Tag Archives: Péter Medgyessy

Former PM Péter Medgyessy on the current political situation

Two days ago, when I was covering the negotiations between MSZP and DK, I was initially planning to include a few words about an interview with Péter Medgyessy, who was prime minister of Hungary between 2002 and 2004. Because I launched Hungarian Spectrum only in July of 2008, readers will find relatively little information on him on this blog. But his name came up about a year ago when we learned that the former prime minister, who owns a consulting firm, had received €600,000 from the French company Alstom in 2006, the year in which the City of Budapest made its decision to buy Alstom cars for the new metro line. Medgyessy naturally claims that his consulting firm had nothing to do with the decision in favor of Alstom, adding that it is a well-known fact that his relationship with Prime Minister Ferenc Gyurcsány and the liberal SZDSZ leadership of the City of Budapest was strained. This may be so, but receiving a high fee from a firm that was already in some trouble over corrupt business practices doesn’t look good.

Medgyessy comes from an old Transylvanian family and can trace his ancestry all the way back to the seventeenth century. After graduating from Karl Marx Economic University, he became a civil servant, working his way up the ladder until by 1982 he was deputy finance minister. After the regime change, he retired from politics and became CEO of a couple of banks. In 1996 he was named finance minister in the Horn government. In 2002 he was chosen as MSZP’s candidate for the premiership and, after a slim victory over Fidesz, became prime minister of the MSZP-SZDSZ coalition government.

Less than three weeks after his inauguration, Magyar Nemzet, a newspaper that had close ties with Fidesz in those days, revealed that Medgyessy had worked as a paid counterintelligence officer under the code name D-209 in the III/II section of the ministry of the interior. SZDSZ demanded that Medgyessy be replaced with someone with a clean record, but MSZP politicians convinced them to support Medgyessy. Two years later, however, Medgyessy lost the support of the coalition partners.When he threatened to resign unless the SZDSZ minister of the economy was dismissed, MSZP refused to stand by him. His resignation was accepted, and MSZP named the young Ferenc Gyurcsány as his replacement.

After this somewhat lengthy introduction, let me turn to the interview itself. Szabolcs Dull of Index visited Medgyessy in his home, where he asked the former prime minister to assess the current political situation. The conversation began with the chances of the opposition parties at the forthcoming election. Medgyessy predicted a Fidesz victory due to the poor performance of the opposition politicians and Viktor Orbán’s superior political instincts. What Medgyessy was referring to here were Orbán’s policies in the face of the migrant crisis. He doesn’t like Orbán’s answers, but he would have done the same thing if he had been in Orbán’s shoes. He also praised Orbán’s public works program. He admitted that the program doesn’t make much sense economically, but it is a good thing to put these people to work, for which they “receive a little bit of money.”

Source: Index / Photo: István Huszti

As for Orbán’s political chances, Medgyessy is convinced that “it will not be the opposition but time that will displace Orbán.” The problem with the opposition politicians, including Gyurcsány, is that “they are made of old stuff,” which is somewhat amusing to hear from a former Kádár counterintelligence officer who served as deputy finance minister in the old regime. They are not only old-fashioned socialist types from Kádár’s times, but “they are also mediocre.” No socialist can successfully take on Viktor Orbán, “who is anything but mediocre.” There is only one person who is up to the task, and that is Bernadett Szél. Medgyessy admits that Szél’s prospects for 2018 are slim, but he believes that she will be ready to lead the country in 2022. Medgyessy’s description of Szél as a person who “can integrate people” is strange considering her categorical and total rejection of cooperation with any other opposition politicians.

At the end of the interview Medgyessy repeated what he had asserted in an interview almost a year ago–that Viktor Orbán can be removed only if MSZP, DK, and Jobbik cooperate. Such a solution might not be a principled political decision, but “what is principled in politics?” The question is not whether the political left likes Jobbik. “There are historical situations which override every other consideration.” As for the problem of a workable coalition government that would comprise left-wing parties and a right-wing Jobbik, Medgyessy’s answer was: “This is the art of politics.” After all, this problem was solved in Austria during Wolfgang Schüssel’s chancellorship between 2000 and 2007 when he formed a coalition government with Jörg Haider’s Freedom Party of Austria.

