Tag Archives: Antal Rogán

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

 

Another Fidesz scandal: Hunguard and Antal Rogán, the inventor

Scandal after scandal in Fidesz circles. Following on the heels of the revelations about the alleged bribery case involving Roland Mengyi, here is a new one. This time a much more important person is being implicated: the #3 man in the Fidesz hierarchy, Antal Rogán. The propaganda minister’s “financial affairs” are far too numerous and, although he is currently being shielded by his benefactor and boss, Prime Minister Viktor Orbán, and Chief Prosecutor Péter Polt, I wonder how long he can remain in his post without inflicting serious political damage on the Orbán government.

I have often complained about the incomprehensibility of Hungarian investigative journalism when the case under scrutiny has something to do with business. This latest scandal, Antal Rogán’s involvement with Hunguard, is a case in point. Admittedly, the corporate structures some Hungarian entrepreneurs come up with are byzantine by design.

Hunguard Kft., an information technology company, is not new. It was established in 1990 by four mathematicians. It was in the news a lot during the summer of 2014 in connection with the infamous utility rate reduction program. In conjunction with this program, the invoices of every utility company had to be audited by a professional auditor to ascertain that the bills the customers received were calculated accurately. That requirement was suspect from the first, but further amendments raised the suspicion that certain people in the government wanted to guarantee that only Hunguard Kft. could have the job. For some bizarre reason the company entrusted with this task had to have national security clearance. Behold, among the three or four companies that could have been in contention for the contract only Hunguard had the requisite clearance.

A year later Népszabadság reported that Hunguard most likely did exceedingly well with its auditing of 67 different utility companies with an estimated combined earnings of one billion forints. Interestingly enough, all the utility companies passed with flying colors, which only strengthened the suspicion that the audit was superfluous in the first place. It was also more than suspicious that while in the original bill auditors had to rotate yearly, Szilárd Németh, the politician in charge of the propaganda campaign, took this provision out of the final version of the bill.

So, from the very beginning it was clear that Hunguard’s fortunes were closely tied to certain leading members of Fidesz. They even included János Lázár, who when one of Hunguard’s competitors managed to get national security clearance eliminated that particular requirement and introduced something called “telephely-biztonsági engedély,” which I believe is a permit the company gives to those who can safely enter its premises. This was a simple solution to keep Hunguard as the only auditor of state utility companies. They would give permission to Hunguard, not to its competitors. Easy.

This was all we knew about Hunguard Kft. until yesterday when Népszabadság, after doing some further research, returned to the topic. Their research led them to Cyprus where, after paying a fee, they received details about the business activities of Hunguard. And here things become complicated, but I will cut to the chase. The owners of Hunguard Kft. wanted to be certain that their ownership was well hidden, so they engaged the services of the Kinanis Fiduciaries Ltd. in Malta, described by a Hungarian lawyer specializing in international business activities as a well-known “bizalmi vagyonkezelő” or a kind of trustee who for a certain fee becomes the owner of the company on paper. Behind the deal is a secret legal agreement which allows only the true owners to make business decisions. The graph below shows the more complicated structure of the arrangement.

Hunguard

Népszabadság notes that only the bank handling the two owners’ finances and the lawyer who represents them vis-à-vis the “trustee” in Malta know the identity of the real owners. And here is the clue. The lawyer in this case is Katalin Karafiát’s law firm, which has for years been in a close business relation with Antal Rogán. Népszabadság was told by people familiar with the business activities of Hunguard that the man behind the whole complicated business structure “is none other than the Fidesz leader who has been much attacked lately for shady business activities.” He is described by the paper as “a master at operating such company networks.” Well, I guess it is not terribly difficult to figure out whom the paper’s informers have in mind.

At this point a commenter to Népszabadság’s August 9th article came to the paper’s help with another clue. The commenter, who wittily called himself “nokiás kamion” (Nokia truck), called attention to something he found on the internet: a patent was registered for “the method of digitally signing an electronic file, and authenticating method.” The inventors were listed as “Balázs Csík, Csaba Lengyel, and Antal Rogán.”

