Viktor Orbán and Ghaith Pharaon: The end of a business relationship?

Although I’m aware that regular commenters on Hungarian Spectrum seem to be interested only in the aftermath of Donald Trump’s victory, I have to return to Hungarian affairs. After all, the blog’s stated purpose is to acquaint people with the politics, economy, culture, and history of Hungary.

I think that by now readers of Hungarian Spectrum are fully aware that the Orbán government is exceedingly pleased with the result and is looking forward to a close friendship between the two countries. I’m certain that Hungarian foreign ministry officials already envisage Viktor Orbán paying an early visit to the Trump White House. Maybe even a state dinner. Wouldn’t that be splendid?

But let’s get back to Hungarian reality, which is not without its troubles for Viktor Orbán and his closest entourage. The Hungarian prime minister might act high and mighty in parliament when asked about one of his closest associates, Antal Rogán, whose luxurious life style reeks of ill-gotten gains. But Rogán’s activities are symptomatic of wider problems. For instance, the “business activities” of the president of Hungary’s central bank, György Matolcsy, funneled through phony “foundations,” and his “generosity” toward his friends and family, from public funds, haven’t helped the reputation of the Orbán government. By now the majority of the population considers it rotten to the core.

Hardly a day goes by without one of the few remaining independent internet news sites unearthing a new scandal. Just today 444.hu published an excellent piece of investigative journalism showing that the Pénzügyi Szervezetek Állami Felügyelete (PSZÁF), the Hungarian equivalent of the U.S. Securities and Exchange Commission, and the Hungarian National Bank, which incorporated it in September 2013, must have had knowledge of Quaestor’s Ponzi scheme for at least 15 years before the brokerage firm collapsed in March 2015. I provided details of the scandal earlier.

Another story that doesn’t want to die concerns Ghaith Pharaon, a wealthy Saudi businessman who has been a fugitive from justice for the last 15 years at least. I covered the story about three weeks ago, but since then an awful lot of new information has come to light, which I will try to summarize briefly.

First of all, the confusion in government circles about the status of Pharaon is indescribable. Yesterday Index devoted a lengthy article to recounting the range of explanations coming from various government offices about why a fugitive from justice had received a Hungarian visa. The same confusion exists when officials try to explain Pharaon’s exact relationship to Viktor Orbán and his family. These explanations more often than not contradict one another. Some most likely have nothing to do with reality. János Lázár is especially prone to inventing stories for his weekly press conferences. I will not bore readers with these attempts to mislead the public.

On the other hand, I think it is important to note that Pharaon’s business activities were not confined to buying expensive real estate in Hungary from a firm connected to Viktor Orbán’s son-in-law, István Tiborcz. MOL, the Hungarian oil company, also had business dealings with Ghaith Pharaon through Pakistan Oil Fields Ltd. The deal was sealed only in April 2016. And a couple of days ago RTL Klub learned that the ministry of foreign affairs and trade, which owns Magyar Nemzeti Kereskedőház/MNK (Hungarian National Trading House), which is designed to encourage and smooth the way for ventures of Hungarian businessmen in different parts of the world, broke its contract with one of Pharaon’s Hungarian companies, Pharaon Gamma Kft. MNK naturally denied that the move had anything to do with the cloud over Pharaon.

The Artemy used by Lőrinc Mészáros

The Artemy used by Lőrinc Mészáros

Meanwhile, back in August Magyar Narancs learned about a 35m luxury yacht docked in the Zadar harbor in Croatia, most likely rented by Lőrinc Mészáros. Of course, it was a juicy story that the former pipefitter, Orbán’s front man, not only has a luxury villa on the Adriatic coast but also enjoys the good life on a yacht with a four-member crew on deck. But the story became truly interesting in November when the same reporters discovered that on August 4 Mészáros’s yacht was anchored in the harbor of Split. And behold, Ghaith Pharaon’s famous Le Pharaon luxury yacht, on which he spends most of his days, just happened to be docked right next to it. This was a most unlikely coincidence because, as the reporters found out, Le Pharaon had not visited Split in the three years prior.

Ghaith Pharaonás famous Le Pharaon

Ghaith Pharaon’s famous Le Pharaon

But this is not the end of the story. At the beginning of August Viktor Orbán disappeared for at least a week. The assumption was that he was on vacation. Zsolt Gréczy, the spokesman for DK, inquired from the prime minister’s office about the whereabouts of Viktor Orbán. He was told by Bertalan Havasi, director of the prime minister’s press office, that he was unable to provide any information regarding the prime minister’s holiday plans. Now that Magyar Narancs discovered the strange “coincidence” of the two yachts next to each other, DK suspects that it wasn’t so much a rendezvous between the pipefitter and the “professor,” as Orbán called Pharaon, but a high-level business meeting between the Hungarian prime minister and the wanted man. Today, although the prime minister’s office still hasn’t revealed where Viktor Orbán was on August 4, it claimed that “Viktor Orbán hasn’t even gotten near Split this year.” I doubt that this denial will satisfy the increasingly suspicious public.

