Tag Archives: insider trading

Jobbik in attack mode: Suspicious withdrawals from Quaestor

In the last few days the Hungarian media has again been full of stories about perhaps the largest financial scandal in recent Hungarian history. It was a year and a half ago, on March 9, 2015, that Quaestor, a brokerage firm with close connections to the Orbán government, collapsed, leaving about 30,000 customers high and dry.

I wrote about the Quaestor scandal several times, but as background to today’s post I recommend one article in particular, “A crime in search of a more coherent cover-up.” In this post I described Viktor Orbán’s desperate attempts to explain how certain government offices managed to withdraw billions of forints a day before the collapse of Quaestor. His efforts were less than successful. László Kéri, a political science professor who has known Viktor Orbán and his friends ever since college days, expressed his total disgust that “in three weeks [Viktor Orbán] could only come up with such an infantile, obvious, and slapdash story.” A month later, at the end of April 2015, I wrote another post about Fidesz’s waning popularity and the long shadow of the Quaestor scandal it was unable to escape.

Of course, interest in the Quaestor case eventually died down, especially since Csaba Tarsoly, the CEO of the firm, disappeared from sight, spending an obviously miserable year and a half in a Hungarian jail. He is a former shadow of himself, which speaks mountains about the deplorable conditions in Hungarian jails. Meanwhile some of the 30,000 small investors have been fighting for compensation. Not all of the cases have been settled. And people who had investments of more than 6 million forints ($21,500) are especially unhappy because their compensation will be capped at that figure.

No left-of-center opposition party bothered to keep the issue of possible insider trading alive. Only Jobbik issued a demand, addressed to the government party at the end of September 2015, to provide a list of Fidesz politicians and government officials who may have withdrawn their money from Quaestor in the last few days before the brokerage house’s collapse. Their demand, of course, was not met.


Now that the prosecutor’s office has finished its investigation and the case against Tarsoly and ten others is underway, interest in Quaestor has been reignited. Jobbik’s search for possible Fidesz accomplices inspired N1TV, an internet television station with close connections to Jobbik, to investigate. On October 14 the television hit pay dirt, receiving a list of 333 Quaestor customers who withdrew money on the very day of the firm’s demise. The TV station focused only on individual withdrawals of more than 10 million forints. Names of investors with relatively small withdrawals were withheld; the names of those with withdrawals of greater than 10 million forints were posted online.

György Szilágyi, a Jobbik member of parliament and party spokesman, held an “extraordinary” press conference, during which he said he found one name to be of special interest. On the list a certain Gábor Richárd Bolya, who according to N1TV used to work as a chauffeur in the prosecutor’s office, withdrew 200 million forints from Quaestor on the crucial day, March 9, 2015. As it turned out, Gábor Richárd Bolya left his job at the prosecutor’s office sometime in 2011, but, as Jobbik pointed out, in 2009 when the account was opened, he was still an employee of the prosecutor’s office. Such substantial savings by someone who made his living as a chauffeur is suspicious, especially since not long ago the chauffeur of a Fidesz MP acquired 136 hectares of agricultural lands at a state auction, which naturally ended up in the hands of his boss.

Another questionable item is a 15 million forint withdrawal by Csaba Mátéfalvy, a former water polo champion, whose wife, Gyöngyi Bende, was at one point the communication director of Quaestor. Bende was quite ready to talk to the journalists of N1TV, even offering her opinion on the number of high officials at Quaestor who most likely had knowledge of the company’s impending doom.

N1TV also interviewed the owner of a Kecskemét company that produces roller bearings. She seemed decidedly uncomfortable and annoyed with the questions about her withdrawal.

Today HVG published an article about another person with possible ties to Fidesz–Gergely Béla Telegdy, a young judge in Szeged whose specialty is administrative and labor law. He withdrew a relatively small amount of money, just a little over 3 million forints, but his mother, Irma Haszon, withdrew 33 million. According to Haszon, she and her son announced their intention to withdraw this large amount of money two weeks earlier because of an impending real estate purchase; it took that long to clear the bureaucratic hurdles. This might be a perfectly legitimate explanation, but suspicion will not die easily. Telegdy is known in Szeged as a darling of the present leadership and a favorite of Tünde Handó, head of the National Judiciary Office. Telegdy, while a student, was a HÖK leader in Szeged. The current HÖK chief, the notorious Márk Török, who simply cannot be removed from office although the university’s administrators would dearly love to see him gone, found a strong supporter in Telegdy. These certainly aren’t sufficient reasons to suspect Telegdy, but distrust of the government and anyone favored by it runs deep.

I’m certain that diligent sleuths will study those 333 withdrawals made public by N1TV and soon enough will find more names with ties to either the government or Quaestor management. György Szilágyi already expressed his hope that all withdrawals in the two weeks before the collapse will be made available to get a fuller picture of possible illegal activities. I assume that if N1TV managed to get the transactions from March 9 it should be able to acquire a list of earlier transactions from the same source. If names of highly placed individuals are on these earlier lists, N1TV’s disclosure will not be good news for the Orbán government, which already has enough trouble with Jobbik’s refusal to support the amendments to the constitution unless the government shuts down its large-scale settlement of foreigners who are ready to buy €300,000 worth of government bonds. But more about that tomorrow.

October 19, 2016

Demands for Viktor Orbán’s resignation

Today is one of those days that I have no idea what will happen between beginning to write this post and uploading it. One thing, however, I can be pretty sure of: I don’t have to worry that by tomorrow morning Viktor Orbán will not be the prime minister of Hungary. Although that is what the opposition would like to see.