There are several oddities regarding this patent. The original, which was registered at the World Intellectual Property Organization with headquarters in Geneva, listed the three men as the inventors. But when it came to the registration in the Hungarian patent office (Szellemi Tulajdon Nemzeti Hivatala) the trio didn’t want to be called “inventors” (feltalálók) but only “jogosultak,” i.e. someone who holds the rights. Népszabadság correctly points out that inventors are normally proud of their invention and rarely hide their role in creating a new product. Perhaps Rogán’s presence among the inventors had something to do with their modesty.

In February the three owners of the patent sold their rights to MobilSign Kft., which now markets the product “MobilSign” as “a system capable of recording the dynamics of a handwritten signature, it produces the advanced electronic signature and assigns it to PDF documents.” Until December MobilSign Kft. was owned by Balázs Csík and Csaba Lengyel. Now the owner is someone called Petra Pozsgai.

Once discovered, Rogán with a straight face claimed that he had an active role in the invention of this electronic signature which, let’s face it, is most unlikely. Rogán has a degree in economics and has no information technology experience. Moreover, he is one of the busiest Fidesz politicians around. He couldn’t possibly have spent three years developing a software program, as he claims, even if he knew something about programming.

The most plausible conclusion one can draw is that Csík and Lengyel paid off Rogán for his good offices over the years by forking over a third of the profits from their invention.

August 10, 2016

Fidesz and the criminal underworld

Yesterday we learned from Medián’s fascinating poll on corruption that a fair number of Hungarians think of their government as a criminal organization and the country they live in as a mafia state. They are not imagining things. Not only is the Orbán government corrupt. We also have convincing evidence that certain members of Fidesz and the government had dealings with figures in the criminal underworld.

Earlier I wrote about Antal Rogán, who during his tenure as mayor of District V of Budapest may have engaged in an illegal transaction with Tamás Portik, a convicted murderer. Rogán’s name also cropped up in connection with the investigation of László Vizoviczki, another shady character who might be responsible for several deaths from drug overdoses at his nightclubs.

That Rogán had dealings with Vizoviczki is not surprising. After all, Vizoviczki owned or rented several nightclubs in District V. Rogán most likely also knew Portik since Portik’s wife/girlfriend had financial dealings with the District through the purchase of a piece of real estate.

But evidence has surfaced indicating that Antal Rogán was not the only Fidesz politician with ties to the Budapest underworld. In a letter written to the prosecutor’s office in April of 2013, in which he outlined a possible plea agreement, Vizoviczki indicated that he had extensive dealings with other important Fidesz politicians.

Vizoviczki’s implicit threat–make a deal or I’ll spill the beans–was not idle. Jobbik’s N1TV, a well-informed internet site which earlier discovered Vizoviczki’s letter to the prosecutors, yesterday made another discovery. According to the story, on February 12, 2013, the police searched Vizoviczki’s four-story mansion in Buda. Among the items found was a 10-page letter addressed to “Gábor.” Gábor turned out to be Gábor Kubatov, currently one of the three deputy chairmen of Fidesz. In it, Vizoviczki asked Kubatov to use his good offices with the prosecutors and the police to get him released from jail and placed under house arrest for the duration of his trial. As Vizoviczki reminded Kubatov, he deserves assistance in exchange “for his support in the campaign (Reform Plan).” The content of this letter is known only from the very short description written by the policeman who took an inventory of the confiscated items because the prosecutors found the letter so insignificant that they didn’t include it in the material that was sent over to the court. On May 30, 2013, Vizoviczki was released from jail.

On the basis of this very brief summary of the letter I think it’s fair to assume that Vizoviczki was a generous supporter of the Fidesz campaign in 2010, which may be one reason that his case, which is still dragging on, hasn’t been vigorously investigated. Neither the police nor the prosecution seems to be eager to go after Vizoviczki. The police are most likely trying to bury the case because high-ranking police officers were allegedly in his pay. And, as we now suspect on the basis of Vizoviczki’s letter to Kubatov, Fidesz is probably also beholden to him.

