Tag Archives: Antal Rogán

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

The Orbán government stands fast at home and abroad

At home

Viktor Orbán was expected to have a difficult time in parliament today. It was one of those times that the prime minister has to answer questions. He cannot pass the unpleasant task on to one of his ministers or even to undersecretaries. All three opposition spokesmen wanted the prime minister to say something about Index’s revelations concerning Antal Rogán’s suspicious business activities which, on the surface at least, seem to involve kickbacks and money laundering.

Opportunities to confront the prime minister directly are rare, and therefore each opposition party should designate its best person to pose the question. I’m afraid MSZP’s choice of László Varga wasn’t wise. His “witticism”—if you can call it that—about Antal Rogán’s inability to see reality from his helicopter and the size of his apartment fell flat. For Orbán, who can shine in such a situation, Varga’s poorly formulated question was easy to answer and counter. Orbán never uttered Rogán’s name but instead reminded the socialists of the days when the MSZP-sponsored hunger marches were organized by “an opulent euro millionaire,” a reference to a high-level MSZP politician who was discovered to have 200 million forints worth of euros in an Austrian bank.

Bernadett Szél, co-chair of LMP, was a great deal more specific. First, she recalled all the lies Rogán told about the residency bonds and about his relationship to Balázs Kertész. Szél specifically wanted to know how long Antal Rogán can remain a minister. She reminded Orbán that he as prime minister is responsible for the composition of his government and therefore it is he who must take responsibility for the behavior of his ministers.

This question couldn’t be sidestepped. Orbán had to give a more or less straight answer. His reply: “I don’t have anything to do with political bluster and political tabloid sensations. I am interested only in performance within the government. Whatever has been happening to Antal Rogán so far only strengthens his position. Don’t think that these accusations shatter us or that they force us to think of them at all. I consider the accusations no more than infantile sham which I simply don’t take seriously. If one word of this affair were true you would have filed charges already.”

Viktor Orbán today in the Parliament

Viktor Orbán in parliament today

Finally, György Szilágyi of Jobbik rose and listed all the lies Rogán uttered in the last few days. He inquired why Orbán as prime minister tolerates this. Orbán pretty much repeated what he said to Szél: “These are political sham attacks that I don’t take seriously. Every attack I have heard so far only increases my trust in the minister.” Orbán also cleverly used this opportunity to bolster his defense of Rogán by pointing out that the attacks are no so much against his minister as against himself and his government. His final words to Szilágy were: “a politician calling another politician a liar is not very original.”

So, for the time being Rogán’s position is secure. He has been an indispensable associate who, by the look of things, brought billions of euros into the coffers not only of the country but most likely also of Fidesz, in addition to enriching himself. Orbán at the moment thinks so little of the strength of the opposition that he believes that he can withstand all the charges. Most likely he is right.

Abroad

Hungarian papers barely mentioned an extraordinary dinner meeting of foreign ministers held on Sunday, which was inspired by German foreign minister Frank-Walter Steinmeier. In light of the unexpected victory of Donald Trump, a man with no background in foreign affairs, Steinmeier thought it was important for the EU foreign ministers have a common policy when dealing with an unpredictable Washington. Federica Mogherini, the quasi foreign minister of the European Union, agreed and the meeting was scheduled.

It was rumored at the time the meeting was announced that Foreign Minister Péter Szijjártó would not attend but would instead send one of his undersecretaries. It was an indication that Hungary, unlike most of the EU member countries, didn’t believe the emergency meeting was necessary. Since Viktor Orbán, alone among European politicians, rooted for Trump, he hopes that the new president will look upon his regime favorably. That the foreign minister opted not to attend the emergency meeting should give Hungary another gold star in Trump’s book.

