Tag Archives: Ghaith Pharaon

A small but close circle: the Orbán family and Arab businessmen

The Pharaon affair simply doesn’t want to disappear.

In the first place, it is not an everyday occurrence that the prime minister of a country and his close family are caught doing business with a man, Saudi businessman Ghaith Pharaon, who is being sought by the FBI and Interpol.

Second, once the story broke Viktor Orbán and several high-level members of his government managed to get themselves entangled in a web of contradictory statements. Analyzing and comparing every statement they made has kept reporters and commentators busy for several days.

Third, since the pressure on the government refused to let up, it seems that the decision was made to change tactics. A couple of days ago Magyar Idők, the government’s mouthpiece, began accusing the United States of being responsible for the problems that plague Hungary, and specifically its prime minister, as a result of Pharaon’s presence and business dealings in Hungary. Soon enough, Pharaon was portrayed as an agent of the CIA who tried to blacken the good name of Viktor Orbán. That was bizarre enough, but for good measure Hungarian intelligence sources complicated matters by adding another twist to the Pharaon story: it was Russian and Israeli intelligence agencies that revealed Orbán’s secret dealings with Pharaon and other Arab businessmen. These stories gave rise to a new round of speculative articles in the Hungarian media.

Finally, Csaba Tarsoly, the CEO of Quaestor, the brokerage firm that for at least a decade if not longer was engaged in a Ponzi scheme, gave an interview to Magyar Narancs the other day from which the Hungarian public learned that shortly before the collapse of Quaestor in March 2015 Foreign Minister Szijjártó arranged a meeting between Tarsoly and Pharaon.

Let’s start with the conspiracy theories. “The ugly American” version comes from Magyar Idők, which on November 23 published information that was allegedly obtained from the Hungarian intelligence services. The gist of the story is that, although the Americans consider Pharaon “very dangerous,” they were so careless that they were searching for him under 11 different names, four different birth dates, and two different birthplaces. The Pharaon who entered Hungary was none of those 11 Pharaons, claimed the Hungarian authorities. Surely, the story continues, if Pharaon were so dangerous and the Americans really want to capture him, they wouldn’t be doing business with the man in Georgia, Pakistan, Afghanistan, and elsewhere. As for Pharaon’s fingerprints, the FBI didn’t pass them on to Interpol. “One wonders why,” Magyar Idők adds mysteriously. To add insult to injury, the fingerprints the Hungarians got from the FBI were useless. So clearly, it is not Hungary’s fault that a visa was issued to Pharaon.

pharaon3

Ghaith Pharaon

Armed with the above information, Magyar Idők apparently confronted the U.S. Embassy in Budapest but said they “haven’t received substantive answers” to their questions. On the other hand, the paper received information from “government sources,” according to which “the idea of Pharaon as a national security risk for our country came directly from the United States” because “with this information the U.S. can strike a blow against the Hungarian government.” This story was then embellished by János Lázár, who at one of his press conferences claimed that at the time the visa was issued in October-November 2014 the Hungarian government asked the U.S. Embassy whether there was any objection to allowing Pharaon to enter Hungary. If this is true, says 444.hu, the Americans tricked the Hungarians, knowing full well that greedy Hungarian businessmen with close connections to the government would make sure that the government issued a visa without any vetting. I find this version of the story most unlikely. And I disregard Lázár’s story altogether. I’m sure that his story about getting in touch with the U.S. Embassy is one of his many fabrications.

While some Hungarian intelligence sources were whispering into the ears of the reporters of Magyar Idők, others were busy dropping stories about Russian and Israeli involvement to Hetek, the publication of the Assembly of Faith. According to this version, Israel is concerned about the very large investments by Arab businessmen in Hungary, which they consider to be “indirect Islamization of the region, which is especially dangerous in a country with the largest Jewish population in the region.” And the Russians? They are worried about Hungary’s close relations with Pharaon because of his reputation as a CIA agent. He must be an agent because there is no other explanation for the fact the United States has been unable to arrest him in the last 25 years. I disregard this version as well.

One doesn’t need to concoct stories about intelligence and counterintelligence to understand a simple story that was made purposely complicated by officials of the Hungarian government. Indeed, greedy Hungarian politicians and businessmen would make deals with the devil himself. They cared not who Pharaon was or what the FBI and Interpol thought of him. National security experts whom I trust are certain that the Hungarian intelligence agencies were fully aware of Pharaon’s past and the dangers that close relations with him would pose but that the prime minister of Hungary overruled them. Yes, I think the story is that simple.