And now let’s move on to a slightly different aspect of the Orbán-Pharaon relationship. Orbán in parliament admitted that he had met “Professor Pharaon” at a dinner party given by the Budapest representative of Jordan where Pharaon was the guest of honor. And now comes Mátyás Eörsi, former chair of the foreign affairs committee of the Hungarian parliament and undersecretary in the ministry of foreign affairs between 1994 and 1998. After hearing the story of Orbán’s meeting with the “professor,” he became suspicious. First of all, it is extremely rare for a prime minister to accept a dinner invitation from a representative of a foreign country. It is even less likely that he would accept such an invitation from the honorary consul of a country that doesn’t even have an embassy in Budapest. Economic relations between the two countries are practically nonexistent. Jordanian exports to Hungary amount to 0.04%, while Hungarian goods going to Jordan are only 0.15% of total trade. Surely, Eörsi argues, the prime minister’s acceptance of this dinner invitation had nothing to do with affairs of state.

Eörsi became even more suspicious when he tried to find out details of direct Jordanian investment in Hungary and discovered that, in the case of Jordan, this is “confidential information.” Normally such investment figures are readily available to the public. On the basis of his research Eörsi suspects, first, that the dinner was organized for the sole purpose of giving Orbán an opportunity to meet Pharaon in person without arousing suspicion and, second, that the subject of their meeting was of a private nature. As for the confidentiality of Jordanian investments the answer is simple enough. Pharaon’s front man is a Jordanian lawyer who is behind the nine Hungarian real estate purchases that have been sealed so far. Surely, the Jordanian partner doesn’t want to reveal details of Pharaon’s purchases, which were most likely acquired on the cheap in exchange for some benefits to the Hungarian partners. I find Eörsi’s hypotheses convincing.

November 15, 2016
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Rivarol
Guest

I hate the Saudis. They are assassins. They publically execute innocent people.

petofi
Guest

Hungary no longer exists: I’m sure it’s now all just a part of Orban’s wet dream…

Observer
Guest

MAFIA STATE par excellence.

becky
Guest
I wonder if Istvan Nagy, Hungary’s ambassador (ie. enjoying diplomatic immunity) to Switzerland who was/is a representative of Audi Bank (a Lebanese bank managing assets for regional investors) has to do with these Arabic investors? In the Arab world “everybody is everybody’s cousin” (Robert Baer) so these people Nagy, Pharaon etc. should know each other from their many decades-long careers. Also interesting is how Orban came to trust Nagy? Is Nagy a Hungarian state security officer (was he under communism) or Orban was just assured that if shady Arab businessmen could trust Nagy he could trust him too? Most likely Pharaon and other Arabic investors are laundering money for Orban for a fee. I think these investors receive a kind of yield/interest of their assets committed in Hungary or on the instruction of Orban but abroad. Until Orban himself or his family can take possession of such assets Pharaon and his cohort will receive an interest in exchange for their commitment to hold those assets in their name/from their capital. Orban probably pays more than the global yields of a few percentage points. By the way MOL (the Hungarian oil and gas company) long used such friendly hands. Basically MOL… Read more »
Observer
Guest

Your suspicion is spot on.

I doubt I.Nagy was involved with the Hungarian security services (although being a banker in Lebanon is not a better moral credential). These murky waters of offshore multi chain companies, huge kickbacks and money laundering deals are where the Orban agents move. Orban himself visited Lebanon several times and regularly visits Switzerland.

Re trust: Nagy was introduced to Orban by Desző Kékesi, Orban’s first money launderer, who bought Orban’s flat for a hugely inflated price of HUF 60 million (OMG, come to compare these paltry sum with today’s billions worth of kickbacks).

http://www.vasarnapihirek.hu/fokusz/orban_svajci_bankara

Observer
Guest

MAFIA STATE continued

The Chief Prosecutor (installed to cover up the Orbán regime crimes) refused to start an investigation upon the complain against the Election Office chief Ilona Pálffy. The complaint was filed by Istvan Nyako, Solcialist Party representative who was physically prevented from filling his question in the office by a group of hired thugs. Ms Pálffy sent away the police who was called to investigate at the scene, thus enabling the thugs to carry out their plan.
Earlier this year the Chief P closed the original investigation in the incident as he saw no crime committed.
http://24.hu/kozelet/2016/11/15/kopaszgate-meguszta-a-bunpartolast-a-valasztasi-iroda-feje/

becky
Guest

I know this is totally OT but I can’t resist writing about it. It would be madly hilarious if it wouldn’t be mad. Frank Gaffney is now apparently on Trump’s transition team. Gaffney is famous for alleging that Grover Norquist, of all people, is a secret agent of the Islamic Brotherhood and has been for years. Of course he also accused Clinton and Abedin of being agents for said organization. That general Petraeus “submitted to Islam”. That Obama was a secret Muslim goes without saying. The guy is lunatic even on the lunatic fringe.