The emergence of this short summary of the letter must have come as a shock to Kubatov because in the last 24 hours he hasn’t been able to come up with a coherent story about the background of the letter. His answer at a press conference yesterday about his acquaintance with Vizoviczki was fairly light-hearted. “Of course, I know him. I’m a politician and it is my business to meet people,” he answered to a question from Index’s journalist. A few hours later he realized that his flippant answer might not have been appropriate. In the second iteration, he tried to minimize his contacts with Vizoviczki. Kubatov claimed to the pro-government Magyar Idők that they had met only twice, once at the 110th anniversary of the kindergarten they both attended and once when Vizoviczki approached him about his plans to invest in sports, specifically in Fradi, Kubatov’s football club. Kubatov was not interested. Otherwise, according to Kubatov, on that occasion they talked about the terrible tragedy at the West-Balkan disco where several people died because of overcrowding and the subsequent stampede. Kubatov and Vizoviczki discussed safety measures that should be introduced in discos to prevent such tragedies in the future.

How well did these two men know each other? I suspect much better than Kubatov now lets on. On the photograph taken at the anniversary celebration of their kindergarten in April 2012 the two men are sitting next to one another. Admittedly, this doesn’t prove anything since the crowd seems to have divided itself largely along gender lines and more women than men attended the gathering. So even if they were perfect strangers they may well have ended up sitting beside one another. But my hunch is that they were no strangers.

kubatov-Viz

The whole story is suspicious, starting with the fact that the prosecutors didn’t include Vizoviczki’s letter to Kubatov in the material they passed on to the court. This cannot be a coincidence, especially in view of the close relationship between the prosecutor’s office and Fidesz. The prosecutors, realizing the damaging material in that letter, hoped that the document would never surface, as indeed it still hasn’t.

In any case, I’m not the only person who finds the prosecutors’ handling of this important letter more than strange. Today MSZP called on Péter Polt to explain why the prosecutor’s office ignored the letter written by Vizoviczki to Kubatov. It’s easy to predict what the answer will be. The same as when the prosecutors were supposed to investigate Tamás Portik’s testimony about the bribe he allegedly handed to Antal Rogán. The prosecutors announced a couple of days ago that they see no reason to investigate Portik’s allegation. Charges were dropped.

July 29, 2016

Hungary’s sudden interest in the eurozone

Mihály Varga, minister of economics, just dropped a surprise package. In a lengthy interview, he talked about Hungary’s plans to join the Eurozone by the end of the decade.

It’s difficult to reconcile the government’s conflicting messages. Earlier, János Lázár, the #2 man in the Orbán government, said that he would vote against membership in the European Union if the decision had to be made today. A week later he drew a parallel between the Soviet Union and the European Union, stressing Hungary’s fervent desire to remain independent. Moreover, the Hungarian government has just begun a venomous campaign against the European Union’s refugee policies ahead of a referendum which, according to the democratic opposition parties, is the first step in realizing the Orbán government’s resolve to leave the EU. Tamás Bauer, a keen observer of Hungarian politics, goes even further. “Orbán wants more than Boris Johnson and Nigel Farage did. He doesn’t want to take his country out of the Union. He wants to destroy the Union itself.” And now comes this interview with Varga, who talked in specific terms about the Hungarian government’s intent to join the Eurozone in the near future.

The media hailed this interview as indicative of a complete turnabout in the Orbán government’s policies toward the European Union. Actually, a year and a half ago there was a similarly unexpected announcement by Antal Rogán, who proclaimed that sometime between 2018 and 2020 Hungary will be in a position to introduce the euro as the country’s currency. His statement contradicted Viktor Orbán’s position, who in prior years had said that he was in no hurry to join the Eurozone because being “outside of it means great independence” which is, as we know, a primary consideration for the prime minister.

The last time Orbán talked about his government’s position on joining the Eurozone was in February of this year, in a speech delivered to Hungarian ambassadors. He refrained from committing himself one way or the other. At this junction, he said, he believed that more and more member states are interested in creating “a core Europe” which, he quickly added, is not the same thing as a “two-tiered Europe.” The members of the Eurozone will constitute the core. Once a country decides on a currency union, it has to give up a great deal of its national sovereignty. In the next few years Hungarians will have to have think very hard whether “we want to belong to a group of countries with a European entity or we will follow an independent national and economic policy.” There are people who support the creation of a United States of Europe, while others think that “one should not make snap decisions.” In any case, “we have to think hard about the question.” This certainly didn’t sound like an endorsement of Eurozone membership, but Orbán left the question open. It could be debated later, in case there is a change in the political constellation on the Continent.