The interview was not well received in opposition circles. The only person who had a high opinion of the interview was László Kéri, who found Medgyessy’s assessment of the present Hungarian situation correct and convincing. His colleague Zoltán Lakner, whom I consider perhaps the best political analyst in Hungary today, had a strikingly different opinion of Medgyessy and his interview. He said that it is hard to forget Medgyessy’s D-209 past and his rather miserable performance as prime minister. Moreover, someone who doesn’t remember the past accurately might not be the best person to predict the future. Here Lakner is referring to Medgyessy’s repeated claim after his resignation that it was a veritable coup d’état organized by Gyurcsány and other MSZP leaders that removed him from office. And with a D-209 past, “he shouldn’t stand on a moral pedestal because it may wobble under him.”

Lakner’s colleague Kornélia Magyar, in a comment to the above, wondered why Index found an interview with Medgyessy such a good idea just now. What is the editorial direction of Index? Clearly, she is suggesting an ulterior motive behind the publication of this interview. I assume Magyar was making a mental note of the fact that Index is owned by Lajos Simicska, who has been supporting Jobbik.

Jenő Kaltenbach, former ombudsman in charge of national and ethnic minority rights, was blunt in expressing his befuddlement at “keeping alive these political weathervane-corpses (Szili, Medgyessy). Unless because of Fidesz.”

This last point refers to the fact that in November 2015 Péter Szijjártó bestowed a prize on Medgyessy for his work on developing closer relations between China and Hungary. The ceremony took place shortly after Medgyessy in an interview claimed that corruption was not greater during the Orbán government than it had been earlier. As for Katalin Szili, formerly one of the top MSZP politicians who was president of the parliament (2002-2009), she accepted all sorts of jobs from Viktor Orbán after 2010. For example, she became a member of the Nemzeti Konzultációs Testület in 2011 and in that capacity had a hand in writing the new constitution. Since March 2015 she has been working for the Orbán government as a commissioner representing the prime minister himself, dealing with matters related to Hungarian minorities in the neighboring countries.

What upset MSZP politicians most was Medgyessy’s suggestion of a political collaboration with Jobbik. The party published a statement in which they expressed their opinion that “Jobbik is the party of a billionaire thief while Fidesz is the party of thieving billionaires –one mustn’t vote for either! With these? Never!” Ildikó Lendvai, former party chairman and leader of MSZP’s parliamentary delegation between 2002 and 2009, stressed in a television interview yesterday that, although she thinks highly of Medgyessy and considers him a pleasant and clever man, she found this interview unfortunate. To work together with Jobbik would be a suicidal strategy. She also took issue with Medgyessy’s support of Bernadett Szél. Although Szél is a very promising and talented politician, one cannot have as the common prime minister of the democratic opposition somebody who refuses to work with others.

All of this shows the predicament in which Hungarian opposition politicians find themselves. Viktor Orbán managed to set up a structure that created a trap from which it is almost impossible to break out.

November 9, 2017

Will communist-era internal security files finally be open in Hungary?

At last the archives of the huge internal security network, currently stored in the Alkotmányvédelmi Hivatal or AH (Constitutional Defense Office), an idiotic name for one of the many offices dealing with national security, will be transferred to the Állambiztonsági Szolgálatok Történeti Levéltár/ASzTL (Historical Archives of the National Security Services). On March 6 a lengthy report on the “study of the pre-1990 data preserved on magnetic tapes” was released by a working group of the National Remembrance Committee and the Historical Archives of the National Security Services. Three days later the Hungarian government approved the transfer of the material.

