sorts of projects, for example, for water management programs and “human research” projects, whatever that means.

According to Hadházy, this racket works as follows. The ministry writes up a project for which there is no need whatsoever. This project is discussed with one of these project management companies, which then begins to “peddle” the project among those who would like to receive unexpected money for a project dreamed up by the ministry and the project management company. The municipalities are told that these companies will take care of everything, but they will have to get the job. Then comes an open tender, and it is obvious which company will win. Hadházy learned that corruption of this kind reaches as high as the level of undersecretaries, who tell their subordinates to turn a blind eye to these highly suspicious projects.

Although it is the ministry of human resources which is under scrutiny at the moment, Nándor Csepreghy, deputy minister of the prime minister’s office, ended up in the center of the affair for at least two reasons. One is that Szilvia B., the employee of KSC who is now in custody for her role in the Mengyi affair, boasted in one of the transcripts about her excellent relations with Csepreghy, whom she had just met at a party organized for their children. Second, Csepreghy is in charge, as Lázár’s deputy, of the disbursement of EU subsidies. Therefore, he, who unlike other Fidesz politicians is quite willing to give interviews even to opposition television and radio stations, has been talking in the last couple of days at some length about the case. Although he is circumspect in his answers to probing questions, he said yesterday morning on ATV’s Start program that KSC alone has been involved in at least 50-70 projects. Expressing his personal opinion, he announced that he will be “reassured only if the circle of writers of tenders and project managers … will be no more.” Csepreghy claims that during the 2007-2013 cycle these companies stole 1,500 billion forints (5.5 billion dollars). During the same conversation, Csepreghy tried to shift the blame for the incredible corruption that exists around the disbursement of EU funds to the former administrations. He blamed Gordon Bajnai and Klára Dobrev, Ferenc Gyurcsány’s wife. These two people were involved with EU funds, but way before the 2007-2013 cycle that Csepreghy was talking about.

I have no idea when the chief prosecutor will feel compelled to take up this case, but it will be difficult to ignore.

August 12, 2016
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dos929
Guest
….and we can multiply this embezzled sum by 100 or by a 1000, and we still won’t know the exact extent of the FIDESZ corruption. I am sure that the appropriate EU organisations do know about these practices for many years now. Surely, the EU cannot do anything about government corruption in Russia, etc…,, but I am equally sure that they know more or less everything that is being cooked in the kitchens of the Orban regime. So, the begging question is why they let it happen year after year, in fact for over 6 years? Why they financing and tolerating this government organised syphoning of EU funds? One may even suspect this incompetent EU leadership that one way or another they are part of the system of corruption… And if not, how on earth they let it continue? Of course their hands are full of the problems stemming from the crisis of Syria, of Crimea, the refugees, etc…. etc…. However, 4-6 years ago there were not as yet had these ‘tasks’ to deal with, as yet they already knew about the regime as much as that there would be enough proof to put Orban et al in front of… Read more »
Guest

That the EU knowingly and deliberately persists in subsidizing a profoundly corrupt Hungarian mafia state is glaringly obvious (a mafia state furthermore, that habitually bites the hand that feeds it).

The question is why?

Guest
Yes, it is baffling in the exreme why the EU continues to fund a mafia regime. Éva’s reader’s questions to Gyurcsány, a few blogs ago, and his reply to my query about this same issue, did not receive a satisfactory answer, in my humble opinion, as much as I admire and support our former PM. He more or less said the EU has a lot to do and can’t be bothered with Hungary. Well, the fact is that one of the reasons for Brexit was precisely because many Brits have had enough of the mismanagement within the EU of their taxes. It is money coming from all the other EU countries, through taxation of workers, which is lining the pockets of Orbán and his gang of thieves. And the thieves and criminals are laughing all the way to the bank, and back again, and laughing while they fund expensive private education for their children, while the children of the poor in remote parts of Hungary barely have enough to eat. And laughing while they buy yachts and penthouses and property internationally as well as castles in Hungary, and laughing while Hungary itself is regressing into one of the most retrograde… Read more »
Mihal
Guest

I think you have a good point when you say the the bureaucrats in Brussels didn’t earn the money themselves. The money that is wasted in Brussels is incredible. Think alone about the European Parliament with their monthly trips to Strasbourg when 750 members plus their staff move office for a week. It such an environment it just seems not worth it to start such a big confrontation which includes the PM of one of the member states.
The excuse that the EU is too busy with other issues and can’t focus on this is total nonsense. How many people actually work at the EU in jobs that are focused on the spending of EU founds? It’s not that the book keepers can’t do their jobs because they have to deal with the refugees. The reality is probably nobody really cares and I am afraid the fact that Fidesz is part of the EPP plays a decisive role in the way the European Parliament is willing to make a real statement against this.

