Tag Archives: party financing

“Observer”: An action befitting a dictatorship

The action of the “independent” State Audit Commission (ÁSZ) against the opposition parties emerges as the most brazen act of political repression committed by the Orbán regime to date (together with the respective legislation passed earlier).

Although many already may know the basic facts, I would like to recap:

At the end of last year ÁSZ completed the scheduled audits of all opposition parties and unprecedentedly found that they all had accepted “illegal funding in kind” and suggested* they have to repay/pay the amount of the alleged illegal funding shown below + an equal amount of fine:

  • LMP 8 mil. Ft. for below market prices leases
  • DK 16 mil. Ft. for below market prices leases
  • Együtt 16 mil. Ft. for below market prices lease and for member fees accounted for as donations (the question of how ÁSZ knows who are the members is left unanswered)
  • Együtt, Párbeszéd, and MOMA were also fined for poster space below market prices.
  • Jobbik 331 mil. Ft. for poster space below market prices (remember the “You work they steal posters”) grant

* According to the 2011. LXVI. Law regulating ÁSZ (ÁSZ Law), it can only offer its findings, suggest and advise Parliament, or initiate proceedings with the competent authorities. The law does not contain the word “fine,” nor does it grant ÁSZ in any way the right to such or any other administrative action.

For lack of space we shall not discuss the often scandalous actions that ÁSZ undertook earlier, such as refusing to audit Fidesz, citing a lack of jurisdiction for market price comparison or studies, scheduling Fidesz audits in even years, i.e. after elections, and flouting document submission deadlines during the audits (of Jobbik), etc.

Fitting the picture is also the end of 2016 – 2017 onslaught against the advertising/poster free market after Jobbik and other parties contracted space from the Simicska-owned CityPoster. The Orbán parliament amended obscure settlement image legislation in an attempt to circumvent the important law on political advertising, which the government couldn’t change for lack of the required two-thirds supermajority. This stands as another brazen act of defying the legal order of the country, i.e. a clear demonstration of dictatorship.

I would, however, draw attention to several actions, which considered together defy credulity and strongly suggest ulterior motives and unlawful organized action:

  • All parties were charged with the same form of “illegal funding in kind,” i.e. they had supposedly rented premises below market prices. Notably, many leases are years old and had been audited by ÁSZ before. In one case the leases were arranged by the Parliament Administrative Office.
  • Four parties allegedly all contracted poster space at below “list prices.” ÁSZ never addressed the long-standing objection that in practice everyone in the market is given some discount from the list price. (Until now the dispute was left hanging in the air since no action was ever taken by ÁSZ on this issue).
  • The space contracted by Jobbik was from the same Simicska-owned company that had “supported” Fidesz in the same way for more than a decade, until the fallout between Simicska and Orbán, after which the practice was outlawed in 2014. In response to the other parties’ protests against those economically nonsensical prices, Simicska once cynically responded that everyone has the right to be stupid.
  • In crude violation of all legal principles (e.g. as DK pointed out, ÁSZ didn’t specify the incriminated leases, and they had many), ÁSZ also did not make public or at least disclose to the affected parties the evidence/materials supporting their conclusions or the way ÁSZ calculated the specific amounts.
  • Jobbik, the largest opposition party, the one most likely to draw votes from the Fidesz camp, was hit hardest, annihilated with a 336 million withdrawal of funding + a fine of the same amount. Jobbik was also found to have failed to cooperate, mainly to provide requested documents (which Jobbik denied in detail), and was threatened with steps to initiate criminal prosecution against its president, i.e. Gábor Vona, under par. 33.3.a. (An indictment would disqualify him from participation in the election.) In the autumn Jobbik was negotiating even more poster space with several firms.
  • Just before the ÁSZ action, by act 29/2017 of October 6, 2017 the Ministry of National Economy (NGM) amended the enforcement/collection provisions only, rep. only for the illegal funding, adding par. 2.A. to decree 55/2016. (XII. 21.) NGM. The amendment was to “come into force on the day following the publishing.”
  • Finally, according to the ÁSZ’s Enikő Czinder, “A proposal based on the auditing experience of the State Audit Office was acted upon, [and] the legal loophole indicated by the ÁSZ was closed by the Ministerial Decree on National Economy for the Suppression of Prohibited Funding.” The timing indicates that the amendment was practically retroactive, as the ÁSZ audits of the parties had been going on during the same period. [Translation is mine.]

There are too many coincidences, unless one believes in miracles.

♦ ♦ ♦

Before delving into the legal aspects of the case, I have to confess that it’s not easy to find the updated and complete texts of the various acts, since the Orbán regime has passed over 750 laws and amendments, often abusing the legislative process by hiding amendments in the bulk of omnibus bills.