Over the years socialist-liberal governments, at least halfheartedly, supported opening the archives, but right-wing governments categorically rejected the idea. For example, one of the most vociferous opponents of opening the archives of the feared III/III department of Kádár’s ministry of interior was Péter Boross, the arch-conservative interior minister and later prime minister in the early 1990s. As for Fidesz, the Orbán government’s reluctance is demonstrated by the fact that in the last seven years LMP turned in 14 proposals to make all documents pertaining to the workings of the internal security apparatus of the Rákosi and Kádár periods accessible. These proposals never got out of the parliamentary committee on judicial affairs.

The present report focuses on one aspect of the vast archival collection of the secret services: “the study of the magnetic tapes.” The existence of these tapes first came to light in 1995, although the initial reaction was one of denial. At that point I belonged to an internet political discussion group in which one of our members, who had been employed by the ministry of interior, had first-hand knowledge of the existence of such tapes. Once their existence could no longer be denied, those who didn’t want the content of these tapes to be revealed announced that they could no longer be read because the recording was done on by now obsolete equipment. Of course, this was just a diversionary tactic. Years later, in 2007, it was Prime Minister Ferenc Gyurcsán who at last set up the so-called Kenedi Commission, a group of researchers familiar with the history of the internal security apparatus. It was that commission which asked a group of IT experts to find a way to make the tapes readable. One of these tech gurus gave a fascinating description of how they managed to accomplish the task. By the way, I should mention that the material on these tapes was made secret until 2060. I don’t know which so-called democratic government decided that the “secrets” of the Kádár regime must be preserved until 2060 (when, presumably, everybody who’s implicated will be dead), but I will note that the Kenedi Commission was promptly dismantled by the Orbán government.

As opposed to other post-communist countries, Hungary allows only extremely limited access to communist-era documents. The East German archives were opened immediately after the regime change. Somewhat later both the Czechs and the Slovaks put all their material online, and anyone can comb through it to his heart’s content. Knowing the “enthusiasm” of the Fidesz government for transparency, I doubt that such a situation will exist in Hungary as long as Viktor Orbán is prime minister.

The present system is quite restrictive. Individuals can ask for their own file if such a file exists. If in that folder he finds a cover name, he can ask for the informer’s real name. But an ordinary mortal can conduct “research” only if he can prove that the person he is researching is a public figure. And only approved historians who can demonstrate a real need to do research in this field are allowed to use the stored archival material. Details of the procedure and the appropriate sections of the 2003 law are given on ASzTL’s website.

Even if one gets permission to do research on public figures to find out whether they were informers, the 2003 law governing accessibility to this material was written in such a way that even if it is perfectly obvious that X or Y was an informer, it is almost impossible to prove it. The law demands supportive material that more often than not is simply not available. For example, the law requires a signed agreement between the security services and the informer or a handwritten report from the agent. It has often happened in the past that the “maligned victim” dragged the historian to court and won because these demands were not met. Historian Krisztián Ungváry claims that as long as the 2003 law is in force nothing will change. For the time being all public figures can rest easy: their “sterling reputations” are being protected by the Hungarian government.

The procedure a historian must go through at ASzTL reminds me of my own experience in the Hungarian National Archives in the 1960s. One had to define one’s research topic quite narrowly–in my case, the foreign policy of the Friedrich government in 1919. I wanted to look at the transcripts of the cabinet meetings. Instead of giving me the full transcripts, the staff extracted only those parts that dealt with foreign policy. One was at their mercy. I assume the situation is similar at ASzTL. Let’s assume that in order to get a full picture of a specific case one needs to look at files on others. Surely, according to the present rules, this is not allowed.

