Tag Archives: ETO Park

Fidesz as an enabler of financial corruption

It will not be easy to learn the truth in the maze of lies that have been fed to the public about the relationships between prominent politicians of Fidesz and Csaba Tarsoly, owner and CEO of the Quaestor Group.

Here I will concentrate on a single transaction, the loan extended to ETO Park, a subsidiary of the Quaestor Group. On April 4 I wrote a post with the title “The Quaestor scandal and football” in which I expressed my suspicion that Csaba Tarsoly’s ties to the current government had a lot to do with his interest in and support for Viktor Orbán’s mania, football. Today I return to Győr, where the ETO Park and Stadium are located.

Let me stress that the issue of the ETO Park and Stadium is unrelated to the scandal that recently engulfed another Quaestor subsidiary, a brokerage firm. The Orbán government has used ETO Park and Stadium to divert attention from its cozy relationship with Tarsoly. It’s trying to shift the story instead to a loan that was extended to the ETO project during socialist governments.

In my earlier post on the subject I made a fleeting reference to questions about this project that arose in the Magyar Fejlesztési Bank (MFB/Hungarian Development Bank) in 2010, after the newly elected government changed the top management of the bank and ordered an investigation of all loans that had been extended during the socialist period. Today’s post is about this investigation and its aftermath.

Orban hazug

War = Peace; Freedom = Slavery; Ignorance = Strength

On April 8 several papers reported that Kormányellenőrzési Hivatal (KEHI/Government Audit Office), after an investigation, is pressing charges against people involved with the 17 billion forint loan MFB extended to ETO Park in two installments, in 2005 and 2008. The reason for the police action, according to M1 TV, was that KEHI discovered that MFB had accepted a 900 million forint grant as collateral for the loan, which was against the law. We were not told when KEHI found this irregularity. Origo reported earlier that KEHI had already looked into the case back in 2010 and found enough evidence to proceed and that it had asked for a police investigation at the time. So why, then, a second investigation of the same case? And why did neither the Chief Prosecutor’s Office nor the Budapest police know anything about an earlier investigation or police action in the case?

KEHI, which functions under the supervision of the prime minister’s office, has been known to be a willing vehicle of the government’s political interests. It’s enough to think of its move against the Ökotárs Foundation, which is responsible for the distribution of grants from the Norwegian Civic Fund, that resulted in a heavy-handed police action. The police are an equally willing partner when the government wants results, and quickly. So why did the police do nothing after 2010 and swing into action only now? Because this time, in a couple of days the police began hauling in former high officials of MFB as witnesses.

It didn’t take long before an important, new piece of information surfaced regarding the original case. On April 9 Népszava was informed “by certain sources that László Baranyay, the CEO of MFB at the time, wanted to press charges but the Fidesz political leadership prevented him from doing so.” Apparently, the charges included fraud, embezzlement, and breach of fiduciary responsibility.

About a week later, on April 15, Zsolt Gréczy, spokesman of the Demokratikus Koalíció, gave a press conference with two documents in hand which were allegedly proof that KEHI in March 2012 stopped the investigation of the case by the new management of MFB. According to the first document, the investigation was supposed to have been conducted between July and September 2011, after which the MFB management would have gone to Győr to take a look at the project, which at that point wasn’t quite finished. The final report was to be ready by October 31, 2011. Gréczy also had a letter in which KEHI informed Deputy CEO Zoltán Urbán that the office had suspended the investigation into the circumstances of the loan to ETO Park.

Index on the very same day learned a few more tidbits about the case. During the 2011 investigation KEHI talked to practically all former top officials of the bank, in addition to lower-level officers who had anything to do with the case. There was one man, however, whom they never contacted: Csaba Tarsoly, CEO of Quaestor. One informant told Index that during the procedure “in an informal way Tarsoly was being told about the details of the investigation.”

So far we can piece together a pretty coherent story, but KEHI is working hard to muddle it. When HírTV first asked KEHI about the details of the earlier investigation of MFB and ETO Park, they were told that KEHI had pressed charges on six accounts. Later KEHI changed the story: no, they didn’t do anything except investigate. That investigation had to be darned thorough because they began it in 2010 and only five years later did they have enough evidence to proceed. After Zsolt Gréczy’s revelations, KEHI denied outright that it ever stopped the investigation.

And finally, here is the latest explanation of what happened in 2011 and 2012, this time from János Lázár. As far as he knows, “KEHI didn’t stop the investigation; it only interrupted [megszakította] it.” Moreover, KEHI asked MFB to change the contract with ETO Park in order to safeguard the interests of the bank. But if the government was aware of the precarious state of Tarsoly’s financial empire, why did it make a gift of 250 million forints for the ETO Park project? Lázár’s surprising answer was: “It was not our job to make the loan unpayable.” In brief, the government helped out the ailing Quaestor as early as 2011, hoping to avoid the firm’s collapse.

The bankruptcy of Quaestor’s brokerage firm is a separate issue from the ETO Park project, which admittedly was not exactly a success story but was not responsible for the brokerage firm’s collapse. On the contrary, one can read stories about contractors working on the project in Győr who often didn’t receive payment on time. The management blamed MFB for not releasing the necessary amount of money at specified intervals. As it turned out, this was a lie. Tarsoly was simply using the loan to cover his tracks in his pyramid scheme.