Finally, here is the latest development in the career of Pharaon in Hungary. According to Csaba Tarsoly of Quaestor, a few days before the collapse of his brokerage firm he had a chance to meet a wealthy Saudi businessman who was interested in investing some money in a huge project that was extremely important to the firm. Quaestor owned 50% of a large tract of land (33 hectares) on the northern side of Csepel Island. The plan included the erection of a large conference center with a hotel and several apartment houses and commercial buildings. Tarsoly and his business associates needed about 300 billion forints to erect Duna City, as the future project was named. According to Tarsoly, “at the beginning of 2015 the foreign ministry brought a Saudi investor called Ghaith Pharaon to me. There was a big dinner at the Buddha Bar where I was introduced to him and his secretary; later I returned the invitation. It was after these two meetings that the investors met in my office and told me they would be willing to invest in the development of Duna City. I found the amount offered insufficient, and therefore the Saudi investor told me that if I give him 5% he will take care of the financing.”

Foreign Minister Szijjártó readily admitted that the Befektetési Ügynökség (Hungarian Investment Promotion Agency/HIPA) that functions under the aegis of the foreign ministry did suggest Tarsoly’s Duna City project to Pharaon. After all, it is HIPA’s job to encourage foreigners to invest in Hungarian projects, and therefore it was practically the agency’s duty to hook Tarsoly up with Pharaon. When Magyar Narancs asked him outright whether he himself was in any way involved in the negotiations, Szijjártó denied any participation. But again, something is not quite right with the story. The director of HIPA told Hír TV that he had nothing to do with either Ghaith Pharaon or the Duna City project. I suspect that this particular business deal was so important to the circle around Viktor Orbán that they sidestepped HIPA and that the negotiations with Pharaon were conducted at the highest level, with Szijjártó or perhaps even Viktor Orbán.

And here’s an interesting footnote to the story of the meeting of Pharaon and Tarsoly in the Buddha Bar. It was on June 14, 2012 that Budapest’s newest luxury hotel, Buddha Bar Hotel, owned by two Jordanian investors, opened in the Klotild Palace in downtown Budapest. It was no ordinary opening. Almost all the foreign ambassadors attended in addition to former president Pál Schmitt and, of all people, Cardinal Péter Erdős. But the most surprising guest was the prime minister himself. While reading Origo’s description of the opening ceremony a name caught my eye: Zaid Naffa, honorary Jordanian consul in Budapest. Sharp-eyed readers of the Hungarian press or Hungarian Spectrum will immediately recognize the name. He is the man who requested a Hungarian visa for Ghaith Pharaon at the Hungarian consulate in Beirut.

Viktor Orbán was the guest of honor at the opening of the hotel. He delivered a speech which revealed the close ties between the Jordanian businessmen and the Hungarian government. It turned out that the two investors had spent their student days in Hungary and that their company, Mellow Mood Group, owns nine more hotels in Budapest. As usual, Viktor Orbán was expansive in his praise of Hungary’s Arab friends and called attention to the common traits of Arabs and Hungarians. They are both hospitable, open people. And, he said, it is obvious from the example of the owners of the hotel that Arabs understand that “not even profit gives satisfaction if there is no friendship and soul.”  Viktor Orbán was, and I suspect continues to be, friends with this small group of people, to whom, I think, Ghaith Pharaon also belongs.

November 25, 2016

Jobbik and the U.S. presidential election

The latest on Ghaith Pharaon

First, I think I should say a few words about the latest developments in the Ghaith Pharaon case. Heti Válasz, a conservative weekly, learned that in January 2014 Pharaon received not only a Hungarian visa but also a residency permit “for the purpose of business and investment activities.” It was the Jordanian honorary consul in Budapest—who by the way was Viktor Orbán’s host at that by now infamous dinner in Pharaon’s honor—who requested the visa, and it was the Hungarian consulate in Beirut that issued it. By the look of things, the Hungarian authorities ignored all the rules and regulations to make Pharaon’s life in Hungary trouble free. For a residency permit the applicant’s fingerprints must be taken but, when pressed, the ministry of interior admitted that Pharaon wasn’t even required to have an official photograph. For almost three years Pharaon had the right to travel to and from Hungary at will. He could also, if he chose, travel anywhere in the European Union. All national security precautions were dispensed with in this case. He most likely enjoyed the protection of Viktor Orbán himself.