Some people claim that nobody is interested in the issue. Who cares? people say. It was a long time ago. Why disturb the past? It is over with. At one point Bence Rétvári (KDNP), at the time the political undersecretary of the justice department, came up with the brilliant idea that the whole archives should be dismantled and that anyone who has a file should just pick it up and take it home. This kind of talk totally disregards the fact that the history of those 40 years requires an understanding of the enormous network which over the years might have had about 200,000 members. Ever since 1990 the issue has been discussed back and forth, committees have been formed, but governments made sure that the public would know as little as possible about the potentially checkered past of present-day politicians.

In 2002, after the public learned that Prime Minister Péter Medgyessy had been a paid officer of the counter-intelligence unit of the ministry of interior, a committee was set up that became known as the Mécs Committee after Imre Mécs (SZDSZ), its chairman. The commission, because of Fidesz’s obstruction, got nowhere. But apparently those members of the commission who had access to the files found at least ten politicians from the post-1990 period who had worked for the internal security forces.

In fact, as far back as 1990 Miklós Németh, the last prime minister of the old regime, was said to have handed over a long list of former informers who had important positions in the newly formed parties and later became members of parliament or members of the Antall government. This list of informers was leaked by someone called “Szakértő 90” in 2005 and is still available on the internet. In the interim historians have published several articles about the shady past of public figures–for example, János Martonyi, foreign minister in the first and second Orbán governments. He was one of the people who successfully sued Krisztián Ungváry.

It would be high time to set the record straight, but I have my doubts.

March 12, 2017

Metro 4: The largest case of Hungarian fraud and corruption

Now that the complete OLAF report is available online, we can all settle down and try to read 103 pages of dense prose detailing “irregularities, fraud, corruption, and misappropriation of EU funds.” A five-member OLAF group began their investigation in January 2012 after the Court of Auditors and the Directorate General for Regional and Urban Policy of the European Commission contacted OLAF, asking the office to scrutinize the case. During the investigation, the OLAF staff got in touch with only the City of Budapest and Péter Medgyessy, prime minister of Hungary between 2002 and 2004, whose consulting firm worked for Alstom Transport S.A., one of the firms accused of wrongdoing.

The total cost of the project was €1,747,313,606, of which €696,490,000 came from the Cohesion Fund. According to OLAF’s calculation, “the financial impact on the Cohesion Fund is €227,881,690.”

The release of OLAF’s final report put an end to the political game Fidesz and the Orbán government had been playing with the document. János Lázár, head of the prime minister’s office, and his deputy, the honey-tongued Nándor Csepreghy, did their best to get as much political mileage from the affair as possible. Lázár intimated that an international socialist-liberal conspiracy was behind the corruption that occurred at the Metro 4 project. On another occasion, he claimed to have filed charges against Gábor Demszky, mayor of Budapest between 1990 and 2010, Csaba Horváth, deputy mayor between 2006 and 2009, and János Atkári, an adviser to Demszky. Csepreghy must have known that none of these people was mentioned in the document, but in a long interview at 888.hu he intimated that even Ferenc Gyurcsány, prime minister between 2004 and 2009, may have shared responsibility for the misappropriation of funds. A few days later he claimed that other politicians might also be implicated.

All this is just political fluff. What we know from the OLAF report is that the City of Budapest signed a contract in 2004 with Budapesti Közlekedési Vállalat (BKV), the city-owned transit authority, which was commissioned to implement the project. Most likely that was a major mistake, which led to a lot of difficulties later. Any project, especially such a large one as the construction of a metro, needs a general contractor who oversees the project. BKV’s staff was not equipped to coordinate the work, which led to innumerable hiccups during construction.

Throughout the project the Hungarian media, especially the online site Index, reported many suspicious cases of overspending. But these cases were actually small potatoes, like too many consulting firms and lawyers making millions for very little work. Although several such cases are described in the final report, the bulk of the money OLAF would now like to be returned came from serious irregularities during the acquisition of tenders by huge corporations.