Three foreign ministers did not attend the Sunday meeting. Predictably, the UK’s Boris Johnson was absent. After all, Britain is on its way out of the Union and needs to be on especially good terms with the next president of the United States. France’s Jean-Marc Ayrault sent an envoy due to a scheduling conflict. And, as euobserver.com said, “Hungary’s pro-Trump Prime Minister Viktor Orbán also kept his top foreign envoy at home.”

Assessments of the Sunday dinner meeting vary. According to critics, it was far too early for the foreign ministers to get together since we know practically nothing about Trump’s foreign policy objectives. Mogherini, on the other hand, declared the meeting a success, saying that the foreign ministers agreed “to engage with the incoming administration even from this very first week of transition,” meaning right away.

Meanwhile, Szijjártó decided to speak up and explain Hungary’s position. He found “the hysteria caused by the US presidential elections that swept through the European political elite pathetic and at the same time amusing.” Hungary will not take part in this hysteria because it considers Trump’s election good news. The Hungarian government finds the president-elect’s idea to stop “democracy export” beneficial to the world.

It should be noted that Viktor Orbán’s Visegrád 4 friends decided not to follow in the footsteps of their pugnacious Hungarian friend. I wonder whether there was any consultation among the four countries ahead of the Sunday dinner meeting. I suspect there was, but that Poland, Slovakia, and the Czech Republic don’t want any more open confrontations with the rest of the European countries. They gave the EU a hard enough time on the refugee issue and don’t feel like sticking their necks out for Donald Trump, who may be courting Russia at the expense of Eastern Europe.

November 14, 2016

The Orbán government’s corruption unveiled by investigative journalists

Index published an extraordinary piece of investigative journalism on November 11, written by András Dezső, Szabolcs Panyi, and Nikita Hava. The first two reporters are well known for their hard-hitting stories about Jobbik and Fidesz. The third person, who appears on Facebook as Hava Nikita Vladimirovics, calls himself “egy ruszki Magyarországon.” He is well versed in Russian-Hungarian affairs.

The team has been looking into Antal Rogán’s shady business ventures for about a year. As we know, investigative journalism is an expensive affair and Hungarian media outlets are far too poor to undertake such ambitious projects on their own. But thanks to the financial assistance of Transparency International Magyarország and Független Médiaközpont (Independent Media Center), plus of course a lot of hard work, these three young journalists did a bang-up job. I should add that for the Georgian aspects of this complicated corruption case Tazo Kupreishvili, editor-in-chief of News.On.ge, assisted the Hungarian team.

The article is a detailed account of the close working relationship between Balázs Kertész, a lawyer who has been making a concerted effort to stay out of public view, and Antal Rogán, currently the number 3 man in the Orbán government. His job title, minister in charge of the prime minister’s cabinet office, is intentionally meaningless. His real task is to spend government money on Fidesz propaganda. He was responsible for funding the anti-immigrant campaign, including staging the referendum. Rogán has long been suspected of being corrupt. But between 2006 and 2014, when he was mayor of Budapest’s posh District V, he gained the reputation of being one of the most corrupt officials in the Orbán administration.

If the relationship between Lőrinc Mészáros and Viktor Orbán is often described as that of a mafia boss and his front man and if the Simicska-Orbán alliance was more like a business partnership, with Simicska acting as a financial adviser, the Kertész-Rogán alliance is a combination of the two. According to the authors, Balázs Kertész is the person who came up with all the schemes that made Rogán (and I assume Kertész as well) a very rich man.

Balázs Kertész at Antal Rogán's inauguration of minister

Balázs Kertész at Antal Rogán’s inauguration as minister

Although stories about Rogán’s more than shady real estate deals have been circulating for only a few years, he began his unsavory career much earlier. His and Kertész’s names first came up in 2003 when the K&H Equities scandal surfaced. A stockbroker named Attila Kulcsár was running a Ponzi scheme. Fidesz, then in opposition, tried to dump the whole scandal on the socialists, but it turned out that several people close to Fidesz were also involved. Among them, Antal Rogán (age 29) and Balázs Kertész (age 27), whose names were found in Kulcsár’s VIP list. Although the members of the parliamentary committee that investigated the case had questions about the two men, thanks to Péter Polt, the chief prosecutor, their names were dropped from the list of suspects.

