Tag Archives: Bertalan Tóth

MSZP is grasping at straws as its support plummets

At 1:00 p.m. today HVG published Medián’s latest opinion poll on the state of Hungarian party politics and the popularity of politicians. The message MSZP’s leadership received was shocking. For the first time in 25 years, MSZP’s support among determined voters sank below 10%. At 3:45 p.m. Gyula Molnár, MSZP chairman, released a short communiqué on the party’s website: “MSZP’s offer is still alive.” In it, Molnár called attention to the Závecz Research Institute’s quick poll showing popular support for the party’s “generous offer,” after which the following sentence was tacked on: “If all six parties outside MSZP find the person of Ferenc Gyurcsány acceptable on the list, then we are certainly open to negotiations concerning the issue.” Well, that didn’t take long.

After László Botka’s eight months of activity that has only damaged the party, it seems that some forces wouldn’t mind his retirement to Szeged. The interview last night with Tamás Lattmann on ATV’s Egyenes beszéd might point to such a turn of events. Originally, Lattmann was invited as a legal expert on international law to discuss Hungary’s rather belligerent attitude toward Ukraine and this position’s legal ramifications. But it seems that Lattmann had other things on his mind. He apparently indicated before the show that he would like to talk about something else. And that something was hot stuff.

You may recall that at the end of January Lattmann announced his candidacy for the premiership as a non-party candidate, representing civil society. At that point there was no officially declared candidate, and Lattmann believed that a non-party person might be able to expedite negotiations among the left-of-center parties. He also hoped that he could open the door that at the moment divides parties and civil society. But then came László Botka, and Lattmann’s name disappeared from the news.

Lattmann in the interview on Egyenes beszéd claimed that by December of last year there was political agreement among four parties–MSZP, DK, Együtt, and Párbeszéd–which included a joint candidacy for the post of prime minister. He would have been the candidate. But then came László Botka, and the promising negotiations came to a screeching halt. Lattmann’s story about the successful negotiations is not new. We have heard Ferenc Gyurcsány and Lajos Bokros talk about them innumerable times. But that these parties were thinking of an outsider as the candidate for the post of prime minister is certainly new.

Tamás Lattmann

Lattmann gave details. He had negotiations concerning his candidacy with Gyula Molnár, MSZP chairman, Bertalan Tóth, head of MSZP’s parliamentary faction, István Hiller, head of the top party leaders, and Zsolt Molnár, an important party leader, especially in Budapest politics. Lattmann also had talks with DK. As for the anti-Gyurcsány strategy, Lattmann claims, that was Botka’s contribution to MSZP’s policy. Prior to his arrival on the scene, by December, an MSZP-DK understanding was a done deal, including Gyurcsány’s presence on a common party list.

How did the parties in question react to Lattmann’s revelations? According to the communiqué published today by the Demokratikus Koalíció:

During the fall of last year the party’s leaders received a position paper (tájékoztatás) that the leaders of MSZP are conducting negotiations with Tamás Lattmann about his candidacy for the post of prime minister. According to the position paper, the candidate had the backing of the chairman, the head of the parliamentary delegation, and the chairman of the board. MSZP asked DK to meet with Tamás Lattmann for an introductory visit. Accordingly, Csaba Molnár, managing deputy chairman, who was leading the negotiations with the other parties, had a meeting with Tamás Lattmann. The managing deputy chairman informed the presidium of DK of the meeting in detail, and it was decided to be open to the nomination. The presidium accordingly authorized Csaba Molnár to continue talks with the candidate. However, no second meeting was held because MSZP, changing its former position, nominated László Botka as the party’s candidate.

In brief, Demokratikus Koalíció corroborated Lattmann’s recollection of his negotiations with the MSZP leaders. Yet the MSZP politicians mentioned by Lattmann and reaffirmed by DK’s communiqué today outright denied any such negotiations. According to Gyula Molnár, “there is a serious misunderstanding” on the part of Tamás Lattmann, who doesn’t seem to understand the Hungarian language. There were only talks about “policy cooperation” (szakpoliltikai együttműködés). Accusing a university professor of international law of not knowing the Hungarian language is quite a charge.

