The Orbán government’s colossal swindle: the residency bonds

It’s time to return to one of the largest scams the Orbán government has come up with to date: the sale of “residency bonds.” The project was launched in 2013. It allowed a citizen of a non-European Union country to “buy” a resident permit for a duration of five years by purchasing €250,000 worth of Hungarian government bonds. In 2015 that amount was raised to €300,000.

Many countries, including the United States, offer residency permits to foreigners willing to invest substantial amounts of money. Such an arrangement might be justified on such economic grounds as job creation and an incentive for the influx of foreign capital.

The Hungarian scheme bears no resemblance to the practices of other countries. The sale of residency bonds creates “instant cash” that is spent as soon as it is received and that will have to be paid back, together with the accrued interest, in five years. The sale of 3,874 residency bonds over the last two and a half years has brought at best a minimal benefit to the national economy, at worst a loss. That Hungary has sold so many residency bonds is understandable because this is about the cheapest way for a person to become a lawful resident of one of the member states of the European Union, and hence to be able to conduct business anywhere in the EU.

Hungarian residency bond purchases have another unusual feature. The prospective buyers of the bonds do not manage the transaction directly by dealing with the Hungarian administration. Their only contact is an agent designated by the government. And on paper at least these agents seem to be the only real financial beneficiaries of the sale of the bonds. For every bond package they sell they receive between €45,000 and €60,000 as a processing fee, charged to the purchaser. The other peculiarity of this transaction is that agents don’t pass on the full €300,000 to the Államadósság Kezelő Központ (Center for the Management of Government Debt) because they receive the bonds from the government at a discount of no less than 2%. So between the processing fee they charge and the discount they receive, agents get between €74,000 and €80,000 per bond package. As Népszabadság rightly pointed out, after five years the purchaser of the bonds will gain about as much on the deal as the agent does within a few weeks.

The whole scheme smacks of corruption. Most likely the people who were chosen to be agents were ready to share these incredible sums of money with members of the Hungarian government or Fidesz party leaders. Currently there are four such agents, of whom only one is registered in Budapest. The others operate out of Malta, Cyprus, and Singapore.

Source: Index

Source: Index

Also on the receiving end is a Budapest law firm which, according to Tamás Wiedemann of Magyar Nemzet, must have made almost five billion forints in the last three years. Heading the firm is Kristóf Kosik, who is a close acquaintance of Antal Rogán, who as the chairman of the parliamentary committee on the economy is the mastermind behind the whole scheme. Kosik’s law firm is the only one that can represent the foreign applicants at the Bevándorlási és Állampolgársági Hivatal (Office of Immigration and Citizenship). The Kosik Ügyvédi Iroda receives €5,000 per application. Since 3,784 applications have been approved since 2013, Kosik’s law firm must have earned €18,920,000 in three years from this little business.

Népszabadság also calculated the amount of money the Hungarian government is losing on these residency bonds. The economists who looked at the numbers came up with the figure of €17.4 million to date. The reason for the loss is that in 2013 the government fixed the interest rate they would pay on the bonds at 2.46%. In the beginning the Hungarian government did okay because the interest rate in the open market was almost 5%. So they were getting cheap instant cash. But by June 2014 the interest rate on euro bonds had dropped to under 2.4%, which was lower than the guaranteed rate on the residency bonds. By now the interest rate in the open market is around 0.5%, while the Hungarian government is still paying the rate fixed in 2013.

While the Hungarian government just declared a “total mobilization” in preparation for a referendum against the refugees and has been carrying out a massive campaign against outsiders, it has quietly allowed 3,784 individuals and their families to settle in Hungary. That may mean close to 16,000 individuals, who come mostly from China, Russia, and the rich Middle Eastern countries. Vetting these individuals is extremely superficial. An applicant makes an appearance before one of the agents and gives details about himself and his past activities. On the basis of this information the Hungarian authorities have 30 days to conduct an investigation. Once that is done, the happy new resident and family can settle in Hungary and travel and conduct business throughout the European Union.

As the result, it is likely that some unsavory characters have managed to settle in the European Union through the Hungarian residency program. The same Tamás Wiedemann who found out about the monopoly Kristóf Kosik’s law firm has on handling applications at the Office of Immigration also learned of at least one Russian, who had been convicted of tax fraud and was most likely a fugitive from justice, who easily managed to get permission to settle in Hungary. It was done in the following manner. Each applicant must produce an “erkölcsi bizonyítvány” (certificate of good conduct). But the Office of Immigration accepts the certificate of good conduct even if it comes from a third country. Thus the Russian fugitive from justice first went to Saint Kitts and Nevis, where he obtained the necessary document attesting to his good conduct and stating that he had had no run-in with the law.