This early brush with the law was nothing in comparison to what happened in District V. Balázs Kertész was the first to become a member of the district council. Soon enough he was followed by two of his friends from Fidelitas days, Antal Rogán and András Puskás. (Fidelitas is Fidesz’s youth organization, a place where aspiring young politicians learn the tools of the trade.) In no time the trio was running the show, despite the fact that the mayor was a socialist. In 2006 Rogán decided to run for district mayor against the socialist Pál Steiner and won easily. By that time Kertész was deeply involved in the district’s finances. Apparently he was the one who came up with the idea of selling expensive pieces of real estate at below market prices. He designed the transactions in such a way that neither he nor Rogán would suffer any legal consequences from cheating the district. The buyers, of course, had to pay a “surcharge”/kickback, apparently thousands of euros. How much of this money went to Kertész we don’t know.

Kertész also seems to be behind Rogán’s lucrative residency bond business. After Kertész left politics in 2010, he returned to the prestigious law firm where he began his legal career. A couple of years later, most likely in 2013, he joined a much less distinguished law firm. It was this firm that got the job of handling the administrative work for the applicants for residency bonds. Their fee was €5,000, and we are talking about 2,000-3,000 applicants so far. Of course, we don’t know whether, in addition, the Kertész-Rogán duo received kickbacks from the intermediaries abroad who got €50,000 per transaction. I suspect yes.

The most spectacular achievement of the Index team was the discovery of two videos. One proved that Balázs Kertész, Antal Rogán, and Árpád Habony met, despite Rogán’s denial. The other showed three highly-placed Georgian businessmen discussing a power plant to be financed by the Hungarian Eximbank. The parties to this discussion were the representative of the Bank of Georgia in Hungary, a Georgian-Israeli businessman, and the former prime minister of Georgia (2009-2012), Nika Gilauri, who earlier had served as minister of energy and minister of finance.

Unfortunately the meeting took place on a very noisy street, so not everything is audible. It is, however, clear that 5% of the Eximbank loan for the power plant has to be paid to Balázs Kertész. It is also obvious from the partial transcript that the money should be paid in advance in order “for them to start working.” I assume the work entails convincing Eximbank to grant the loan. The man who most likely has that job is András Puskás, deputy CEO of business operations at Eximbank, who used to be Rogán’s right-hand man and deputy in District V. So far no decision has been reached on the Georgians’ request for $68 million. And after these revelations, I doubt that they will see a penny of the promised loan. Whether Kertész has already banked over $3 million on this deal is unknown.

From Index’s article as well as some other commentaries we get a sense of how Kertész and Rogán have reacted to the probe. First, Kertész must have known for some time that journalists were after him. As the investigative team noted, “the closer we got to him, the more evidence of his existence disappeared.”

Second, there is a very good possibility that Kertész and Rogán laid a trap to discredit whatever Péter Juhász, Együtt’s sleuth, and the journalists might uncover. They enlisted a couple of “reliable” Fidesz sources to claim, independently of one another, that Balázs Kertész had been arrested by TEK and that many hundreds of forints were also impounded. The story was, of course, a hoax. If newspapers reported a false story, it would cast doubt on any subsequent stories about Kertész they might publish. At least one Hungarian newspaper fell into the trap.

Third, it is hard to believe how stupidly Antal Rogán tries to cover up his misdeeds. He thinks that if he denies that something ever happened it will simply go away. He denied his helicopter trip (documented by Népszabadság) and in this instance denied his meetings with Habony and Kertész (where again, hard evidence proves the contrary).

Fourth, perhaps his stupidest move once the Index story broke was to remove the recent picture showing Kertész at his inauguration as minister. For such an occasion a politician can normally invite his family members and a very small number of his closest friends. By removing the picture he practically admitted his guilt.