Istvan
Guest
I don’t agree Gaffney is a lunatic, wildly extreme would be a better characterization I think. Here is what is interesting about Frank Gaffney, Jr., his views on Russia are similar to those of Mike Rogers who was either fired or resigned from team Trump yesterday depending on what source is used. ( reasons for this vary but this one is interesting http://nymag.com/daily/intelligencer/2016/11/competent-official-uncovered-on-trump-transition-is-fired.html )Here is a short statement from Gaffney on the Russian nuclear threat http://www.centerforsecuritypolicy.org/2016/08/15/the-russian-nuclear-threat-grows-as-america-disarms/ Gaffney also just days a go published the introduction to an edited collection of articles on the increased threat of Russia to the US titled: Putin’s Reset: The Bear is Back and How America Must Respond. Trump can’t have it both ways, making nice with Putin, and having leading security analysts that see Russia preparing for a first strike against us. Possibly Trump is putting Gaffney in a more public role to calm Republicans like myself or Senator McCain who see Russia as threat number 1 to USA, while none the less pursuing detente with Russia to contain China. In my opinion Gafffney would not necessarily be a friend of Orban, just because Orban claims to be anti-Islamic doesn’t make it so. He would… Read more »
webber
Guest

Istvan – Trump can have it as many ways as he wants, because there is just as much sense of direction in the man as in a tick on a dog. He goes where the dog goes.
Trump has already made friends with China. Didn’t you see the news about his friendly chat with Xi Jinping?
What Trump says today and does tomorrow are two different things.

webber
Guest

Trump to Xi Jinping: “”During the call, the leaders established a clear sense of mutual respect for one another, and President-elect Trump stated that he believes the two leaders will have one of the strongest relationships for both countries moving forward,” a statement from Trump’s presidential transition office said.

So, there’s no clear direction whatsoever – there is just a lot of waffling about appointments.

Relationships with Republican senators are already souring. How is Trump going to get a damned thing done without Senate backing, I’d like to know (okay – on a few things, there will be agreement).
Senators Cohen and McCain have already expressed reservations about Trump’s policy plans. There goes the majority in the Senate…. And there is NO WAY they are going to vote for term limits for themselves.

This presidency is shambolic and it hasn’t even started.

webber
Guest

(sorry for the rant). I cannot recall a presidency in which relationships between the incumbent president and his party’s senators have gone bad BEFORE the President even assumed office. Can anyone else?

Istvan
Guest

As of yesterday Trump still plans on labeling China as a currency manipulator. The Wall Street Journal had an article on it http://www.wsj.com/articles/donald-trumps-pledge-to-get-tough-on-china-raises-threat-of-trade-war-1478804077

WSJ is unclear what such a declaration would or would not mean.

Joe Simon
Guest

You have a pathological preoccupation with Orbán.
“Culture and history of Hungary”??? When do you ever write about Erdély, Felvidék, etc. Your epistles are one-sided, opinionated, repetitious, boring.

webber
Guest

Why do you read them? And why do you write anything here, if that is how you feel?
There are so many other webpages out there – plenty about Hungary or in Hungarian for that matter. Why do you waste your time here, if you dislike it so much?

Guest

This site is not about the history of Hungary a hundred or more years ago but about today’s problems!

If you’re interested in the Good Old Times of the Hungarian Empire, well, then start your own blog!

Observer
Guest

Fidesnik Joe
When one has cancer, that is subject no 1 and no. 2 and 3. Hungary has orban, hence such blogs.

Repetitios, I read HS, but would also pray for Orban every day if I were religious.. not for his health, you know..

Member

The average social security payment in Hungary is $378 (€353) a month, the median is much lower.

http://www.penzcentrum.hu/nyugdij/nyugdijtitkarol_vallott_a_kossuth_dijas_moldova_gyorgy.1052300.html

Observer
Guest

For non Hungarian speakers: this the retirement pension.
The unemployment cum social benefits are paid for 3-6 months and often are less than $ 200 / month.
No wonder 40% of the population lives at or below the poverty line.

Gabor Toka
Guest

Nice article, Eva, thank you. These summaries save me from having to read through copious amount of nonsense and trivia elsewhere to find the small bits that you can call news!

Guest

Thank you, Eva, for telling in English what is going on in Hungary. The existence of HS is a good reason for Hungarians to learn English.

Guest

A bit OT:
Some crazies reported that George Soros had died of a heart attack – maybe wishful thinking, but snopes reports:
Soros most recently made headlines on 14 November 2016, but not for dying: Instead, he took part in a closed-door, three-day meeting with Democratic lawmakers and operatives to plan their course in response to Trump.
http://www.snopes.com/george-soros-dies-of-heart-attack/
I’m sure you all (like me) would like to know what they talked about …
Here’s the source:
http://www.politico.com/story/2016/11/democrats-soros-trump-231313

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