Naturally, the government’s reaction was denial. Csaba Dömötör, undersecretary in Antal Rogán’s Cabinet Office of the Prime Minister or, as people on the street call it, the propaganda ministry, announced that the article “is based on frivolous suppositions and calumnies.” He added that it is difficult to take the story seriously because Wiedemann didn’t give the name of the individual. Magyar Nemzet’s journalist pointed out in an interview on ATV yesterday that he is forbidden by law to reveal the name of the individual, and he would also have transgressed the law on securities if he had given details.

Rogán’s propaganda ministry might be cocky but Mihály Varga, minister of the national economy, was much more cautious and told ATV that perhaps the law governing the rules of residency requirements can be changed “if necessary.”

September 7, 2016

 

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web tasarım
Guest

“There is a possibility of a cultural counter-revolution right now.” – Viktor Orbàn… + İlave olarak ‘Man of the Year’ Anti-immigrant Hungary PM Orban says Mass Migration causes “elimination” of “historical identities…

Jean P.
Guest

“one of the largest scams the Orbán government has come up with to date”

Although it is monumental I don’t think it qualifies for a bronze medal.

Observer
Guest

So, the Orban mafia ripped off approx. 277 million Euro (85 billion Ft) embezzled in “processing fees” alone. Fees that should have been collected by the Hungarian Trade Commissions, the Sijjarto’s Trading Houses, the Center for Gov Debt Management or other gov agencies.
Add inflated legal fees and interest losses and we have so far 300 000 000 Euro paid by the Hungarian taxpayers earning 900 /month avr.
No Robin Hood in Hungary, but several Sheriffs ripping the hapless populace.

Hajra Magyarok! fizetni..

bimbi
Guest

This residency bond business needs to be thoroughly exposed. Certainly it has all the appearances of a scam but, like so much of Orban’s “bidness” dealings, it is all legal – legalized by his own government. But think about it. Who owns the right to residency in this country? Certainly not Rogan or Orban. That is a right owned by the people of Hungary. Now, that, like so much else, has been stolen/managed for the private gain of a few Fidesz faithful. The agents and the kickback back boys have set massive processing fees so that they can cream off huge profits. This is yet another “legal” scam of the government. Even if they will not admit to, it sure looks plain criminal to me

nope
Guest

If you wonder why Attila Mesterhazy isn’t/wasn’t too keen on toppling the Orban government.

By the way Mesterhazy and Laci Puch (and the Budapest bunch like Zsolt Molnar) are still calling the shots within MSZP.

Gyula Molnar is only the chairman, the Választmány is headed by Istvan Hiller and I understand there you have Attila and Laszlo again too.

Interestingly there is no public list of members. Nothing changes, the 70-30 still applies (though more like 95-5).

http://444.hu/2016/09/08/tiborcz-istvan-mellett-mesterhazy-attila-ismerosei-is-jol-jartak-a-kozel-keleten

NWO
Guest

This is the point I wanted to make. This program is purely about corruption. It has no redeeming values for the Hungarian economy, society etc. But while elements of FIDESZ are the main beneficiaries, the corruption is spread around to just enough of the “opposition” so every pretends there is no problem. The ethical underpinnings of the society are so rotten and the elites (and people generally) so cynical, that I find it hard to imagine there is a path out of the morass.

pappp
Guest

This may be a good interview. Unfortunately MSZP is still by far the most “popular” leftist party. The maths just doesn’t add up for the left-wing to defeat Fidesz especially when MSZP is really controlled by Orban. The new system operates perfectly.

http://24.hu/kozelet/2016/09/08/orban-emberei-az-mszp-ben/

Observer
Guest

@nope

You are trying to mislead here:
– 444 say they took the story from Heti Választ
– They present as the closest connection a company, which “in the 2010-14-es cycle Hilal Central Europe was one of the largest contracted advisors of the MSZP parlamentare faction, for approx, (!!!) HALF A MILLION FORINT monthly”.
(Pretty dumb joke as Fidesz pays individuals 20-25 million for bogus “studies”.)

The rest is complete BS, as ti goes back to the 1994-98 Horn government and the Mesterházi uni years. I guess the odd person with some old ties to other parties just switched to reap the benefits of the corruption orgy.

The HV article is just another Fidesz attempt at relativization , i.e. we steal, but they did too. Neither the magnitude difference nor the institutionalization of corruption is mentioned.