The most important question still remains. How much does Viktor Orbán know about all this? He has stuck with Rogán through thick and thin in the last couple of years, so my suspicion is that he is privy to everything.

November 13, 2016

Gábor Vona and Viktor Orbán: Who will win this political game?

At the end of yesterday’s post I indicated that Gábor Vona, chairman of Jobbik, had just announced his party’s refusal to support the government party’s quest for another round of amendments to the constitution that would introduce a number of changes related to the settlement of foreigners in Hungary. Earlier I wrote an analysis of the notion of constitutional identity, which is the linchpin of the otherwise meaningless constitutional amendments, and published an English translation of the amendments themselves.

The government considers these amendments vital to Viktor Orbán’s impending battle with Brussels over a possibly mandatory distribution of refugees. But changing the constitution requires a two-thirds majority in parliament, which Fidesz-KDNP currently doesn’t have. The government party had been counting on the support of Jobbik, the only opposition party that was wholeheartedly behind the amendments. In fact, it was Jobbik that, from the beginning, championed for constitutional amendments instead of a referendum. Fidesz, however, rejected the proposal and embarked on an expensive, divisive referendum that in the end turned out to be invalid.

What followed was a typical Viktor Orbán move: regardless of the failure of his referendum he decided to go ahead with the amendments to the constitution. But there was a rub. Jobbik demanded a price for its members’ votes, which Gábor Vona set forth early in the game.

For starters, Vona said that he wanted to meet with the prime minister in private. In the last six years, however, it has never happened that the ruler of Hungary sat down alone with an opposition leader. Granting such a privilege to Vona was too demeaning, so Orbán organized a series of “consultations,” starting with Zsolt Semjén of the Christian Democratic Party and his own deputy, which everybody thought was a joke. Then he sent a message to Gyula Molnár, chairman of MSZP, who foolishly accepted the invitation, which he kept secret from the rest of the leading politicians of his party. Once the meeting became known, Molnár tried to explain himself away by saying that the consultation was not about the amendments but about the summit that is taking place at this very moment in Brussels. Since when does Viktor Orbán have consultations with opposition party chiefs about summits?

The long-awaited meeting between Vona and Orbán took place on October 18. In the days leading up to the meeting, Jobbik spokesmen repeatedly indicated that the party would support Orbán and that the Jobbik delegation would cast its votes with Fidesz-KDNP, guaranteeing an easy passage of the amendments. After all, this is what they wanted all along. Yes, but Jobbik was in a perfect position to demand something in exchange for its support of the government party. Vona’s demand was that the government cease selling residency bonds to wealthy Chinese, Russian, and Arab businessmen.

The residency bond sale, which I described as a “colossal swindle,” is the brainchild of Árpád Habony and Antal Rogán. Habony is safely deposited in London. Rogán, on the other hand, has been under incredible pressure, mostly because of Népszabadság’s revelations about his most likely ill-gotten wealth. The residency bond scheme has been severely criticized not only by the opposition but by some higher-up Fidesz leaders as well. In fact, in the last few weeks there were indications that the scheme would be modified. But I very much doubt that Orbán had the total cessation of the program in mind. And this is what Vona demands. If poor immigrants can’t settle in Hungary, rich ones shouldn’t be able to either.

The outcry against the Jobbik demand was not restricted to the government party. Gyula Molnár, chairman of MSZP, also condemned it in almost identical words. Bence Tuzson, one of the many spokesmen of the prime minister’s office, called it “kufárkodás” (profiteering) while Molnár considered it “seftelés” (conducting business in a dishonorable way). The two words are practically synonymous. For good measure Molnár added that Vona’s behavior is “political prostitution” pure and simple.