Jobbik on the U.S. presidential elections

The government’s rejoicing over Donald Trump’s victory knows no bounds. The pro-government media is full of stories of the “liberal rabble” on the streets who have been aroused against the president-elect by people like George Soros. Relentless attacks on the Obama government and Hillary Clinton can be found daily in all the right-wing papers.

Interestingly enough, Jobbik’s reaction is a lot more tempered and, I must admit, more realistic. The government-financed 888.hu was outraged when it found that Ádám Mirkóczki, Jobbik’s spokesman, in response to a question from a reporter of HVG, called Trump “an unfit and poor candidate” who is “an unpredictable madman.” Otherwise, he said, the choice was difficult because neither candidate was inspiring.

A few days later, in an interview with Magyar Nemzet, Mirkóczki was more restrained in the sense that he didn’t repeat his one-liner about Trump’s state of mind, but he further elaborated on Jobbik’s position that the presidential choice this year was poor. The interviewer assumed that Jobbik “is as satisfied with the results of the American election” as Fidesz is, but he didn’t get the answer he was expecting. Mirkóczki said he feels for the American people, who had to choose between two poor candidates. He shares the government’s opinion that Clinton “would have been a disaster for Hungary” and in that sense between the two “catastrophic candidates, the less bad won.” Jobbik only “hopes that Trump’s policies will coalesce with Hungary’s interests.” But Mirkóczki was more than cautious on that score because “we don’t know anything about [Trump’s] political ideas.” If we can believe the Jobbik spokesman, the party hopes that Trump will mellow in time because “a radical leading the United States is not in Hungary’s interest.”

Ádám Mirkóczki, Jobbik spokesman

Ádám Mirkóczki, Jobbik spokesman

Jobbik doesn’t think that with Trump’s victory U.S.-Hungarian relations will be much better. Orbán will remind the American diplomats of his early support for Trump, but such messages are “irrelevant as far as economic, political, or military relations are concerned between two countries.” In plain English, as long the present government continues on the same path it has followed in the last six years, change of presidency or not, U.S.-Hungarian relations will not improve.

About a year ago Gábor Vona delivered a speech in which he talked about his party’s intention to develop direct relations with politicians in Washington. As far as I know, several Jobbik politicians visited Washington and other larger cities. Jobbik is no longer an outcast, so its politicians had the opportunity to meet with several ambassadors in Budapest, including U.S. Ambassador Colleen Bell. Mirkóczki thinks that Orbán’s diplomatic approach to the United States has been counterproductive. Jobbik would strive for consensus, a style void of the “arrogant, lecturing, and negative style” that Fidesz has chosen in its dealings with the United States.

Of course, it is difficult to tell how much of this is merely for show. Recently BBC’s Nick Thorpe wrote an article about the metamorphosis of Jobbik “from a radical nationalist party … to a moderate ‘conservative people’s party’” and said that Vona “now promises to restore the checks and balances lost under Orbán.” He quotes Vona, who nowadays tries to avoid political labeling, who said that “if [he] lived in Greece [he] would probably vote for Syriza, though they are supposed to be on the left.” He also adopted Bálint Magyar’s characterization of Orbán’s regime and called it “a mafia-type state.”

Given Jobbik’s past, it is probably wise to take much of this with a grain of salt. But Jobbik’s cautious attitude toward the impending Trump presidency is much more statesmanlike than the Orbán government’s uncritical admiration of Trump’s radicalism. In this respect at least, Jobbik sounds more like a conservative party; Fidesz, the radical one.

November 16, 2016

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

Domestic retreat and preparation for a battle with Brussels

After spending two days away from the Hungarian scene it is time to return. In government circles the rejoicing over Donald Trump’s election continues unabated. Trump’s victory seems to have energized Viktor Orbán for his renewed fight against the European Union. His preparation for the next battle comes, however, after a number of serious domestic political setbacks. The biggest blow was parliament’s failure to pass the constitutional amendments designed at least in part to strengthen his hand in his negotiations with Brussels.