If the Orbán government had wanted to point the finger at Ferenc Gyurcsány and Gordon Bajnai for not properly vetting the loan for the ETO Park project, it could have done so in 2010 or 2011. Instead, it stopped the investigation and kept trying to prop up Quaestor’s business ventures. It became an enabler of financial corruption.

The Quaestor scandal and football

Perhaps if Prime Minister Viktor Orbán were not a crazed football fan his government wouldn’t be in such a pickle today. What does football have to do with the Quaestor scandal? A lot. Although the Orbán government is desperately trying to blame the socialist-liberal governments (2002-2010) for the collapse of Quaestor, the close relationship between Fidesz and Csaba Tarsoly, the CEO of Quaestor, dates back to 2001, during the first Orbán administration. And it was all about football.

In 2001 Tarsoly purchased the Győr football stadium and 17 acres of land for 650 million forints from Rába Rt. While he was at it, he also bought the ETO FC football team. With the purchases he assumed their heavy debt load, plus the stadium was no longer up to snuff. He needed cash and, knowing  the boundless interest in football among the Fidesz leadership, he approached Tamás Deutsch, then sports minister, who promised him 900 million forints. He also went to the socialist mayor of Győr for additional funds and got a promise of 500 million. The people of the city were thrilled that someone had bought the financially ailing football team that had seen better days, and therefore the mayor gladly offered help. Moreover, when Fidesz lost the election in 2002 he himself made sure that the new socialist-liberal government would fulfill the Fidesz government’s promise of financial help.

Back in 2001 Tarsoly had the support not only of the mayor but also of two Fidesz members of the city council, one of whom was the young political hopeful, Péter Szijjártó. Tarsoly may have been counting on a Fidesz victory in 2002 because three weeks before the election, in the presence of the Fidesz members of the city council, he laid the cornerstone of the new stadium although there was no valid building permit yet. I suspect that the cornerstone-laying ceremony was designed to help the Fidesz election campaign.

Fidesz’s loss at the national election must have been a blow to Tarsoly because he had only verbal promises of financial help, no cash in hand. So he rushed back to the socialist mayor asking for his continuing support, which he got. Moreover, the mayor promised to lobby on his behalf with the new sports minister, Ferenc Dénes, and later with Ferenc Gyurcsány, who held the post between May 2003 and September 2004.

Of course, the money that had been pledged was nowhere near enough to build a stadium that could seat 16,000 people. Moreover, as time went on, Tarsoly’s ambitions grew. He also wanted to have a hotel, a plaza, and a high school for the students of the football academy run by ETO FC. So, at the same time, Tarsoly applied for a series of loans from the state-owned Magyar Fejlesztési Bank [MFB] (Hungarian Development Bank), which eventually amounted to 16.9 billion forints. The actual construction and its financing had some setbacks, especially given the 2008 economic crisis, but the stadium and the plaza were finished in 2009. The hotel opened only in 2012.

Photo by Sándor H. Szabó

Photo by Sándor H. Szabó

Already in 2009, that is under socialist stewardship, MFB had worries about the way Quaestor was handling the project and two years later, when the Fidesz-appointed president took over the bank, he also considered the project to be one of twelve that were risky. He even asked for a police investigation, but the police or the prosecutors didn’t follow through. 444.hu suspects that the Orbán government didn’t want to make a fuss because of Tarsoly’s generous support of football. In fact, as time went on, both Viktor Orbán and Péter Szijjártó praised Tarsoly and his project at every turn. Orbán often visited the ETO Park in Győr, and the team became one of his favorites, especially since his own son was a member of ETO FC for a while. Apparently, when Audi moved its factory to Győr, Orbán’s only request in exchange for the generous government support extended to the German manufacturer was sponsorship of ETO FC. Indeed until a few days ago Audi gave 300 million forints every year to the local team.

Of course, Szijjártó, a Győr native, was thrilled. In 2012 when the four-star hotel opened, Szijjártó praised the project as the most modern sports complex in Central Europe. He went on and on about the “family-friendly plaza”and the stadium itself, which in his opinion is “the most precious gem” of all stadiums. Of course, this was before the tsunami of football stadiums thanks to Viktor Orbán’s insatiable appetite. The Győr stadium seats 16,000. A week ago only 3,800 fans were present.

As far as the plaza is concerned, it is an unmitigated disaster. It turned out that there was no need for a third shopping center in Győr. At present 44 stores out of a total of 80 are empty. The mall reminds people of the plaza in the film “Dawn of the Dead” except “not even the zombies come here.”

Some commentators speculated that the reason Tarsoly was optimistic about getting financial assistance from the government in early March was Viktor Orbán’s passion for football. Judging from the short note the prime minister sent to Tarsoly on March 9th, there might still have been a glimmer of hope as far as the owner of ETO FC was concerned. Orbán was ready to talk about Tarsoly’s proposal even at that late stage of the crisis. Of course, we have no idea what transpired in the afternoon of March 9th and the morning of the 10th when Mihály Varga’s deputy had a chat with Tarsoly, but it looks as if Orbán was unable to convince the ministry of national economy that saving Quaestor was economically and politically feasible. Even if Tarsoly owns ETO FC, Orbán’s favorite team.