I am amazed at these reactions. In the world of politics this kind of give and take is perfectly normal. If Viktor Orbán needs the help of Gábor Vona’s party, it is natural that Jobbik will want something in return. After the meeting, Vona talked to the press and announced that Viktor Orbán had rejected his proposal, but a few minutes later Orbán sent a message via Tuzson saying that “he will consider the request of Vona.”

The Hungarian media started speculating about whether Orbán would meet Vona’s demands. Szabolcs Dull of Index simply could not imagine that it will be Viktor Orbán who has to knuckle under. After all, Orbán has convinced the Hungarian public that he is always the one who comes out on top. He is always the winner. In fact, Dull suggested, Orbán wants to get rid of the troublesome residency bonds anyway, and therefore he will readily concede to Vona’s demands. In fact, “he will kill two birds with one stone: he will be able to restructure the residency bond scheme and will receive Jobbik’s endorsement.”

Dull’s theory collapsed less than ten hours later when the government indicated that it has no intention of scrapping the residency bond program. Yesterday, around noon, Lajos Kósa, leader of the Fidesz caucus, announced that in their opinion the two issues, the bonds and the settlement of foreigners, have nothing to do with one another and suggested that Fidesz isn’t counting on the votes of Jobbik. They hope to get the necessary two votes from the “independent” members of parliament. Who these “independent” members would be is not entirely clear, but some Fidesz politicians indicated that they think a few “patriotic” Jobbik members could be found who would turn against Vona. By this afternoon most Hungarian journalists were convinced that Fidesz will put the amendments to a vote on November 8 even if they are not assured of Jobbik’s support.

Antal Rogán, carrying Viktor Orbán's briefcase in Maastricht, October 20, 2016

Antal Rogán, carrying Viktor Orbán’s briefcase in Maastricht today

In trying to win concessions from Orbán, did Vona sow the seeds of his own destruction? Today Magyar Nemzet speculated about why a Fidesz defeat would actually be good for Fidesz and bad for Jobbik. If the amendments are not passed and if Brussels insists on compulsory quotas, Fidesz can blame Jobbik.

Tamás Fábián of Index found this hypothesis compelling, adding that from information he received from people close to Orbán, “Brussels cannot be stopped and within months the compulsory quotas will be forthcoming.” If that is the case, “Jobbik politicians will never be able to get rid of the label of being traitors,” which Lajos Kósa already pinned on them. Fábián is convinced that Vona made a fatal mistake by presenting Orbán with an ultimatum. “He started on a narrow path and will suffer heavy blows along the way.”

Fábián also predicted that the sale of residency bonds will be continued, even if with some adjustments. Although in the last few days Fidesz spokesmen did talk about fundamental changes, two weeks ago Orbán called the program “a successful construction.”

I might add that despite all the dirt that was unearthed about Antal Rogán, he seems to have nothing to fear. Orbán will not let him go. I was astonished to see Rogán in Brussels, walking right behind Orbán. Since when do propaganda ministers go to summits in Brussels? I guess the government is sending a message that he is still under the protection of the prime minister.

October 20, 2016

Viktor Orbán shut down Hungary’s leading opposition paper

By now the whole world knows that Hungary’s leading daily newspaper, Népszabadság, is no more. Although the Budapest correspondents of Reuters and the Associated Press pointed out that the newspaper has lost $18.4 million since 2007, don’t allow yourselves to be fooled. Mediaworks, which owns Népszabadság, makes plenty of money on its other publications, including several profitable regional papers and the popular Nemzeti Sport.

Fidesz may say that it considers “the suspension [of Népszabadság] a rational economic decision,” but ceasing publication altogether is not considered to be an economically sound choice for solving the financial woes of a business venture. Reorganization, restructuring, reducing the size of the workforce–these are some of the most often used instruments to salvage a company. Suspending publication, by contrast, can be a costly affair. There are most likely contracts in force to print the paper for the next few months, and what about the 30,000 some subscribers who will not receive their daily paper on Monday? No, closing the doors of Népszabadság has nothing to do with economics. It is a sordid political maneuver executed by the far-right, dictatorial leader of a country that can no longer be called a democracy.