At this point at least, Orbán believed that Hungary would get along just fine economically and wouldn’t suffer any negative consequences from being outside of the “core.” But then came today’s interview with Mihály Varga, who said that he is “very much hoping that we will have the euro, and happily it is up to us when that will be.” He predicted that by the end of the decade the Hungarian currency will be the euro. He explained that Hungary has fulfilled all the requirements for membership with one exception: it is not a member of ERM-II. For Eurozone membership a country must belong to the Exchange Rate Mechanism to ensure that exchange rate fluctuations between the euro and other EU currencies do not disrupt economic stability within the single market. ERM-II allows a ±15% fluctuation band, which is achieved by interventions coordinated by the European Central Bank and the central bank of the non-euro member state. As Varga pointed out, Hungary is in good shape in this respect. In the last two years the forint has remained well inside the band. The maximum fluctuations in the exchange rate between the euro and the forint have been +2.6% and -5.8%. According to Varga, Hungary didn’t join ERM-II because with such a move the country would have lost its competitive advantage.

eurozone

Hungary is not rushing to join ERM-II. Varga indicated that the Czech Republic, Poland, and Hungary constantly coordinate their moves and will decide when such a step is advantageous to them. It all depends on how stable the euro is in the next few months or year and how competitive the Hungarian economy is.

The two largest democratic opposition parties, MSZP and DK, reacted skeptically to the Varga interview. MSZP called it “a cheap performance” while DK somewhat sarcastically remarked that Varga “must have suddenly seen the light.” DK’s spokesman added that if Orbán shares Varga’s views, he should immediately call off the hate campaign against the European Union and the referendum on quotas, which would initiate Hungary’s exit from the Union.

I don’t think Varga’s statement means that the Orbán government has made a serious commitment to work toward joining the Eurozone. We have heard such pronouncements before from other members of the current government. But Péter Szijjártó’s offer today to take over the presidency of the European Union from the United Kingdom in the second half of 2017 indicates to me a more conciliatory attitude toward Brussels. In case Great Britain is unable to fulfill its obligation, the Hungarian foreign minister said, Hungary would be happy to assume its duties. He added that Hungary’s presidency between January 31 and July 30, 2011 was by all accounts considered to be a success. Hungarian diplomats proved themselves up to the task. Of course, Szijjártó didn’t add that those diplomats no longer work for the Ministry of Foreign Affairs. He and Tibor Navrancsics purged them.

These friendly overtures by two ministers of the Orbán government cannot be a coincidence. Something must have happened in the last few weeks or even days that prompted Viktor Orbán to try to curry favor with Brussels. But I agree with the spokesman of DK that it is impossible to make overtures to the European Union and at the same time conduct a vicious anti-EU campaign. I really wonder what is in Viktor Orbán’s mind. Perhaps the whole thing is nothing more than the usual “peacock dance” to which we have become accustomed by now. But the question still remains: why, and why now?

July 19, 2016

Antal Rogán’s legal troubles: two organized crime bosses know a lot about him

The last time I wrote about Antal Rogán’s possible link to members of organized crime was a month ago, after Tamás Portik’s devastating testimony in a civil suit Rogán initiated against Péter Juhász. Here is the background.

Antal Rogán, the number three man in the Orbán government, was mayor of Budapest’s District V between 2006 and 2014. In fact, Rogán has spent his whole life as a modestly paid politician. Yet, especially in the last decade or so, he became a rich man. Péter Juhász, a former human rights activist and now one of the leaders of Együtt as well as a council member of District V, has made it his goal to uncover suspicious sales of municipal property. Juhász unearthed several cases where real estate was sold way below market price. One such piece of real estate went to the common-law wife/girlfriend of Tamás Portik, a convicted murderer and a member of the Budapest criminal underworld. Juhász, in one of his public appearances, called Rogán a criminal. Rogán decided to sue, which may have been a huge mistake on his part.