For a day or so there was talk of dragging the amendments back to parliament for another try, but as of yesterday the government seems to have decided to abandon them. János Lázár, at his Thursday afternoon press conference, made that announcement, adding that unfortunately the opposition parties for selfish political reasons had turned against their own country. Századvég, the government’s servile pollster, promptly published a new poll showing that 85% of Hungarians find it dangerous that the opposition prevented the passage of the constitutional amendments.

Despite this setback, Lázár assured the country that the government will fight to the end to save Hungary from foreign hordes. Of course, if the government doesn’t succeed in Brussels, the fault will lie with the unpatriotic left and right opposition parties. Viktor Orbán’s ire is especially directed against Jobbik. He has always accused the parties on the left of being the agents of Brussels, but by now he has come to realize that “Jobbik is also on the side of Brussels.” Jobbik no longer represents the interests of the Hungarian people. Instead, “they represent the point of view of Brussels in Hungarian politics.” The attacks on Jobbik and in particular on Gábor Vona have intensified in the last few days. It seems that Viktor Orbán’s hatred of Jobbik and its leader at the moment surpasses his hatred of the democratic opposition.

Yet at the same press conference Lázár announced the government’s decision to put an end to the “residency bonds” after all. It was this bond program that prompted Jobbik not to vote in favor of the amendments. This decision doesn’t seem to be tied to a possible future vote on the constitutional amendments. Instead, it looks as if the government is trying to find existing provisions in the constitution to justify the prohibition of foreign populaces’ settlement on Hungarian soil. The scandals that have surrounded the sale of these residency bonds, quite independently from the program’s being exploited by Jobbik for its own political purposes, were becoming a burden on the Orbán government. Giving up these bonds is most likely a painful sacrifice for both the government and the intermediaries who have made a killing on them. The government will be deprived of huge amounts of instant cash which is sorely needed, especially since right now practically no money is coming from Brussels.

The government also had to retreat on the issue of Ghaith Pharaon’s visa. He is the man who has been on both the FBI’s and Interpol’s list of criminals who are being sought. Pharaon in the last few months has been buying up valuable pieces of real estate in Hungary and has close working relations with Viktor Orbán’s son-in-law. At the beginning of this scandal Viktor Orbán in parliament called the American charges against Pharaon “a game of the U.S. secret services,” but, after a lot of contradictory statements, Lázár at last announced that as of November 1 Pharaon has no Hungarian visa and therefore cannot legally enter the country.

Today came another setback for the government. You may recall that I wrote a post in October about government plans for a system of what I called Fidesz party courts. These courts would have functioned under an entirely separate judicial system that would have dealt exclusively with matters pertaining to the various branches of the administration. It was especially worrisome that half of the judges assigned to these courts would have been people who had had at least ten years of experience in public service, which would have made their judicial independence highly questionable.

The reaction to the announcement about the planned administrative courts was one of outrage among the judges and in the public at large. Even Tünde Handó, head of the Országos Bírósági Hivatal, a close friend of the Orbán and the wife of József Szájer, Fidesz MEP in Brussels, objected. However, László Trócsányi, minister of justice, continued to press for a separate administrative court system. Eventually, even Tünde Handó, who had written a 32-page objection to the plan, was forced to half-heartedly support some of the new law’s proposals. Well, today the same Tünde Handó, to everybody’s great surprise, announced on Inforádió’s Aréna program that no changes will be made to the present judiciary system. She repeated her belief that there are enough judges in the present system who can handle cases connected with the state administration. We don’t yet know what made Trócsányi retreat from his forceful insistence on the scheme. At the time of the controversy, he claimed that he had been working on this “reform” ever since he became minister of justice in 2014. Giving up so easily strikes me as odd. Perhaps Fidesz didn’t have enough votes to pass it.