According to OLAF, 96% of the “irregularities” occurred in contracts signed by six large firms: Siemens AG, the largest manufacturing and electronics company in Europe; Swietelsky, an Austrian construction company from Linz; Strabag, the largest construction company in Austria, based in Villach; a Hungarian company called Hídépítő Zrt., which as its name indicates builds bridges and roads; the BAMCO consortium (Vinci CGP, Strabag, Hídépítő Zrt); and Alstom, the French multinational company operating worldwide in rail transport, including the manufacture of metro trains.

I left Alstom to last because it was in regard to Alstom that OLAF got in touch with Péter Medgyessy, who received €600,000 in 2007-2008 from Alstom for two years of consulting. This payment occurred after Alstom had won the tender with apparently the worst offer. Medgyessy naturally claims that his consulting firm had nothing to do with the Alstom case, adding that it is a well-known fact that his relationship with Prime Minister Ferenc Gyurcsány and the liberal SZDSZ leadership of the City of Budapest was strained. What his relationship with Gyurcsány had to do with BKV deciding to purchase overpriced Alstom cars is beyond me. I have no idea whether in a court of law Medgyessy would be found innocent or not, but in ethical terms his behavior was highly suspect.

Siemens, the German company which was in charge of electrical works, received 31.7 billion forints (€102,303,730) for the job. Since OLAF claims that Siemens most likely received inside information during the bidding process, the European Union wants the Hungarian government to pay back the whole amount. The same is true of Alstom’s 22.9 billion forint (€73,892,769) tender. BAMCO also won the tender in an irregular manner, and therefore the European Union demands the return of 8 billion forints (€25,817,360). The EU also demands 7.6 billion forints (€24,523,364) from Swietelsky, which was responsible for the interior of the metro stations. Strabag-Hídépítő, in charge of structural work on the station at Baross Square, received 3.7 billion forints for its work but because of procurement irregularities 2.5 billion forints (€8,067,751) should be returned.

Another politician who, although not mentioned by name, was most likely involved in the metro case is László Puch, former financial director of MSZP, whose company Media Magnet Kft. just purchased the ailing Népszava and Vasárnapi Hírek. Media Magnet, according to the OLAF report, received 331 million forints (€1,068,110) from Siemens for advertising. The report notes that “this company was in charge of the campaign of the political party which was in a decision-making position in the case of Metro 4.” In 2010 Index reported that BKV ordered all sorts of superfluous studies from Media Magnet on such things as, for example, the state of the cable television market. There is a strong suspicion that some of this money ended up in MSZP’s coffers.

The biggest culprits will most likely be found among the representatives of the named companies and those BKV officials who were in contact with them. There’s no question that the guilty parties should be punished, but judging from the outcomes of earlier corruption cases I have my doubts that we will ever hear about all the dirt that OLAF unearthed. I’m also pretty sure that Fidesz will try its darndest to drag high-level politicians into the morass around BKV.

I see that Gábor Demszky will be represented by György Magyar, one of the “star lawyers” in the country. On February 3 Magyar announced on ATV that Demszky had signed only three contracts during the many years of construction. One was the contract between the city and the government in which the parties agreed that 79% of the construction cost would be borne by the government and the rest by the City of Budapest. The second contract dealt with a loan the City had to obtain for the project. The third was the contract that gave full authority to BKV for the implementation of the project.

Fidesz naturally wants to have a parliamentary investigation into the case, which will lead to further accusations on both sides. If Hungary had a decent prosecutor’s office and an independent chief prosecutor, it should undertake a speedy, thorough, unbiased investigation of the case. Unfortunately, this is the last thing we can hope for under the present circumstances.

February 6, 2017

Sebastian L. von Gorka’s encounter with the Hungarian National Security Office

I’m sure that many of Hungarian Spectrum’s readers were expecting me to write about the Putin visit to Budapest, but only a few hours after Putin’s airplanes, all three of them, landed at the Ferenc Liszt International Airport I cannot say anything meaningful about the much heralded visit except that it cost the Hungarian taxpayers an immense amount of money. The cost of official visits must be borne by the host country.