The legal aspects

Let’s move on from the audit performance and its findings to the legality the so-called fines ÁSZ imposed.

Prof. Peter Róna, economist, jurist and businessman, recently published an article in HVG and gave some interviews where he harshly denounced the action: “ÁSZ committed a coup against the constitution … The ÁSZ action against opposition parties forsakes the separation of powers set by the Basic Law. This is a dictatorship,” he stated.

Beyond the ulterior intentions and the actual attempt to impair the opposition’s capabilities to successfully participate in the election race, Professor Róna warns of what he sees as “the final elimination of the constitutional foundations of our country.” He points out that the current “Basic Law is the basis of Hungary’s legal system (Article Q (1)), which is based on the principle of separation of powers (Article C (1)). The power of the state is divided into three parts, namely the Parliament entrusted with legislation (Article 1), the Government with the executive power (Article 15) and the Courts entrusted with providing justice. (Article 25)”

According to article 42/43 of the Basic Law, ÁSZ is an organ of Parliament; § 1.1 of the (ÁSZ Law) 2011. LXVI. stipulates: “The State Audit Office is the main financial and economic control body of the Parliament, which performs its task under the Parliament. The statute and the powers of the State Audit Office are defined by the Basic Law and this Act.”

The above status, argues Professor Róna, “precludes any executive task, the possibility of any executive action. ÁSZ, therefore, cannot be authorized by any law with more or wider powers than the ones the Parliament itself possesses, or with which Article 42 of the Basic Law endows it. The Parliament has no constitutional rights to carry out specific [executive] actions, even less so to impose specific punishment, and the Basic Law only defines auditing powers” to ÁSZ.

The ÁSZ Law specifies the ÁSZ functions as follows:

  • 1.4 Assisting Parliament with findings, suggestions and advice.
  • 1.5 Based on its findings, the State Audit Office can initiate proceedings with the competent organs against the audited organizations and responsible persons.
  • 3, 4 and 5 setting out tasks of ÁSZ mentions “audit plan,” “carrying out audits,” “auditing functions,” “auditing activities,” “findings of the audit,” but no executive action at all.

The ÁSZ Law repeatedly and consistently refers to ÁSZ’s right and obligation “to initiate proceedings with the competent authorities” or organizations/organs: §11.4 11.5 16.5 23.2.b 27.1 27.7 27.8 30.1 33.3a/b, but does not mention any form of punitive action by ÁSZ, which leaves no doubt regarding the intention of the legislator.

Prof. Róna thinks that the much maligned provision of the ÁSZ Law “§ 1.6 The ÁSZ reports, the findings therein and its conclusions cannot be challenged before a court or other authority” fits into this line of legal thinking, because “from ÁSZ’s scope of authority it follows that it cannot make decisions binding on others; it can only inform the competent organizations or Parliament if it detects a violation of the law. Its [ÁSZ] decisions cannot be appealed exactly because in the absence of binding force there is nothing to rectify or to execute.”

Most of us agree that the interpretation of the ÁSZ finding, including the testimonies of (sometimes dubious) external experts, as being incontestable is absurd in any legal system today. Even in Prof. Róna’s line of reasoning, I still am critical of the clause, because it makes unclear the status of the ÁSZ findings vis-à-vis other evidence in any legal contest.

In Róna’s judgment “the action of ÁSZ against the opposition parties forsakes the separation of the branches government set out in the Basic Law, i.e. the Parliament through its own organ, the State Audit Commission, takes specific [executive] action circumventing the judicial branch and denying legal remedy. This is the dictatorship itself, for the prevention of which the separation of the power branches was conceived.”

What next?

By now all affected parties have stated that they are not going to pay–Jobbik actually cannot, but there are various statements regarding the following steps and the presumed consequences thereof.

Fines are generally due to the Treasury, and, if not voluntarily paid, some can be collected by the Tax Office. The applicable 2003 Law XCII. (Art.) § 145, contains an exhaustive listing of “enforceable documents,” i.e. the only legal grounds for the Tax Office to enforce collection:

  1. final official decision determining the payment obligation (order, order for payment),
  2. in the case of tax self-assessment, a tax return containing tax obligation (tax advance payment)
  3. outstanding public debt, which can be collected in the way of tax collection,
  4. tax assessment communicated to the taxpayer
  5. a judicial decision …[ordering court fees]
  6. document establishing a healthcare contribution obligation

ÁSZ, however, is in no position to issue any of the above, so the guessing game is on.
Viktor Szigetrvári of Együtt stated that they won’t pay voluntarily but was certain that the Fidesz party state will take their money anyway (in Hungary the Tax Office can garnish, freeze, and seize funds from a bank account without any writ), administering “quick poison” to the opposition. He did not elaborate further.