The supposed 70%-30% system was replaced by 99% x 100 = Fidesz system.
So just shut up and pay up.

Guest

Another billboard:

Did you know that Hungarian citizenship is now sold for 300 000 € to many Chinese, Russians and Arabs?
Did you know that the proceeds from this business go to selected party members?

Of course I know that residency is not citizenship – but for the hapless Hungarians it’s practically the same!

Jean P.
Guest

Did you know what hate mongering is before you saw the blue billboards?

Observer
Guest

Not citizenship, just permanent residence.

Guest

Rather OT but funny in a way:

Seems the US right wingers don’t like George Soros either:
In August 2016, a graphic featuring a picture of billionaire George Soros next to a quote ostensibly uttered by him about his goal to “bring down the United States by funding Black Hate groups” began circulating via social media:
http://www.snopes.com/george-soros-bring-down-us/

Btw snopes.com is full of examples where satirical pieces (by Andy Borowitz e g) are taken at face value by the stupid US right wingers – reminds me of Hungary …

Those “Christian” gun loving Creationists are similar everywhere!

webber
Guest

FYI: British r-wingers absolutely HATE Soros.

Guest

You know if VO’s land is a company it looks like it’s operating like a Magyar Enron. That company pulled off some hoodwinking. Corruption and scam upon scam run amok. Fidesz too started out with hosannas in the beginning that they were going to be ‘gamechangers’….The ‘King Kongs’ in changing things for the better. Thing is in KK’s demise it was said that it was ‘beauty’ that killed the beast. For Magyarorszag though at the pace we see it will be pure, unadulterated greed that will most likely take it down. So-called ‘synergistic’ corruption is the symbolic cancer of the country. Add the lack of ethical accountability. A terrible mix.

pappp
Guest

OT,

I just flipped through this week’s HVG (which is still independent but its influence has eroded, it may be printed in 35,000 copies) and Figyelő (which has already moved to give space to oligarchs and their operators and will be sold to Fidesz, it is printed in 6-8,000 copies).

My conclusion is that the oligarchs do everything openly, they give interviews, they don’t run, the deals are obvious – although given the diligent paperwork, proof before a court would be difficult.

This system became totally normalized. There is no prosecution, no police raids, no agency whatsoever which would look into the deals and crucially no political party is protesting.

Istvan
Guest

Off topic but related to an eariler post by Eva on the teacher’s movement. The Tanítanék Mozgalom ( the I teach movement )yesterday released a document it calls its “Manifesto [that]outlines our vision about what social goals are and how it relates to matters of education.” For those who read Hungarian it can be accessed at https://www.facebook.com/notes/tan%C3%ADtan%C3%A9k/szeptemberi-ki%C3%A1ltv%C3%A1ny-negyed-sz%C3%A1zaddal-a-rendszerv%C3%A1lt%C3%A1s-ut%C3%A1n/1585174368445873

In my opinion it will not have the support of the two major teachers unions because on a philosophical basis it is completely in direct opposition to the goals and objectives of the Fidesz government. I do not believe either of these two union are willing to go this far. But I support the thrust of the Manifesto as will many of Eva’s readers.

tappanch
Guest

I have almost choked to death from laughing. So I have to share the newest Hitler=Orban “Untergang=Downfall” parody with you.

tappanch
Guest

In several districts of Budapest, the Fidesz authorities have ordered the anti-referendum signs, billboards by the “Double-tailed dog party” to be taken down.

http://444.hu/2016/09/08/magyar-ketfarku-kutya-part-terezvaros-onkormanyzata-nem-ismeri-a-torvenyeket

tappanch
Guest

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tappanch
Guest

The second largest commercial television channel – which has become a government mouthpiece, since it was purchased using loans of state-owned banks nine months ago – published a Brezhnev-style propaganda news report claiming that

… anti-corruption activist Peter Juhasz is “financed and directed” by a mafioso from jail.

http://444.hu/2016/09/08/a-tv2-n-egy-elitelt-zsarolo-arrol-beszelt-hogy-juhasz-petert-portik-tamas-penzeli-es-iranyitja-a-bortonbol-hogy-megdontse-a-kormanyt

Juhasz’s reaction:

“It is terrifying what criminals allow to themselves. […] I think of the people ordering and manufacturing the Fidesz propaganda. I am going to sue all of them”

http://444.hu/2016/09/08/a-tv2-n-egy-elitelt-zsarolo-arrol-beszelt-hogy-juhasz-petert-portik-tamas-penzeli-es-iranyitja-a-bortonbol-hogy-megdontse-a-kormanyt

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