The hypocritical prime minister wants us believe that “it would be a violation of the freedom of the press if [Fidesz] would intervene in the affairs of the owner of the media,” but it is almost certain that this sudden move was orchestrated by Viktor Orbán himself. Just as we learned only recently that he had been the one who handed down the order to investigate Ökotárs, the civic group responsible for the dispersion of the Norway Funds, two years ago. He lied then as he does now. At the time of the raid on Ökotárs, he was asked whether he played any role in that shameful affair. He denied it, adding that if he had done so, it would have been a crime. Now we have the proof. We know that the prime minister of Hungary, by his own admission, committed a crime in 2014. And I suspect that he did so again while working to eliminate a paper that must have nettled him, especially lately. I wonder what his next step will be in his quest to destroy all independent media outlets. He has been at it for some time, but earlier he didn’t use such heavy-handed and so openly dictatorial methods. By now, it seems, he no longer cares about even the semblance of legality and media freedom.

Darkness, Thomas Toft / flickr

Darkness, Thomas Toft / flickr

In the last few months rumors were flying that the government was trying to buy, through some middleman, Mediaworks, currently owned by Vienna Capital Partners, a private equity firm. In June 2016 Népszava, the oldest Hungarian socialist newspaper, learned that Heinrich Pecina, the majority owner, asked for a meeting with Viktor Orbán. Interestingly, the Hungarian prime minister had no compunctions about negotiating with the owner of Népszabadság concerning the possible sale of the paper. Népszava at that point believed that the “buyer” would be the mysterious “adviser” of Viktor Orbán, Árpád Habony, who is most likely Orbán’s “stróman,” as a front man is called in Hungarian. Others suspected Lőrinc Mészáros, who is usually described as the ultimate “stróman,” the alter ego of the prime minister whose newly acquired fabulous wealth is only partly his. The employees of Népszabadság were living under the constant threat that they would end up in the street and be replaced by a new pro-government owner, just as happened to Magyar Hírlap in 2004 when Ringier, an international media group with headquarters in Switzerland, sold the paper to Gábor Széles, a billionaire with far-right political views.

The journalists working for the paper might have had their forebodings, but I’m sure they never dreamed of such an abrupt and barbarous end to their paper. The question is what made Orbán set aside all niceties and finesse and show his true ruthless self. It seems that the straw that broke the camel’s back was a recent series of investigative articles that appeared in the paper about Hungarian National Bank Chairman György Matolcsy and Antal Rogán, the propaganda minister.

The paper reported that Matolcsy’s lover, while working for the bank, received an inordinately high salary. And once she left the bank, Matolcsy placed her in lucrative positions at some of the bank’s foundations, which serve as conduits to transform the “profits” of Hungary’s central bank from public to private funds.

As it turned out, that was not the end of the Matolcsy story. Since Matolcsy is in the middle of divorcing his wife, he needed an apartment. Soon enough he found just the right one. A lovely, very expensive apartment in the Castle District of Buda. The only problem is that the apartment belongs to the president of the Hungarian branch of Unicredit, Mihály Patai, who is currently the chairman of the Banking Association. Considering that György Matolcsy is heading the very institution that has a supervisory function over the Hungarian banking system, this whole arrangement is highly unethical and suggests a conflict of interest. Népszabadság had begun to investigate possible favors extended by the central bank to Unicredit.

That was bad enough, but then came another story, this time about Antal Rogán, whose extravagant lifestyle and questionable financial dealings have been the talk of the town for a long time. Népszabadság learned that Rogán, his wife, and one of their sons traveled in princely fashion to a wedding. They used a helicopter. Well, I guess nothing is wrong about traveling by helicopter to a wedding if you have enough money, but the story was not so simple. First, Rogán denied the whole thing–until he was confronted with a photo showing him heading toward the helicopter. At this point he switched his story and talked about a kind friend who generously gave him a ride back from the wedding. A day later it turned out that he had used the helicopter both to go to and to return from the wedding. Lies, lies, lies.