Emese Pásztor of the Eötvös Károly Institute spoke of ÁSZ “calling upon” (felszólítani) the parties to pay within 15 days, and stated that the legal nature of such “calling upon” is unclear; it cannot possibly be considered an administrative act, as all such must be open to appeal.

Attila Szabó of TASZ (Hungarian Civil Liberties Union) concurs in this respect. He also criticized the lack of justification by ÁSZ, e.g. how were the amounts of the fines established. He speculated that the parties can petition the Administrative Courts, which will most probably throw out the petition for lack of jurisdiction, but such a ruling may help clarify the status of the case and may be used in an eventual international legal challenge. He also pointed out that one-fourth of the MPs can petition the Constitutional Court for subsequent control of the legislation involved.

I couldn’t find a firm opinion on whether the ÁSZ act can trigger the process of collection, and it may be that there isn’t any such provision. There have been many cases of half-baked pieces of legislation rushed through by the all-too-eager ruling party, which are often deliberately drafted in a way to conceal their true ulterior objectives.

The eventual enforced collection is also problematic since the 2003 Law XCII. (Art.) obliges the Tax Office to avoid causing “undue stress” to the debtor by eventually deferring and scheduling the payments. In our case this means a collection after the elections and in installments.

So what are we to make of this week’s more telling than baffling initiative of the minister for the economy Mihály Varga, who started a “co-ordination“ (egyeztetés) with Treasury and the Tax Office aimed at postponing and scheduling the payments of the fines by the parties. The move raises numerous questions: why the NGM minister, why not ÁSZ, on what authority does the minister interfere, etc.

My first guess is that the whole action was planned as a form of intimidation only, with no intention to actually seize the funds, not now at least. However, witnessing the recent harder line taken by the regime in other areas, I can’t exclude the possibility that the intention was to destroy Jobbik and/or to drain Simicska’s resources. It is possible that Viktor Orbán felt that ÁSZ’s heavy-handed action created too much political noise and turned to Varga to do something quickly to smudge the picture, a favorite routine in Orbán’s Hungary, prompting Varga’s ill-considered action.

Summing up

Péter Róna sees the situation as follows: The reason Parliament or the government “does not entrust the task of punishing any wrongdoings to the competent authority — as stipulated in Article 23 of the Basic Law — is because the BL provides for legal remedies against executive actions. Since the [government’s] intention was to take actions that would not pass the filters of justice, there was a need to find a body that does not fall under the jurisdiction of the courts. Such is the State Audit Commission.

“The Parliament’s responsibility is now enormous. It is a constitutional duty to reject … the [ÁSZ’s] decision, … and the opposition parties’ responsibility is to refuse to comply with any ÁSZ measure,” concludes Prof. Róna, to which ÁSZ reacted with some platitudes and with calling on Prof. Róna “to cease misleading the citizens.”

It turned out that the indicting ÁSZ reports were not signed by the president, László Domokos, formerly Fidesz member of parliament. The law allows for substitution, but one must ask why the president didn’t sign such politically explosive documents. When pressed, Bálint Horváth, ÁSZ’s communication director, said only: “because the president decided so.” My sarcastic reaction is that it was perhaps insurance against eventual criminal charges.

Let me cynically sum up: a party soldier at the head of ÁSZ acts beyond his authority, attempting to cripple financially the opposition parties and annihilate the biggest one, charges all of them with the same alleged offense — a situation that has existed for years and has previously passed muster with ÁSZ, while providing no detailed justification of its findings and how the fines were arrived at. This assault on the opposition just before the elections happens to benefit the ruling “illiberal” regime, which has a long record of actions against the democratic institutions, and which in this case amended legislation to facilitate the collection of precisely such fines.

I rest my case. It’s now up to the jury.

January 12, 2018

Is the Demokratikus Koalíció a liberal party?

A few days ago Gábor Fodor announced that he will establish a new party called Magyar Liberális Párt. SZDSZ is no more, he declared, and it mustn’t happen that Hungary has no liberal party.

I’m not familiar with the personal relationships among SZDSZ politicians, but former colleagues who once sat in the same parliamentary caucus hardly speak to and refuse to cooperate with one another. Although the various splinter groups have divergent ideas, they seem to have one thing in common: nobody wants anything to do with Gábor Fodor.

As for the existence of a liberal party in Hungary, I propose that there already is one. It is called Demokratikus Koalíció. I venture to say that the bulk of DK voters and party members come from former SZDSZ supporters and/or members. This is only a hunch, but I suspect that a public opinion poll that would tease out the correlation between former SZDSZ and current DK followers would lend credence to my contention.