Today Gyula Molnár, István Hiller, and Bertalan Tóth published a communiqué in which they repeated that Lattmann was mistaken. “It is a fact that can be checked by anybody, since no party organ dealt with the issue and therefore no decision was made.” You may have noticed that Zsolt Molnár, the fourth person Lattmann claimed he talked with, was not among the signatories. He is the one who about a month ago wrote an article about the desirability of stopping the anti-Gyurcsány campaign. In any case, the joint communiqué is no more than typical socialist double-talk. Yes, the issue didn’t get to any decision-making body, but the candidate had “the backing” of the three top party officials who asked DK to take a look at him.

Now let’s move on to MSZP’s second “generous offer.” This time MSZP expressed its willingness to negotiate about Gyurcsány’s inclusion on the list as long as all the other parties are ready to sit down and talk about it. But, as Zoom rightly pointed out, “this is an offer without any stake” because we know that all the other parties already said no to the first “generous offer.” A typical MSZP move, I’m afraid. The offer is meaningless.

Meanwhile something funny happened on the right. The government media suddenly became a great admirer of László Botka, who was thrown overboard by his heartless comrades. Origo’s headline reads: “They kicked Botka in the teeth.” In the article Origo came up with one possible scenario behind the scenes in socialist circles. According to the article, the Molnár-Hiller-Tóth-Molnár team wanted to stop the nomination of Botka already in January, but “at that point they were unable to accomplish their plan.” However, in the last few weeks, Botka couldn’t work on the campaign with full energy because of the constant party intrigues against him, and therefore he is more vulnerable to the intrigues of the Molnár-Hiller-Tóth-Molnár team. Finding one of Fidesz’s own papers standing up for a poor downtrodden MSZP candidate is really amusing. Magyar Idők is not happy with MSZP’s “entirely new direction” as opposed to the “categorical rejection” of Gyurcsány. “We could also say that Gyurcsány, like the fairy-tale wolf, put his foot into MSZP’s cottage. How will this tale end?”

Of course, we don’t know the end of the tale (although I doubt that MSZP will live happily ever after), but today Tamás Lattmann said in an interview with Reflector that under these new circumstances he would no longer be a viable candidate. But he considers Bernadett Szél “a perfectly qualified candidate to become prime minister,” although he is not an LMP supporter. So, this is where we stand at the moment, but who knows what tomorrow will bring.

September 27, 2017

Developments in the Hungarian National Bank corruption case

One goes for a little outing to Felcsút to admire that lovely little choo-choo train and what happens? The Hungarian public learns that, at least in the case of the Pallas Athene Domus Animae Foundation, György Matolcsy, chairman of Hungary’s National Bank (MNB), was directly involved in making its financial decisions. This flies in the face of the official story–that once the Hungarian National Bank parted with 260 billion Hungarian forints (almost $1 billion) of public money the management of the bank had no say in the affairs of the foundations.

Let’s start with the backstory, how the very existence of the MNB foundations and the extent of their funding was unearthed. The information initially came in a letter to the editor of HVG in the summer of 2014, shortly after the foundations were established. The letter called attention to a number of foundations established by the Hungarian National Bank and even mentioned the sum of money that had landed in these foundations. But the amount was so huge that the journalist assigned to the story was certain that the 200 billion forints mentioned in the letter must be either a typo or a figment of the letter writer’s imagination. It was far too large a figure. In August 2014 the journalist, Károly Csabai, who now works for Világgazdaság, started digging into the funding of these foundations. A law suit demanding that the National Bank reveal financial details of the foundations ensued. Verdict after verdict went against the bank, but it kept appealing. It wasn’t until March 2016 that the Kúria, the highest court of the land, declared that MNB had reached the end of the line. It must hand over the information.

Even as the MNB was meeting resistance in the courts, the foundations continued to hand out money without worrying about possible consequences. Perhaps György Matolcsy simply believed that the bank would be able to keep its foundations’ activities secret. People who know him say he is a modern-day Pangloss who believes that everything will turn out just fine regardless of how hopeless things seem. Perhaps he was also encouraged by the lawyers of the bank who were convinced that even if they lose the suit the arrangement would ultimately withstand legal scrutiny. But things are starting to fall apart.