Guest
Responsible liberal democracies have government audit offices that are independent of the political powers and of the politics of the day, much like the central banks, and their investigations and annual reports, together with an alert investigative media, then systemically help to keep in check bureaucratic waste and mismanagement. This is how the business of government is run in Australia, and even in otherwise very corrupt Israel, where however corrupt miscreants are regularly brought to heel and jailed, even if they were prime ministers. The key point that Orbán seems to have latched onto pretty early in the game, is that while there is some financial auditing of sorts in Brussels, the official remit of the EU and its bureaucrats does not extend to auditing how funds allocated to member countries are spent, and neither is there any kind of a regime of graduated sanctions to bring corrupt mafia governments to heel, as both such audits and sanctions would be seen under EU rules as interfering in the internal affairs of that country. This glaring omission in the EU set-up is then exacerbated on the one hand by the customary bureaucratic reluctance to take responsibility for outcomes, and also of… Read more »
petofi
Guest

petty cash for petty people-

Guest

Re: ‘This glaring omission in the EU set-up is then exacerbated on the one hand by the customary bureaucratic reluctance to take responsibility for outcomes, and also of course the fact that the moneys they disburse to the Hungarian mafia state is not their money and its corrupt misuse does not effect their own pockets’

Seems Brussels as an economic unit is just ripe for a ‘corporate takeover’. Those fellows are just running those assets into oblivion.
Perhaps time for another new corporate board on the continent as well.

PALIKA
Guest

Interesting. How can it be that huge sums of public funds are stolen without anyone in the EU buerocracy taking any step to recover the money and to stop future payouts? Presumably the EU staff enjoy immunity from prosecution. Has no one presented a dossier of misappropriations? If not why not?
I suppose this is another example of prosecuting those they want to have a go at for a collateral reason. The Wikileaks guy cooped up in the Embassy in London to escape being sent to the US once he returns to Sweden to face sex charges, the basis for which presumably a conversation without any third party witness as to the required use of condoms. The Swedish prosecutor has never taken advantage of the offer to conduct an interview with the suspect in the Embassy. Presumably the ladies will soon lose interest. Not the State Department however.
The pursuit of justice is often flawed especially if it is for a collateral purpose promoted by politicians.
So do not hold out hope that OV’s funds might soon be cut off

Guest
Palika is asking: “How can it be that huge sums of public funds are stolen without anyone in the EU bureaucracy taking any step to recover the money and to stop future payouts? Presumably the EU staff enjoy immunity from prosecution. Has no one presented a dossier of misappropriations? If not why not?” The point I was making above (Today 6:18 am) is that under EU rules, it is not within the remit of the EU or of Brussels bureaucrats to audit the actual use of EU subsidies once those funds are transferred into the hands of a recipient member government, or to apply sanctions in case of corrupt misappropriations. This is because how the funds are disbursed and disposed of within a member country is regarded under both EU and international law as the internal affair of that member. Thus a mafia set-up like the Hungarian government enjoys complete impunity in so far as the corrupt misappropriations of EU convergence funds is concerned. This is obviously a glaring and outrageous deficiency in the financial subsidy system run by the EU, but to change the system to one that would no longer subsidize the private bank accounts of the leaderships… Read more »
András B. Göllner
Guest

To ambalint

“So Europe is stuck with a bad funds disbursement system without being able to do anything about it.”

Therein lies the handle of the proverbially buried ax, along with the reason why an increasing number of European taxpayers are ready to rebel . The EU high brass won’t do anything until more and more people begin to demand an end to this highway robbery. Orbán’s theft of EU taxpayer’s money is NOT an internal affair of Hungary,. It is first and foremost the domestic affair of countries outside of Orbánistán. THIS is what the discourse in the media should focus on. Hungary’s rule of law violations cost billions to ordinary European citizens.

Guest

@András B. Göllner
Today 12:10 pm

I am in furious agreement that Orbán’s theft of EU taxpayer’s money should NOT be a mere internal affair of Hungary that Brussels can just continue to blithely ignore.

The issue however is not what we think, but what the relevant EU rules and regulations actually lay down for Brussels bureaucrats to follow.

In addition, from a Brussels perspective the corrupt lining of pockets by the mafia nomenklatura in Hungary from the EU convergence subsidies only involve sums that are mere petty cash in the overall financial scheme of things in Brussels.

Given that perspective, bureaucrats at EU headquarters are not about to let themselves be concerned by small matters such as grand larceny by Orbán and his mafia cronies in a small country on the Balkan periphery.

Guest

They obviously have much bigger fish to fry.

Jean P.
Guest

“How can it be that huge sums of public funds are stolen without anyone in the EU buerocracy taking any step to recover the money and to stop future payouts?”

The EU bureaucracy works along the same guidelines as Peter Polt.

Guest

Why does the EU keep funding Fidesz’s mafia state? It’s called politics. EPP’s politics more specifically. Ironically, African countries which might be more corrupt than Hungary use EU funds in a much more transparent manner since they cannot benefit from any support within the EU.

Istvan
Guest

Another reason is JC Junker who sits at the helm of the EU. He is not only an alchoholic he has been institutionally involved in promoting tax avoidance schemes and legislation in Luxembourg. Juncker and many others in the EU bureaucracy are every bit as dirty as Orban and Fidesz. It’s like expecting the Fox to guard the hen house.

The EU bureaucracy or the US State Department isn’t going to save Hungary from its own elected crooks. Only the Hungarian people themselves can fix this problem.

Guest

Actually this situation reminds me bit of the last years of “Socialism” in the 80s.

Afaik East Germany and Yugoslavia (don’t know about the other countries …) were propped up by West Germany with large sums of money. Some of that was nominally given to free people – imagine paying East Germany aka the GDR thousands of Marks to let some of their citizens leave the country …

And of course West German tourists paid huge sums to be able to visit their relatives in the GDR.

And all the time our politicians told us that the East was catching up – while in reality it was headed for an economic and ecological disaster – until Gorbatchov declared the end of the system …

Are we seeing a similar development now in Hungary (and Poland, Russia, …)?

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