In the face of these retreats the government consoled itself with the wonderful news of Donald Trump’s election. Here are a couple of typical expressions of delight on the part of Viktor Orbán, the only prime minister in the European Union who believes we are seeing the beginning of “a better future for the world with the new president.” Brexit “was the knocking on the door of this new era, but now we have stepped over its threshold.” The future will be bright because “the days of liberal non-democracy are coming to an end and we can return to real democracy.” Orbán seems to define “real democracy” as a political system in which “we can return to straight, honest talk freed of the paralyzing constraints of political correctness.” We have seen what Fidesz means by “straight and honest talk” in the last 14 years if not longer. And we can admire what straight and honest talk produced in the United States during this dreadful year of campaigning.

self-confidence

Finally, I should say something about a special meeting of the 28 EU foreign ministers called together by Frank-Walter Steinmeier, the German foreign minister for the coming Sunday. The foreign ministers at their regular session on Monday will be discussing the situation in Turkey. The special meeting is supposed “to assess the implications of Donald Trump’s victory as America’s allies brace for the unknown.” I heard a fleeting remark on Klubrádió (but can’t find written confirmation of it) that the Hungarian foreign minister, István Szijjártó, will not attend the special meeting. Perhaps an undersecretary will represent Hungary. If this is true, the Orbán government would be making a statement about its own divergent opinion of the result of the U.S. election.

The Hungarian government is not at all worried. On the contrary, Viktor Orbán and his minions are looking forward to a wonderful new world. He heads the list of “Europe’s extreme right leaders [who] revel in Trump’s victory.” Euractiv.com puts him in the company of Nigel Farage of Britain’s UKIP, Geert Wilders of the Party for Freedom in the Netherlands, Beatrix von Storch of Germany’s AfD, Norbert Hofer of the Austrian Freedom party, Tom Van Grieken of Vlaams Belang (Belgium’s far-right Flemish separatist party), Nikolaos Michaloliakos of Greece’s Golden Dawn party, and Marine Le Pen of France’s National Front. Among these politicians Orbán is the only one who is not the leader of a saber-rattling far-right opposition party but is the prime minister of a country that is a member of the European Union. Ah, but just wait, he would say. The dominoes are falling.

November 11, 2016

Viktor Orbán’s new neighbor: Ghaith Pharaon, fugitive from justice

During the summer Viktor Orbán’s son-in-law, István Tiborcz, was searching for new business opportunities. By that time, OLAF, the European Union’s Anti-Fraud Office, was looking into his “super company,” which had received almost all of the contracts for the EU-financed modernization of city lighting in Hungary. The first son-in-law had to find greener pastures, preferably far away from public procurements. The choice, it seems, was real estate. Investigative journalists discovered that Tiborcz was doing lucrative deals with the assistance of a wealthy Turkish businessman. One of their first real estate ventures was the purchase of the building of the defunct Postabank, which soon enough they sold, through an intermediary, to Ghaith Pharaon, a Saudi businessman of dubious repute.

The available English-language information on Ghaith Pharaon is extensive, mostly because of his association with the Bank of Credit and Commerce International (BCCI) back in the 1990s. Secretly acting on behalf of BCCI, Pharaon acquired control of two American banks in violation of federal banking laws. When the fraud was discovered, BCCI was forced to sell the banks, which soon after were shut down by regulators when it was determined they were insolvent. Pharaon was charged with wire fraud and conspiracy to commit racketeering. He has been wanted by the FBI since 1991 for his role in the BCCI fraud and remains a fugitive. In addition, Pharaon was accused in a 2002 French parliamentary report of having financial dealings with hawala, an Islamic financial network which is also used by terrorist organizations. Earlier I wrote in more detail about Pharaon’s business activities in Hungary.

Trouble seems to follow István Tiborcz. Or perhaps it is more accurate to say that he has a penchant for dealing with questionable characters.

It seems that in the last four or five months Pharaon has been busy. He is currently the owner of nine extremely valuable pieces of property in Hungary. His latest purchase is a mansion right across from the house owned by Viktor Orbán and his family. I suspect that the mansion was a state property that earlier was used as a kindergarten. Orbán himself liked the building so much that during his first administration he planned to refurbish it and use it as the official residence of the speaker of the house. The place has been abandoned for almost 20 years and, judging from the photos, it needs extensive repairs. During the summer the property’s listing price was 410 million forints or $1.45 million.

The mansion Pharaon bought

The mansion Ghaith Pharaon bought

Once it became public knowledge that Pharaon is now Orbán’s neighbor, interest in his past spiked even though it has been a well-known fact in Hungary, at least since June 2016, that Pharaon is on the FBI’s wanted list. But the opposition parties finally started asking questions about Pharaon’s close business ties not only with the prime minister’s son-in-law but also with the Hungarian government and MOL, the Hungarian oil company.