Juhász’s lawyer argued that Tamás Portik, who during his trial testified that he knew Rogán and that Rogán was lying when he claimed otherwise, should be called to testify in connection with real estate deals he knew about. The defense was especially interested in the sale of a very expensive apartment to Árpád Habony’s mother-in-law, in which Portik acted as a go-between. He was the one who allegedly delivered 10 million forints worth of euros to Rogán as a bribe in connection with the sale. Independent media outlets found the details of the encounter as described by Portik to be realistic, and the consensus was that Rogán is most likely guilty as charged.

But that was not the end of Rogán’s troubles. He is now being tied to László Vizoviczki, who comes from the shadowy world of Budapest night life and who has been under investigation ever since 2012. Over the years Vizoviczki built a restaurant/night club empire consisting of more than 40 business ventures in different parts of the city, most of them in Districts III and V. The word on the street was that without the okay of Vizoviczki no night club could open in Budapest, especially if it was located near one of his own. He achieved such dominance with the active cooperation of crooked cops and crooked politicians.

Although there was an investigation into the links between Vizoviczki and high-ranking policemen, not one of the 61 policemen initially charged in the District V station has to worry. The Chief Prosecutor’s Office closed the case in May 2015.

Despite the closed case, it seems that Vizoviczki spent millions, if not hundreds of millions, of forints for police protection. This usually involved harassing his competitors and making sure that no trouble ever came to his own business ventures. Some of the high-ranking policemen were also the source of inside information that helped Vizoviczki in his dirty dealings. An excellent, detailed summary of Vizoviczki’s rise to power and his connection to the police appears in the first installment of a Vizoviczki portrait by an investigative journalist of 444.hu.

vizoviczki

Vizoviczki also had extensive dealings with the local politicians who were instrumental in granting or denying business permits. By 2012, when Vizoviczki’s arrest was imminent and the investigators of the National Defense Service were already on his case, a conversation took place between Vizoviczki’s chief of security and a certain József T., who oversaw the District V business ventures of the crime boss. József T. reported that the district notary, a kind of city manager in the Hungarian system, had given a permit to somebody who, in the Vizoviczki man’s opinion, shouldn’t have received one. The security man says in that telephone conversation that if the city manager gave out such a permit it was “without the knowledge of Mr. Rogán” and, if that is the case, “they went against Mr. Rogán’s wishes” (az ő számításait keresztbe húzták). Although it is pretty certain that over the years the city manager received millions from Vizoviczki, after a lengthy investigation he was acquitted. The tapes were illegally obtained and hence couldn’t be used against him.

But Rogán and his city manager might not be off the hook yet. A few days ago an internet television station associated with Jobbik, N1TV, released a lengthy interview with one of the accused in the Vizoviczki trial, a female employee. She said that the terrace permits cost the businessman 4 million forints at the beginning of every season. She added that Rogán insisted on a personal meeting with Vizoviczki and that, if he was too busy to meet the mayor, the terrace openings had to be postponed. The interview can be seen on the station’s website.

That’s not all. Yesterday N1TV published a 19-page letter written by Vizoviczki, who was already in jail, in which he outlined a possible plea agreement between himself and the prosecution. The deal would be that he would say nothing about Fidesz politicians but would tell everything he knows about the socialists. He made it clear that he has plenty of information on Fidesz and indicated that if the prosecution refuses to oblige, he will not hesitate to talk about their politicians’ affairs. He very much hoped that he wouldn’t be forced to take such steps because his sympathies lie with the present government. The offer apparently involved “a member of parliament-mayor” who, we must assume, was an MSZP politician. He claimed that he has information on criminal activities of this person and his deputy that would rival the sensation caused by Ferenc Gyurcsány’s speech at Balatonőszöd about his lies of the past.