It is hard to know precisely what benefits Vladimir Putin expects to reap from his Hungarian visits. As far as Viktor Orbán is concerned, however, they must boost his ego. It doesn’t happen too often that the Russian president pays an official visit to a member state of the European Union. In fact, it is extremely rare. In the last two years there were only two such visits: in February 2015 to Hungary and in May 2016 to Greece. The Greek visit, just like, I believe, Putin’s trip to Hungary today, had something to do with Putin’s eagerness to have the crippling economic sanctions against his country lifted. Perhaps he was hoping for a Greek veto as now he is hoping for Orbán’s assistance. Whether he succeeded this time around in convincing the Hungarian prime minister to veto the renewal of sanctions against Russia is not at all sure. Orbán usually talks a lot about the sanctions’ harmful effects on Hungary, but when the chips are down he votes with the rest of his colleagues in the European Council.

So, instead of the Putin visit, I am returning to the Sebastian Gorka story. There are details about Gorka’s life in Hungary that might shed additional light on the qualifications and trustworthiness of Donald Trump’s new deputy assistant.

Gorka himself has revealed very little about his life in Hungary, although he spent 16 years in the country, arriving in 1992 and leaving in 2008. In 2002, however, his name was all over the Hungarian media. There were strong suspicions that Gorka was a spy working for British counterintelligence. How did such rumors emerge?

It was in June 2002 that Magyar Nemzet, then affiliated with Fidesz, which had just lost the election, revealed that Péter Medgyessy, the new prime minister of the country, was a counterespionage officer in the 1980s during the Kádár regime. Fidesz naturally insisted on setting up a special parliamentary committee to investigate Medgyessy’s role as a counterintelligence officer. Fidesz recommended Sebastian Gorka as one of its experts on such matters. The other recommendation was Gábor Kiszely, a right-wing historian whose favorite subject was the history of freemasonry. For the job the participants needed security clearance. The National Security Office (Nemzetbiztonsági Hivatal/NH), however, was suspicious of both Gorka and Kiszely. It eventually refused to green light the two experts.

Gorka naturally denied the truthfulness of the media reports. The undersecretary in charge of national security, however, assured the public that, as a precaution, Gorka hadn’t had any opportunity to get to top secret documents in the absence of such clearance. The expert delegated by the government party sailed through the vetting process, but the clearance of Gorka and Kiszely was nowhere. Gorka suspected that the security officials were simply dragging their heels in order to delay matters until the competence of the committee expired in August. To Origo he explained that he had never had anything to do with counterintelligence because he was only “a uniformed member of the British army’s anti-terrorist unit.” As we know from his Wikipedia entry, this was not the case because there we can learn that “at university, he joined the British Territorial Army reserves serving in the Intelligence Corps.” His only duty, he told Origo, was “to measure the possible dangers posed by terrorists,” such as members of the Irish Republican Army. Moreover, Gorka misleadingly renamed his unit “Territorial Army 22 Company” instead of “UK Territorial Army, Intelligence Corps (22),” the correct name, given by Népszabadság at the time and also given in Wikipedia, at least for today.

Now let’s see how László Bartus, currently editor-in-chief of Népszava, the oldest Hungarian-language paper in the United States, remembers Gorka from those days. Bartus was working as a journalist in Hungary at the time. He claims that it was discovered that Gorka had never attended any institution of higher education. This may have been the case in 2002, but it certainly wasn’t true in 2008 when he received his Ph.D. for a dissertation titled “Content and end-state-based alteration in the practice of political violence since the end of the cold war: The difference between the terrorism of the cold war and the terrorism of Al-Quaeda: The rise of the ‘transcendental terrorist.’” His dissertation adviser was András Lánczi, Viktor Orbán’s favorite political scientist, who became notorious after announcing that “What [the critics of the Orbán regime] call corruption in practical terms is the most important policy goal of Fidesz.” More about Lánczi can be found in my post “András Lánczi: What others call corruption is the raison d’être of Fidesz.” I may add that on the dissertation Gorka’s full name is given as Sebastian L. v. Gorka. So, the brief appearance of his name in Wikipedia as Sebastian Lukács von Gorka was not a mistake.