Pharaon is not a simple foreign investor wanting to make some money in Hungary. He is in possession of a valid visa issued to him by the Hungarian government. At the time they issued the visa, Hungarian authorities were aware of the fact that Pharaon was being sought not only by the FBI but apparently also by Interpol because of his relations with terrorists, including at one time with Osama bin Laden. Péter Juhász of Együtt got hold of a letter from Sándor Pintér, minister of interior, strangely enough written in Hungarian, to the Saudi ambassador in Budapest confirming their knowledge. Pintér wanted to have the Saudi government’s opinion in the case. The answer had to be reassuring because Pharaon received a visa without any trouble. But why would it not have been reassuring since, according to information that can be found in Stratfor Intelligence Files made public by WikiLeaks, “Ghaith Pharaon is not a genuine businessman … he is nothing more than a front man who does dirty things on behalf of Saudi Arabia.”

All the talk about Pharaon being on the FBI’s most wanted list eventually prompted Hungarian journalists to approach the U.S. Embassy in Budapest, requesting information about Pharaon’s current status. Eric Watnik, counselor for public affairs, who is in charge of the press and information office at the embassy, gave the following information on Pharaon. On November 15, 1991 the District of Columbia court issued an arrest warrant signed by Alan Kay, magistrate judge. “This arrest warrant is still valid,” he added. Since then the charges against Pharaon have multiplied (conspiracy, wire fraud, racketeering conspiracy, aiding and abetting) and by now, if arrested and charged, he could face at least 30 years in jail. In addition, according to Watnik, Interpol issued a Red Notice (A355/8-1992) which, according to Interpol’s website, seeks “the location and arrest of wanted persons with a view to extradition or similar lawful action.” Although the Red Notice has since disappeared from the Interpol website, Watnik noted that Hungary has an extradition treaty with the United States and thus, had it been asked, would have been obliged to agree to the extradition of Pharaon.

Once this letter from Pintér to the Saudi ambassador became public, both Jobbik and MSZP wanted to know more about the case. Jobbik’s Márton Gyöngyösi couldn’t get an answer from Viktor Orbán himself, but Tamás Harangozó of MSZP lucked out. He wanted to know whether the prime minister had ever had a personal meeting with Pharaon. Harangozó said he wanted to have a serious answer because Orbán, instead of giving substantive responses, often cracks jokes or makes ironic remarks. Orbán admitted that he had met “Professor Pharaon” at a banquet, which surely cannot pose a national security risk. Harangozó hit back: in that case, Orbán and the government itself is the national security risk. Eventually, Orbán claimed that “the whole Pharaon affair is an American secret service game.” If the FBI is truly seeking his extradition, how is it possible that Pharaon has remained free for the last 24 years?

The case was even discussed in the parliamentary committee on national security where Szilárd Németh, the committee’s Fidesz deputy chairman, expressed his belief that Viktor Orbán’s neighbor may be only the namesake of the real Ghaith Pharaon. Of course, a simple fingerprint comparison could put an end to any doubt but, according the U.S. Embassy, the Hungarian authorities refuse to cooperate. In fact, the Hungarian government is actively shielding Pharaon from “harassment.” When Jobbik wanted to place a public announcement in which Pharaon’s name was mentioned, MTI OS (Országos Sajtószolgálat) refused to publish it because “they need to protect the privacy rights of public figures.” Why is Pharaon a public figure? The only thing that comes to my mind is the phrase “public enemy.”

October 29, 2016

Turkish and Saudi business ties of Viktor Orbán’s son-in-law

I’m coming to the conclusion that the “first family” of Hungary must have gotten together on several occasions to figure out how to guarantee that their new son-in-law, István Tiborcz, becomes a very rich man. Thanks to the good offices of Viktor Orbán, the young man—he is still not quite thirty years old—made a small fortune in the LED street lighting business. In fact, he was too successful. OLAF, the European Union’s Anti-Fraud Office, wanted to know more about this super company that received almost all of the contracts for EU-financed modernization of city lighting in Hungary.

With a possible investigation on the horizon, Tiborcz had to distance himself from the lighting business. And the head of the family had to find another source of income for Tiborcz that would be less directly involved with public procurements. It looks as if Orbán’s advice was for his son-in-law to try his hand at real estate.