Well, these two or three embarrassing stories about people who are perhaps the closest associates of Viktor Orbán were too much for the mafia boss. He gave the order: shut them down! After all, he had no idea what else those two or three journalists who had worked on the stories know. And what paper that wants to live another day will hire them to continue their work? Shutting down Népszabadság doesn’t merely have a chilling effect; it puts Hungarian investigative journalism into a deep freeze.

Viktor Orbán is a vengeful, vindictive, malevolent man who doesn’t forget and who is ready to pursue his victims until they are utterly destroyed. There is no mercy once he decides that somebody is an enemy. At the top of his enemy list are Gábor Iványi, the kind minister of the Hungarian Methodists; Ibolya Dávid, whom he blames for his lost election in 2006; and Ferenc Gyurcsány, who had the temerity to win a television debate against him. And then there are the other lesser-known victims who at one time or the other stood in his way: they often languish in jail for months or years on trumped-up charges. One could go on and on.

Finally, let me quote a bitter Facebook note by Mária Vásárhely, a media expert: “Thank you, European Union. It matters not how painful it is, but it must be said that without you Hungary wouldn’t have ended up where it is now. If you didn’t finance the building and functioning of Orbán’s dictatorship, the whole edifice would have crumbled already. It doesn’t matter how painful it is to point out, but the destruction of Népszabadság, one of the last bastions of press freedom, was purchased with the immense amount of money you have poured into the country and which is now being used by the criminal oligarchs of a criminal state.”

Unfortunately, there is a great deal of truth in this bitter note.

October 8, 2016

Back in business: the Orbán government is after its opponents

After the summer doldrums Hungarian politics is back in attack mode. In the last couple of days we witnessed two highly disturbing events. The first was the frisking of Ákos Hadházy, LMP’s new co-chairman and a member of parliament, by watchful policemen in Viktor Orbán’s private domain of Felcsút. The second was the crude, but potentially damaging, attempt by people most likely close to government circles to discredit Péter Juhász, co-chair of Együtt (Together), who is one of the most effective political activists in the anti-Fidesz camp.

Frisking in Felcsút

Felcsút is under the watchful eyes of the Hungarian police day and night. They make sure that no stranger loiters anywhere near Viktor Orbán’s precious football stadium. Especially suspect are people who are critical of the regime. As are camera crews. In the past, the police would retreat if confronted (I assume quite forcefully) with the argument that they have no right to interfere because the area is public property. At least this was the case about a year ago when Ferenc Gyurcsány managed to film a ten-minute video on life in Felcsút.

Ákos Hadházy was not so lucky when he appeared in Felcsút in the company of the TV crew of the German RTL2. They wanted to take some pictures of the stadium and the infamous choo-choo train which keeps going back and forth on its 5 km track, usually totally empty. They were stopped and, most likely illegally, frisked, and their car was also thoroughly searched. Apparently, a “helpful” neighbor of Viktor Orbán, who has a weekend house in Felcsút, called the police on them, claiming that they wanted to enter Orbán’s house, which was obviously a lie.

Hadházy on his Facebook page described what happened. “I was just smiling, but the Germans were downright shocked.” After their thorough search Hadházy was informed that the reason for this highly unusual procedure is that the country is under a state of “increased preparedness” (fokozott készültség). A brief video taken on Hadházy’s phone can be seen on YouTube.