Kiszely and Gorka were barred from displaying their expertise in counterintelligence because, as some right-winger readers claimed in their comments, they were dual citizens. As for his citizenship, Hungarian newspapers claimed at the time that in addition to his British citizenship, he was also a citizen of the United States. Considering that he got married to an American woman in 1996, he could certainly have held U.S. citizenship by then. However, he hotly denied being a citizen of the country that he now wants to help make great.

Bartus sums up the Hungarian opinion of Gorka: “Then the unanimous opinion was that this man is a fortune hunter and a conman, who wriggles his way in everywhere, where he convinces everybody of his extraordinary expertise, when actually the only thing he is an expert on is extremist incitement. This picture of him among those who knew him in Budapest has not changed since.” Bartus is not surprised that Trump and Gorka found each other since “birds of a feather flock together.”

February 2, 2017

OLAF finds irregularities–fraud and possible corruption–in the Metro-4 megaproject

So what else is new? Politico reported that the European anti-fraud office, OLAF, after looking into the financing of Budapest’s fourth metro line, found “serious irregularities—fraud and possible corruption.” OLAF recommended, because it has no authority to do anything else, that Hungary return €228 million to the European Commission and €55 million to the European Investment Bank. OLAF’s investigation covers the period between 2006 and 2015. As Politico noted, this period spans not just the two Orbán administrations “but also two Socialist-backed governments that ruled between 2004 and 2010.”

I have already written about the difficulties surrounding the building of this new metro line, so I will not recount the story here. Suffice it to say that when the line was eventually finished, it bore little resemblance to the original plans. It was only about 7 km long, running between the Kelenföld train station in South Buda and the Eastern Station on the Pest side. Originally, it was to run all the way to the outer sections of the city in Bosnyák tér, but because of financial difficulties the second part of the project was abandoned. As a result, the line is severely underutilized. And its cost was enormous. Benedek Jávor, Párbeszéd MEP, considers the project as it stands now “completely senseless.”

It is difficult to come by hard figures, but Politico puts the total cost of the project at €1.7 billion. According to the Hungarian version of Wikipedia, the cost was 450 billion forints, of which 180 billion came from the European Union and almost 170 billion from the central government. The City of Budapest contributed about 70 billion. The balance most likely came from the European Investment Bank.

As soon as the news of OLAF’s findings reached Budapest the debate began over who the guilty party is. The government’s first reaction was that it had absolutely nothing to do with the project. Everything was handled by the City of Budapest. (The City of Budapest, I would note, didn’t get a copy of the 104-page report OLAF sent to the government.) According to Lord Mayor István Tarlós’s office, as far as they know all the irregularities occurred between 2006 and 2010. So, the Gyurcsány and Bajnai governments and Gábor Demszky, former lord mayor of Budapest, are responsible for all the “irregularities” while the Orbán government is blameless. This is hard to believe.

Since the government has not released the OLAF report, we are in total darkness about the nature of these “irregularities.” I am, however, somewhat suspicious about their alleged timeline. For starters, it was only in September 2009 that the European Commission made the decision to finance the first 7-km section of Metro-4. Of course, that doesn’t preclude the possibility that fraud and corruption occurred before that date. Most likely it did. We know only too well how business is conducted in Hungary, especially when it comes to the prospect of “free money” from Brussels.

As you can see, no money was spared on the appointments

What strengthened my suspicion of the Orbán government’s culpability in this affair was an article that appeared in the government mouthpiece Magyar Idők only a few hours ago. The title of the article is telling: “Brussels wants to saddle Orbán with the affairs of Medgyessy and Demszky.” Brussels, it would seem from the headline, is pointing the finger at Orbán. Perhaps in anticipation of such a finding, the Orbán government set out to shift the blame to Medgyessy and Demszky.