Admittedly, three years have gone by since this letter was written, but on July 6 Pesti Srácok, a Fidesz-sponsored internet news site, reported that Vizoviczki will apparently be released on a 250 million forint bail. Release on bail is relatively rare in Hungary, and therefore the news caused quite a stir. Given Vizoviczki’s extensive business dealings in District V, attention immediately centered on the possible connection between the unexpected release of Vizoviczki and Tamás Portik’s testimony against Rogán at the civil suit Rogán launched against Péter Juhász. The connection between the two events is made stronger by Vizoviczki’s sudden announcement a few days after he received the good news of his release that he has never met Rogán in his life. It looks as if the prosecutors rushed to help Antal Rogán who, it seems, is truly worried about his political future.

July 16, 2016

Another government shake-up: Greater confusion guaranteed

János Lázár has been the focus of a great deal of media attention of late. His often provocative behavior and his less than diplomatic comments about fellow politicians and important oligarchs made a lot of political observers wonder when Viktor Orbán will deem it necessary to shove his currently number one man into the background. The discussion over Lázár’s political future gained intensity last fall with the appointment of Antal Rogán as chief of the Prime Ministry’s Cabinet Office, nicknamed Viktor Orbán’s propaganda ministry, which was created especially for Rogán. Some people believed that the creation of this new office weakened János Lázár’s position. There were also reports that Lázár was not too keen on the idea of placing another center of power inside the Prime Minister’s Office.

Speculations over Lázár’s future flared up again when a week ago he announced the retirement of Mrs. László Németh, undersecretary in charge of financial services and postal affairs. Her appointment as minister of national development in 2010 caused quite a stir. She was an absolute unknown without much educational background. But she was Lajos Simicska’s close friend and business partner. Through her Simicska pretty well controlled the whole ministry of national development. In 2014 Orbán, who was obviously already thinking of loosening Simicska’s influence over financial matters, replaced her with Miklós Seszták. Surprisingly, this was not the end of Mrs. Németh’s career. Orbán found a place for her in the Prime Minister’s Office. Mrs. Németh hasn’t yet reached the official retirement age of 65, and therefore I assume that her “retirement” wasn’t exactly voluntary. But Fidesz will find a job for her somewhere else.

Mrs. Németh’s “retirement” is probably not related so much to the Orbán-Simicska fallout as to the so-called Spéder case, about which I wrote earlier. The case is very complicated, but the most likely explanation for Viktor Orbán’s ire and his decision to unseat one of his formerly favorite oligarchs was Spéder’s less than subservient behavior toward his benefactor. Certain financial transactions were made that, in Orbán’s opinion, hurt his government’s interests. It was Mrs. Németh who was supposed to keep an eye on Spéder, which she failed to do. At least this is the most likely charge against her.

But what does all this have to with János Lázár? Quite a bit. First of all, a week ago Lázár announced that Zoltán Spéder is his friend, whom he is not going to abandon. According to rumor, the police have taken, among other things, taped telephone conversations between Simicska and Spéder, which were most likely recorded by Spéder. Whether this rumor is true or not, most likely in Orbán’s head there is a connection between Simicska, Spéder, Mrs. Németh, and perhaps even János Lázár.

In record time Mrs. Németh was replaced by Andrea Bártfai-Mager and was given the title of government commissioner, a position that carries ministerial rank. Bártfai-Mager is a member of the National Bank’s Monetary Council, so György Matolcsy, chairman of the bank, may well have recommended her for the job. Most significantly, Bártfai-Mager will not be under the supervision of the head of the Prime Minister’s office, János Lázár, but will report directly to Prime Minister Viktor Orbán.

Mrs. László Németh and her replacement, Andrea Bártfai-Mager / Source: 444.hu

Mrs. László Németh and her replacement, Andrea Bártfai-Mager / Source: 444.hu

With these changes Lázár will lose power over important sectors of the government edifice: the affairs of the Hungarian Development Bank and 18 state-owned companies associated with it; the Hungarian Postal Service, which unlike its American equivalent is an important financial institution; and the integration of the credit unions, which used to be handled by Spéder. Lázár will end up looking after such things as public administration, rural development, EU subsidies, national policy, and heritage conservation.

Although strictly speaking it is an entirely different matter, I should mention in passing that it also looks as if the troublesome issue of the House of Fate, a kind of Holocaust Museum Orbán style, which was most likely Lázár’s idea in the first place, will be taken out of his hands. The task of doing something with the brand new, impressive building, which has been standing empty for well over two years, will be assumed by Zoltán Balog’s already overburdened ministry of human resources.