This morning’s editorial in Népszabadság demanded Foreign Minister Péter Szijjártó’s resignation. And, indeed, Szijjártó’s situation was deemed so grave that Prime Minister Viktor Orbán himself came to his rescue. At a press conference in Sopron he said that he was the one who decided that all government money invested in bonds issued by private financial institutions must be withdrawn immediately. He announced his decision at the Thursday, March 4th cabinet meeting. The Hungarian National Trading House subsequently withdrew 3.8 billion forints from Quaestor on Monday, March 9th. That very evening Csaba Tarsoly, CEO of Quaestor, announced his firm’s bankruptcy.

The problem with this story is that it doesn’t jibe with earlier statements of the ministry of foreign affairs and trade that praised the Trading House officials who “acted conscientiously when, observing the market developments,” they opted to withdraw Trading House’s money from Quaestor. Because, according to the letter the ministry sent to cink.hu, there was real panic in the first days of March “when the majority of Quaestor’s clients began withdrawing their assets.” The problem with this explanation is that it is not true. There was no outward sign of trouble at Quaestor at the time. Once Orbán decided to bear the odium of what appeared to be insider trading on the part of government agencies, the ministry discovered that its earlier explanation did not accurately reflect the situation and that in fact the prime minister’s version was the correct one.

Many political reporters were stunned when they heard that Orbán had decided to be the fall guy in this scandal. “In the first moment I didn’t understand how [Orbán] could do something like that,” László Szily of cink.hu saidM. Kasnyk of 444.hu at first couldn’t believe that the story was true. After all, with this admission Orbán threw himself into a quagmire of monumental proportions with a possibly serious political fallout. But it seems that Viktor Orbán is confident about his invincibility. He thinks that his position is secure and that he has nothing to fear. Given the Hungarian parliamentary rules he is probably right, although the opposition parties appear to be united in demanding his resignation.

As we learn more about the events leading up to the collapse of Quaestor, it seems that the Fidesz political leadership had been aware that Csaba Tarsoly’s financial empire was in serious trouble for some time. A high-ranking member of the Fidesz parliamentary caucus told an Index reporter that it was likely after Buda-Cash’s collapse that there would be other bankruptcies. He specifically mentioned Hungaria Értékpapír and Quaestor, both of which subsequently failed.

But let’s return to why Viktor Orbán decided to speak up. Most likely because he realized that Péter Szijjártó was in big trouble. He had illegally invested government assets in a shaky private business venture and then, presumably equally illegally, had withdrawn 3.8 billion forints just before Quaestor’s collapse. Orbán gave this young man a critically important position, one that he was not prepared for. But Orbán is not the kind of man who would ever admit that he made a wrong decision, and therefore it would never occur to him to remove Szijjártó from his position. Also, Szijjártó served him with undivided loyalty for such a long time that perhaps Orbán feels obliged to defend him.

Viktor Orbán announcing that it was him who ordered the withdrawal of government assets from Quaestor

Viktor Orbán announcing his decision to withdraw government assets from Quaestor

Let’s take a quick look at the opposition parties’ reaction to Viktor Orbán’s announcement. Párbeszéd Magyarországért/Dialogue for Hungary (PM) was the first to announce their decision to press charges against government officials who, they believe, are guilty of insider trading. Tímea Szabó, co-chair of the party, naively said that they will demand the audiotape of the March 4th cabinet meeting. Good luck! As far as I know, no records of Orbán’s cabinet meetings are kept in any shape or form. Orbán made that decision already in 1998 when he first became prime minister. He didn’t want to become a second Nixon.

Együtt/Together decided that, while they were at it, they might as well send Péter Polt, the chief prosecutor, into retirement alongside his old friend, the prime minister. DK is also pressing charges, and they “would like it if the prime minister would assume financial responsibility with his own assets” for the losses at Quaestor. LMP’s spokesman, a practicing lawyer, talked about insider trading, which is a serious crime and for which long jail terms are normally handed down. He even offered an explanation of what might have happened. In his opinion, it was through the close relationship between Szijjártó and Tarsoly that the information leaked out and spread within the Orbán administration. He also raised the possibility that with the ministry withdrawing about 20 billion forints, Szijjártó may have been partially responsible for the collapse of Quaestor. Gábor Fodor of the Liberális Párt (LP) wrote a letter to the prime minister which Orbán will have to answer at the latest in three weeks’ time. Fodor wants to know exactly how Orbán ordered the ministers to withdraw government assets from private firms. Was it in a letter and, if yes, who were the addressees?

Modern Magyarország Mozgalom (MoMa), the party of Lajos Bokros, called the Hungarian state under Victor Orbán a “den of criminals.” He called attention to the seriousness of insider trading for which “in the United States and in Great Britain people receive very long jail sentences.” In Hungary, he claimed, important government officials are involved in such practices. Bokros also wanted to know “how the ministry of foreign affairs and trade has extra money to invest.”

Several MSZP politicians talked about the case and they all called for Viktor Orbán’s resignation. Jobbik’s János Volner, chairman of the parliamentary committee on promoting entrepreneurial activities, plans to convene a meeting where he expects Péter Szijjártó and the leading official of the Hungarian National Bank to answer the committee’s questions. If they don’t get satisfactory answers, they are ready to go as far as the European Union.

Fidesz is stonewalling. The party “doesn’t fall for the socialists’ provocations because after all it was the left that in the socialist broker scandal [i.e., the Buda-Cash collapse] abandoned the Hungarian people.” And in any case, “it is MSZP, Gyurcsány and Bajnai who are involved in the network of brokerages.” I have no idea what the Fidesz spokesman is talking about here.

The last piece of news I read before sitting down to write this post said that MSZP is inviting all other opposition parties to a meeting tomorrow. We will see what the reaction to this call is. If they manage to form a common front, it will be a first.