In addition to the media, Bertalan Tóth, an MSZP member of parliament, has been pressuring the central bank via the justice system for more information. Today at last he received the documents concerning the financial decisions of Pallas Athene Domus Animae (PADA). The chairman of that particular foundation was Matolcsy himself, and the documents reveal that all investment decisions were the exclusive right of the chairman. That in itself is bad enough, but what is truly embarrassing is that the bulk of PADA’s money (well over 60 billion forints) was kept in the tiny little bank of Matolcsy’s cousin, Tamás Szemerey. And, worse yet, the foundation lent money to the struggling bank, presumably to avert liquidity crises, at a lower interest rate than the national bank’s stated rate at the time. It is noteworthy that Szemerey’s bank lent a substantial amount of money to Matolcsy’s son Ádám to enable him buy a furniture factory that would otherwise have been way beyond his means. I guess we can say that, in an admittedly indirect way, the Hungarian National Bank financed Ádám Matolcsy’s business venture.

Bertalan Tóth has also calculated that the foundations, by buying government bonds, added the equivalent of 0.7% of the Hungarian GDP to the national budget. In this way they massaged the size of the deficit. Last year’s official deficit was 2.5%, but without the extra money pumped into the budget by the foundations, it would have been over the 3% allowed by the European Union.

Bertalan Tóth and others wanted to question Viktor Orbán and György Matolcsy in parliament today. Neither of them showed up. Matolcsy sent one of his hapless deputies to answer the questions he was supposed to answer himself. András Schiffer of LMP demanded Matolcsy’s resignation from Viktor Orbán, who was also busy elsewhere. In his place András Tállai, undersecretary of the ministry of the economy, claimed that the government has absolutely nothing to do with the central bank. This is true in the sense that the government cannot dictate the bank’s monetary policy. But here we are talking about the questionable financial activities of the bank. Since the bank is owned by the Hungarian government, the government is responsible for any mismanagement that might take place at the MNB. Tóth compared the managers of the Hungarian Bank to the characters in the 2013 American movie The Wolf of Wall Street. His fellow MSZP member of parliament Lajos Korózs called the Hungarian National Bank “the residence of criminals,” saying its decision makers were planning to steal most of the money they deposited in the foundations.

So far Fidesz doesn’t have a competent point man to deal with this scandal. Lajos Kósa, who replaced Antal Rogán as the leader of the party’s parliamentary caucus, is famous for his bungling linguistic performances. This was certainly the case today when Index’s Szabolcs Dull pumped him for his reaction to the documents that demonstrate Matolcsy’s critical role in the financial affairs of PADA. Kósa, after some long and incomprehensible blabbering, could only fall back on the claim that “this assertion has not yet been ascertained” when the facts are there in black and white for everybody to see. The whole pitiful performance is available on the website of Index.

Lajos Kósa explains his interpretation of the connection between György Matolcsy and his foundations

Lajos Kósa explains the connection between György Matolcsy and his foundations

All in all, this is a case that will haunt the Orbán administration for a while. A few days ago the top brass of Fidesz expressed their relief because, according to their poll, only 10% of the electorate had heard anything about the central bank’s foundations. Moreover, they figured that the whole case is far too complicated for the man on the street to comprehend. I wouldn’t be so sanguine in their place. First of all, the scandal can only grow as Matolcsy will have to release ever more information. For example, there are all those “private persons” who received money from the foundations. So far their names haven’t been revealed, but pressure is mounting to release their identities. Moreover, ordinary folks don’t need fancy explanations about private as opposed to public money. It is enough for them to understand that these people, along with their friends and families, stole a heck of a lot of their hard-earned money.

May 2, 2016

“The great Fidesz gas theft”

On Friday Viktor Orbán summarized his administration’s achievements at a conference held in Bratislava/Pozsony.  The short English-language talk was mostly about the accomplishments of his unorthodox economic policies, but he briefly called attention to the necessity of having a strong domestic capitalist class. In Hungary, just in other former socialist countries, he admitted, there is not enough capital to enable local entrepreneurs to become really powerful economic engines. But, he added, “we are getting there.”

Under these circumstances how can a country create a strong monied class in record time? If conditions were normal, it would take a considerable length of time for local businessmen to grow organically and compete successfully with foreign companies. If, however, you want instant super-rich capitalists, I can see only one way of achieving that miracle: to make sure that the state creates a legal framework that allows public money to be funneled into private hands. And this is what the Orbán government has been doing in the last five and a half years. The case study I’m sharing today–MET Holding–is most likely only the tip of the iceberg.