There is widespread consensus in Hungary that Orbán is heading a government that functions very badly. He himself seems to realize its shortcomings. But his usual fix is to change the government’s structure. He makes ad hoc decisions on structural changes, decisions that by now have resulted in a bloated government and total chaos. Dozens and dozens of government commissioners and over one hundred undersecretaries with all sorts of special jobs have only increased bureaucracy. The talk is always about efficiency and reducing the number of civil servants, but the number of political appointees keeps going up.

Now, it seems, Viktor Orbán has come up with yet another reorganization of the government. The announcement, which was totally unexpected, came from János Lázár this afternoon at his regular Thursday government “info.” He said very little about the details, not because he tried to be secretive but because I suspect he himself doesn’t know much about the impending changes.

So, what’s in the offing? I think Index put it best: “Orbán turns everything upside-down: he is creating two little governments.” Yes, this is the gist of it as far as I can ascertain. As it stands now, once a week the ministers and their undersecretaries get together for what we in English would call a cabinet meeting, presided over by Viktor Orbán. In Hungarian it is called “kormányülés” (government meeting). It is here that final policy decisions are made.

Now, in addition to this group, Orbán will create two “cabinets.” One will be called “gazdasági kabinet” and the other “stratégiai kabinet.” These cabinets will have wide decision-making powers. The idea is that these cabinets, whose membership will vary depending on the subject matter discussed, will allow government officials to focus on important questions in greater depth.

Such an arrangement might make sense if these “cabinets” had only an advisory role, but I don’t see how the decisions of the weekly meeting of ministers and those of the lower-level cabinets can be brought together into a cohesive whole. I’m convinced that the chaos and confusion that now exists in the Orbán administration is nothing compared to what will happen when two mini-governments compete with the real “cabinet.” I don’t know whether such an arrangement exists anywhere else in the western world or whether Viktor Orbán’s latest brainchild will have the dubious distinction of being a unique addition to his illiberal state.

July 7, 2016

Antal Rogán’s decision to sue might have backfired

In April of 2015 Antal Rogán, today one of the most important members of the Orbán government, sued Péter Juhász of Együtt because Juhász had called him a criminal in connection with his real estate dealings while he was mayor of District V in Budapest. District V constitutes the heart of Budapest, where perhaps the most valuable pieces of real estate can be found. The opportunities for corruption in city halls are numerous, especially when a great number of buildings are still owned by the municipality. That was the case in District V. Over Rogán’s eight years in office, 800 units–apartments as well as storefronts–were sold to private individuals.

According to a city ordinance, the tenant of a property owned by the municipality has the right to purchase the rented property at a reduced price if the city decides to sell. Rogán and his fellow city politicians apparently devised a scheme to jack up the rents so high that the tenants, who had the right of first refusal, were forced to leave the premises for financial reasons. Then came a “friend” who rented the place for a couple of months, after which he could buy the property at a 30% discount to the market value. Often Rogán allowed further illegal cuts in the purchase price, with some individuals acquiring valuable pieces of property at half price. A few months later the new owner sold the property for twice his purchase price. The assumption is that all these “good offices” on the part of the mayor and other district officials cost money, which went straight into the pockets of the facilitators, including Rogán himself, whose visible enrichment has been the talk of the country for a number of years.

One case especially aroused interest because it involved a well-known criminal, Tamás Portik, who is currently serving a 15-year sentence for his role in instigating several murders. In 2014 it came to light that Portik’s common-law-wife or girlfriend, Marianne Pápa, who also happened to be the aunt-by-marriage of Árpád Habony, the mysterious advisor of Viktor Orbán, with the help of Portik managed to get a 212 m² storefront for 52 million forints, which they subsequently sold for 102 million, its fair market value. It was at this point that Juhász, who was by then a member of the city council of District V and therefore had access to the relevant documents, called Rogán a criminal who received kickbacks from well-known underworld characters.