When Index inquired about this claim from ORFK (Országos Rendőrfőkapitányság), they were told that the police chief of the country had ordered “increased control” (fokozott ellenőrzés) for the whole country between July 1 and September 30, 2016, which allows policemen to stop anyone or any vehicle and do a thorough search. The police didn’t explain the reason for introducing such a measure between these particular dates. I suspect that this incident has nothing whatsoever to do with the “increased control” measures but rather is part and parcel of the harassment of anyone who tries to call attention to the corruption of Viktor Orbán and his family, especially in and around Felcsút.

hadhazy

Today Orbán was accosted by journalists on his way to the yearly Fidesz picnic in Kötcse and asked about the incident. Orbán said that the police “must have had their reasons.” There are rules and regulations that everyone must obey. János Halász, the Fidesz spokesman, went further. He doubted Hadházy’s veracity because “in the past he has come up with so much nonsense that we are handling this case cautiously.” The “nonsense” Halász referred to is Hadházy’s heroic effort to uncover corruption cases related to EU subsidies.

Fidesz media comes to the rescue of Antal Rogán

This is not a pretty story either. Tamás Portik, who is currently serving a fifteen-year sentence for murder and other criminal activities, testified against Antal Rogán in the case Rogán bought against Péter Juhász, co-chair of Együtt. Juhász called him a criminal  and said that, as mayor, he had embezzled a great deal of money through his sales of property in the ritzy District V of downtown Pest. Portik claimed that at one point he was asked to deliver 10 million forints worth of euros from one of Rogán’s “customers” to the mayor. I covered the story in great detail back in June. Since then the Hungarian prosecutor’s office has declined to investigate the authenticity of Portik’s testimony. But, for one reason or another, Rogán and the people around him still don’t feel safe and so decided to go after Juhász.

On September 7 Pesti Srácok, a far-right Fidesz and government supported internet site, came out with a story that Portik’s girlfriend, Erika A. E., “handles his money” in Hungary, some of which is used to support an unnamed but well-known opposition politician. The claim is that some of Portik’s money, about €22-23 million of which is in Switzerland, is managed by his 20-year-old son. It is used to finance opposition parties.

According to Pesti Srácok, Portik’s money is funneled through a “foundation,” which recently received 80 million forints for the support of the politician. The person Pesti Srácok was obviously referring to, even if not by name, is Péter Juhász, who a few months ago asked the public for financial help because on his meager salary as district council member he cannot provide for his family of four.

Once the Pesti Srácok story was out, revelation followed revelation in the right-wing media. Válasz, another Fidesz mouthpiece, revealed that Juhász was the politician in question. A few hours later Attila Menyhárt, a former cellmate of Portik, showed up at Andy Vajna’s by now notorious TV2 studio. He recalled that Portik had proudly told him that he is able to influence politics even from inside his cell. He said that Péter Juhász was “Portik’s man, and that means a lot. He is the one who tells Juhász what to say, what to do, and what kinds of statements to make in public. Portik considers Juhász his puppet.” Portik would like to see the current government overthrown, which he believes will result in his freedom.

Naturally, Fidesz decided to pursue this juicy story. Moreover, as if the story weren’t damning enough on its face, it kept getting embellished. By the time it got to István Hollik, a member of the KDNP parliamentary delegation who was assigned to the case, the claim was that Juhász had admitted that he had accepted money from Portik.

How did this story gain traction? According to Juhász, Erika A. E., whom he didn’t know at that point, phoned him and offered him a picture on which Portik and Rogán can be seen together at some kind of gala gathering. The picture was evidence that the two men knew each other, or at least had met. When Erika delivered the photo, she asked whether Juhász would be good enough to collect some articles about the Rogán-Juhász trial for her from the internet because she is not too familiar with the ins and outs of the internet. She would like to give them to Portik, whom she visits frequently. Juhász obliged, collected the material, and was seen giving an envelope to Erika.

Juhász’s friendly gesture was a potentially costly mistake. We can expect a lengthy, ugly case that will track down the financial sources of the “foundation” and try to uncover the contents of the envelope. Rogán and his friends might have gotten hold of a story, however flimsy, that will ruin Juhász’s reputation.

September 10, 2016

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