At least two well-known SZDSZ politicians are on board in DK: Tamás Bauer and Mátyás Eörsi. Both were founders of SZDSZ and both served as members of parliament. Eörsi between 1990 and 2010 and Bauer between 1994 and 2002. Bauer is an economist while Eörsi has a law degree.

liberalism by brexians flickr

Liberalism by brexians / Flickr

Here I would like to summarize an article by Tamás Bauer that appeared yesterday in Galamus. The title of the piece is “Someone who can’t stop attacking Gyurcsány” (Aki a gyurcsányozást nem bírja abbahagyni). Even from the title it is evident that Bauer is coming to the defense of Ferenc Gyurcsány. The great virtue of the article, however, is that Bauer is thoroughly familiar with the details of behind-the-scenes party politics  about which we outsiders know practically nothing.

Bauer’s article is an answer to an opinion piece by András Böhm, an SZDSZ member of parliament between 2002 and 2010, in HVG entitled “The One Who Cannot Stop” (Aki nem bírja abbahagyni). Böhm maintains that Gyurcsány’s political activity turns away hundreds of thousands of voters from the democratic opposition. Böhm made a long list of  political blunders committed by Ferenc Gyurcsány, from the “tax burlesque” of 2006 to his resignation in 2009 that, in Böhm’s opinion, was too late. In the article Böhm makes Gyurcsány solely responsible for the two-thirds majority victory of Viktor Orbán. Or at least this is how Tamás Bauer interpreted the article.

Bauer finds this argument more than odd, especially coming from someone who became a member of parliament in 2002. At that time the new parliamentary majority, instead of correcting the economic mistakes of the first Orbán government, added to the problems with Péter Medgyessy’s two 100-day programs that further increased the deficit. András Böhm, as an SZDSZ member of parliament, voted for all these government programs.

As for the “tax burlesque” of 2006, Gábor Kuncze, chairman of SZDSZ at the time, tried to convince the SZDSZ caucus to give up the idea of decreasing the personal income tax burden as well as the VAT, but Kuncze’s effort was in vain. The majority of the SZDSZ delegation insisted on the decrease. Gyurcsány apparently did the same during his negotiations with the board (elnökség) of MSZP. He got nowhere. Gyurcsány “had to deliver the speech in Balatonőszöd to convince his fellow socialists” to agree to change course. In addition to a mistaken economic policy, political corruption was another reason for the failure of the socialist-liberal governments. Again it was only Ferenc Gyurcsány, says Bauer, who fought for transparent party financing. After he failed, he left MSZP in October 2011 to establish a new party, the Demokratikus Koalíció.

According to Bauer, Böhm’s only concern is what Gyurcsány did or didn’t do between 2004 and 2009. He pays no attention to what the Demokratikus Koalíció is doing today in Hungarian politics. The question is whether DK has a role to play on the Hungarian political spectrum. According to Bauer, the answer is a resounding yes.

Bauer reminds Böhm that SZDSZ was the only party that refused to vote for the so-called “status law” that would have provided Hungarians living in the neighboring countries special privileges inside of Hungary. The members of SZDSZ’s parliamentary caucus were the only MPs who refused to vote for a resolution condemning Slovakia in connection with the language law and its treatment of President László Sólyom.

It is DK that is continuing this tradition when it comes to policies concerning Hungarian minorities. After 2010 both the MSZP and the LMP caucus voted for dual citizenship, with the exception of Ferenc Gyurcsány. Today DK is the only party that continues the former policies of SZDSZ when it comes to the Hungarian minorities. Citizenship yes, voting rights no.

It was during the 2006 campaign that Viktor Orbán first came up with the idea of decreasing the price of natural gas. MSZP tried to outdo him and promised even greater decreases. It was only SZDSZ that refused to follow suit. Today MSZP promised support for the government’s decision to lower utility costs. DK is against the measure.

In 2008, on MDF’s insistence, MSZP voted to repeal the inheritance tax; SZDSZ had the courage to vote against the measure. Today DK’s party program spells out its insistence on reinstating inheritance taxes on estates over 20 million forints. Bauer points out that today MSZP is talking about absolutely free higher education; it is only DK that is calling for tuition fees across the board combined with financial assistance for the needy. Once upon a time it was only SZDSZ that wanted to renegotiate the agreement between Gyula Horn and the Vatican. Today it is part of DK’s party program.

All in all, in Bauer’s opinion, DK is the only party representing a liberal economic policy, liberal legal thinking, liberal higher education, liberal national policy (magyarságpolitika), and liberal policies concerning church and state. There is no other party among the opposition groups that represents these ideals.

Bauer concludes his article by saying that it is not enough to win the elections. It is also important to know what kind of Hungary will be created after the victory. And in that new Hungary one must have a party that represents “these liberal values that neither MSZP nor Együtt14 is ready to stand behind.”