Tiborcz’s first real estate venture was the purchase of the Schossberger Mansion last October. His father-in-law most likely also counselled him to make sure that his name doesn’t appear on the letterhead of companies he owns in full or in part. So, the new real estate company, called BDPST Ingatlanforgalmazó, is on paper owned by two people, apparently friends of Tiborcz. But since he paid the excise tax in connection with the purchase of the mansion, we can be confident that Tiborcz is behind BDPST. I wrote about this deal about half a year ago.

At that time we also learned that Tiborcz may have interests in two other real estate firms, AMX HS and AMX Nador House. The CEO of both companies was a wealthy Turkish businessman, Suat Gökhan Karakus, who lives in Hungary.

In the foreground Adnan Polat / Source: Magyar Narancs

Adnan Polat  / Source: Magyar Narancs

A few months later atlatszo.hu discovered that Tiborcz has other important foreign backers. One of them is the incredibly rich Adnan Polat, a Turkish businessman who is one of the owners of AMX HS and AMX Nador House. He has, as 444.hu learned, many contacts within the Orbán government and is very active in Hungarian-Turkish cultural and business associations. He is involved with the Hungarian Trading House in Istanbul, and the Hungarian Cultural Center set up shop in the offices of Polat Holding.

Another man who is now in Tiborcz’s circle of business associates is Ghaith Pharaon, a Saudi businessman of dubious reputation. AMX Nador House, a joint venture of Polat and Tiborcz, managed to buy from the state the old headquarters of Postabank at József Nádor tér. Soon enough they sold AMX Nador House to a certain Ammar M. A. Abu Namous, who immediately changed the name of the company to Pharaon-Kappa Befektetési és Tanácsadó Kft. The Hungarian internet site Válasz soon found out that Namous is a lawyer who handles Ghaith Pharaon’s business ventures in Hungary. There are already seven such businesses, all of whose names include letters of the Greek alphabet. In addition to extremely valuable Budapest properties, Pharaon through Namous bought the Zichy-Hadik Mansion in Seregélyes and the Hochburg-Lamberg Mansion in Bodajk.

The available English-language information on Ghaith Pharaon is extensive, mostly because of his association with the Bank of Credit and Commerce International (BCCI) back in the 1990s. Secretly acting on behalf of BCCI, Pharaon acquired control of two American banks in violation of federal banking laws. When the fraud was discovered, BCCI was forced to sell the banks, which soon after were shut down by regulators when it was determined that they were insolvent. Pharaon was charged with wire fraud and racketeering conspiracy. He has been wanted by the FBI since 1991 for his role in the fraud involving the financial collapse of BCCI and remains a fugitive. In addition, Pharaon was accused in a 2002 French parliamentary report of having financial dealings with hawala, an Islamic financial network which is also used by terrorist organizations. Currently, he is chairman of Attock Petroleum, CEO of National Refinery, and Director of Pakistan Oilfields, just to mention a few of his business ties. He lives mostly on his super yacht named Le Pharaon.

Pharaon might be wanted by the FBI, but the Orbán government is not fussy. Rumor has it that the state is planning to sell the building next door to the former Postabank building that is already in Pharaon’s possession. The building, which is currently occupied by the ministry of national economy, will soon be available when the ministry moves, along with the prime minister’s office, to the Castle District in Buda. In addition to his various real estate deals, Pharaon is also a business partner of the Hungarian state through the Hungarian National Trading House.

The stories circulating about Pharaon eventually worried opposition politicians. At the end of April the parliamentary committee on national security spent a three-hour session on the relationship between Pharaon and the Orbán government, at the end of which deputy chairman Szilárd Németh (Fidesz) informed reporters that “this Pharaon is not that Pharaon.” Then, on June 6, when János Lázár was testifying before the committee about the work of the secret services in the year 2015, Bernadett Szél (LMP) decided to ask him about the “Pharaon case.” Did the government manage to learn more about Pharaon? Since she didn’t receive a satisfactory answer, Szél is demanding a separate hearing of the case in the near future.

Whether Pharaon is a national security risk or not I have no idea, but Tiborcz’s role as an intermediary between the Hungarian government and foreign businessmen, given Tiborcz’s relation to the prime minister, is troublesome to say the least. It seems that Tiborcz and his father-in-law are unwilling to settle for a role for Ráhel Orbán’s husband that has nothing to do with the Orbán government and the Hungarian state. After all, as long as Orbán is prime minister, the financial benefits of such a relationship are enormous.

June 8, 2016