The story is not new, but now we have most of the documentation to prove what we have suspected all along: a few of Viktor Orbán’s close friends have made billions at the expense of the Hungarian people.

In 2007 MET Group, headquartered in Switzerland, began operations “in natural gas retail and wholesale trading in the European market as well as in the retail sale of natural gas to industrial customers in Hungary, Slovakia and Croatia.” Five years later, in 2012, MET Holding was established to manage and support the subsidiaries of MET Group.

Shortly after the election in 2010 Orbán promised cheaper energy to consumers. In order to lower prices, the state-owned MVM (Magyar Villamossági Művek) was allowed to dip into its gas reserves, which it could then replenish with cheaper gas from the open market, through a pipeline from Austria. The cheaper gas was supposed to be sold to hospitals, schools, and public buildings. MVM claimed, however, that its own retailer, MVMP (MVM Partners), didn’t have enough experience, so they would have to use a Swiss subsidiary of MET Holding, METI (MET International), for the transactions. As a result, MET itself reaped about 80% of the gain that the cheaper gas coming from the West offered to MVM. That is, the savings from the cheaper gas went to the shareholders of MET Holding instead of to Hungarian consumers.

In order to make that business deal legal, the Orbán government simply changed the regulation governing trading via the pipeline. In 2011 Tamás Fellegi, minister of national development, signed a new regulation allowing MVM to be the sole trader of gas from the open market. The arrangement, which was originally intended to remedy a one-time shortage in gas reserves, was extended year after year. The Hungarian government was perfectly happy to have MET, a private company, be the chief beneficiary of the cheaper gas coming from the West and not the state-owned MVM. This arrangement, by the way, is coming to an end on July 1 because Hungary is currently under an infringement procedure for allowing a single company to use the gas pipeline without holding any auctions.

We knew some of these details already last fall. I wrote about them in November, but then we had no documentation and hence no hard proof. Since then, however, Bertalan Tóth, an MSZP member of parliament, sued MVM for refusing to release the documentation of what is considered to be “a bizarre arrangement” between MET and MVM. Tóth won in the court of first instance and, after MVM’s appeal, also in the court of appeal. He received thousands of documents back in January, but it took months to wade through them and reconstruct a plausible scenario of three years of shady transactions. This morning summaries of the documents appeared on MSZP’s website. On the basis of the documents, the losses the publicly-owned MVM suffered in three years may be as high as 100 billion forints. In November, the estimate was only half that much.

Some of the details that have emerged from these documents are truly bizarre. For example, MVM bought MET’s gas on the Austrian side and later gave it back to MET on the Hungarian side and charged only 2.3-3.5 ft./m³ for shipping. It is also clear from the documents that MVM’s claim that MVMP, the subsidiary created to be a retailer for MVM, was not experienced enough to do the actual buying and selling on the open market was an outright lie. MVMP did a brisk business already in 2011 and 2012 and bought gas for MVM 16.55 forints cheaper than MET did. It even happened that MVMP bought gas from MET on the Austrian side and sold it back to MET for a lower price. MVMP didn’t lose any money because the gas sold back to MET included some gas purchased from another company at a much lower price. From the documents it looks as if MVMP acted only as a “mailman” between MET and MVM. MVM didn’t lose money on its transactions with MET, but its own profit was minimal.

Viktor Orbán and István Garancsi

Viktor Orbán and István Garancsi

Since the documents were released only this morning, there hasn’t been much time to comb through the material. Moreover, Tóth and his experts on gas transactions figure that perhaps 1,000 documents are still missing, without which the picture is far from complete. Still, the skeleton of the story is there. The Orbán government used the power of the state and its ability to change laws to pass public money to private individuals.

One of the owners of MET, by the way, is István Garancsi, who is described as the new Lajos Simicska. He is the owner of the Videoton Football League which, in turn, has close connections with the Ferenc Puskás Academy. Garancsi is considered to be one of Orbán’s frontmen. He is the one who just signed a contract with the Hungarian government to build the sites for the Aquatic World Championships to be held in 2017.