A month after Juhász’s accusation, in January 2015, Rogán sued Juhász for 1 million forints by way of compensation and demanded a statement from him admitting that he had “falsely stated that during the mayoralty of Antal Rogán the municipality had any business dealings with Tamás Portik or with any person or company connected with him.” The court case got underway on April 16, but Antal Rogán didn’t show. I should add that by that time Juhász had filed several complaints in connection with the real estate deals and an investigation was underway. Juhász’s lawyer asked the judge to summon Portik to give evidence because Portik, on several occasions during his own trial, had testified that he knew Rogán and that Rogán was lying when he claimed otherwise. Not surprisingly, Rogán’s lawyer objected, but to no avail. The judge decided to call Portik to testify.

The court appearance was scheduled for yesterday, June 17. Rogán and his lawyer were not happy. They wanted to disqualify the judge because “the case is dragging on too long.” Moreover, Rogán expressed his dissatisfaction that the judge had set the date of the next court appearance without consulting him first and that, as a result, he cannot face his accuser. Once it became known that Rogán was refusing to appear in court, now for the second time, the opposition media indicated that Rogán for one reason or another doesn’t want to face Portik. As it turned out, he had every reason to avoid him. Even the restrained and cautious Népszabadság wrote in an editorial that Portik’s description of his relationship with Rogán was realistic. Yes, we can doubt the veracity of Portik, but can we believe Rogán? What about Rogán’s inexplicable enrichment? Portik’s testimony was devastating, the paper claimed.

The rules and regulations concerning the testimony of a witness are roughly the same as in the United States. If a witness is later found to have lied under oath, he can be charged with the crime of perjury. Therefore, Juhász argues, Portik’s testimony should be taken seriously.

From the testimony it became clear that Portik was well acquainted with the way Rogán’s scheme worked. He was familiar with the property Árpád Habony’s aunt acquired, and he said he was involved in the transaction as a kind of go-between. Allegedly, Rogán urgently needed 10 million forints, and because both “Árpi and Marianne” understood that Portik knew Rogán, they asked him to deliver the amount in euros. Portik described the exact location of the Fidesz office where he handed the money to Rogán. Apparently, Rogán later complained that the money he received wasn’t quite enough, at which point “Marianne remarked that, as it is, Tóni is far too expensive.” That apparently wasn’t the only encounter between Rogán and Portik. They were both guests of honor at the opening of Nobu, Andy Vajna’s restaurant in the Kempinsky Hotel in Budapest.

Péter Juhász with his lawyer and Portik in the courtroom

Péter Juhász with his lawyer and Portik in the courtroom

Rogán’s lawyer was in trouble, and his only strategy was to rely on a 2008 conversation between Sándor Laborc, head of the National Security Office, and Portik. Portik had approached him to complain about right-wing elements in the police force who were badgering him to hand over incriminating information about leading members of MSZP. Portik at this point was very worried about a Fidesz win in the 2010 election and therefore offered to find dirt on men in the service of Fidesz, stressing during the conversation his allegiance to MSZP. Rogán’s lawyer kept returning to this conversation, trying to prove that Portik’s story had to be sheer fabrication because, given his strong commitment to the left, he couldn’t have had highly-placed Fidesz friends. A feeble argument.

The government mouthpiece Magyar Idők was also in trouble when it came to discrediting Portik’s testimony. It claimed that Portik didn’t remember the details of his meeting with Rogán, which was simply not true. The paper also maintained that Portik contradicted himself because he testified that he had never given any money to a Fidesz politician when, in fact, he had. But was that a contradiction? Of course not. Surely, there is a difference between giving your own money to a person and delivering somebody else’s money.

888.hu invoked the specter of communism. Portik, an ordinary criminal, is for them “one of the last undercover agents” of the Kádár regime, who has been engaged in dirty political work against Fidesz ever since 1990. Liberal journalists hate the leading Fidesz politicians so much that they are ready to use a feared criminal to discredit the government.

On the other hand, Magyar Nemzet, nowadays a conservative opposition paper, took Portik’s testimony seriously. “If one tenth of what we have heard from Portik is true, Rogán must go,” László Szemán wrote in an editorial. As the title of the piece indicates, Orbán has no choice. He must let him go. The dominoes are falling.

June 18, 2016