Péter Medgyessy was prime minister of Hungary between 2002 and 2004. After his political career ended, he returned to his consulting business and in this capacity received 597,000 euros from the French company Alstom in 2006, the year when the final decision was made by the City of Budapest to buy Alstom cars for the new metro line. In December 2014 Alstom was found guilty of paying more than $740 million in bribes to government officials around the world.

A few months ago Hungarian authorities began an investigation into the connection between Medgyessy and Alstom. The final verdict on Medgyessy’s innocence or guilt has not yet been reached, but even if it turns out that he lobbied the Demszky administration on behalf of Alstom, for which he received money from the company, it is unlikely that OLAF considers this something for which either the Hungarian government or the City of Budapest is responsible. Unless, of course, they can prove that Medgyessy tried to bribe the officials responsible for the decision to buy Alstom cars. It seems, however, that the investigative committee set up by the Budapest City Council in September has been singularly unsuccessful in proving that any of the lobbyists tried to bribe those responsible for the decision. The final report of the committee has not been published yet, but probing questions by the right-wing media to Fidesz members of the committee have failed to unearth anything about money exchanging hands in connection with the purchase of the Alstom cars.

We can’t expect any information on the OLAF investigation from official sources for months. But, just as in the past, it can easily happen that the document will be leaked to the Hungarian media. After all, Politico is in possession of certain material already. Until then it’s a guessing game.

December 22, 2016

Let’s have a new enemy: Romania

One can say all sorts of things about Foreign Minister Péter Szijjártó, just not that he is the paragon of diplomatic virtue. Upon his arrival in Hungary’s foreign ministry, he not only got rid of Hungary’s seasoned diplomats but also used language rarely heard in the world of diplomacy. Szijjártó was groomed for his diplomatic career in the rough and tumble of Hungarian politics, Fidesz style. He tore into fellow foreign ministers, presidents, prime ministers, anyone who dared utter a word against Hungary. Actually, he was just following the instructions of Prime Minister Viktor Orbán, who at his very first meeting with the Hungarian ambassadors told them that they cannot let one “untrue” statement about the country go unanswered. Thus, like diplomats from banana republics, Hungarian ambassadors routinely write letters to the editor of major papers of the country where they serve. A rather distasteful habit.

It is hard to assess Hungary’s relations with her neighbors because they are so volatile. One month Szijjártó sends threatening letters to presidents, prime ministers, foreign ministers of Croatia, Slovenia, and Austria and the next month we hear high praise for the same countries from Viktor Orbán. There are exceptions to the rule: Serbian-Hungarian relations seem to be consistently good and Romanian-Hungarian relations, consistently bad. Szijjártó’s latest move will not improve the situation with Romania.

Szijjártó forbade Hungarian diplomats serving abroad to attend the receptions Romanian embassies gave today on the country’s national holiday. It was on December 1, 1918 that the National Assembly of Transylvania and Hungary convened in Alba Iulia/Gyulafehérvár and decreed “the unification of those Romanians and of all the territories inhabited by them with Romania.” As the foreign ministry’s spokesman explained to HVG, “the Hungarian people have no reason to celebrate December 1.”

A contemporary depiction of the meeting of the Romanian National Assembly on December 1, 1918

A contemporary depiction of the meeting of the Romanian National Assembly on December 1, 1918

Thus no one represented official Hungary at the reception in Budapest where the Romanian ambassador greeted the visitors in both Romanian and Hungarian and where the national anthems of both countries were played. The concert that followed included pieces by Johann Sebastian Bach, Béla Bartók, and George Enescu. The ambassador’s speech, delivered in English, put special emphasis on the 1996 Hungarian-Romanian treaty on “mutual understanding, cooperation, and good neighborliness.” The English-French-language text of the treaty is available online, and its importance is detailed in a recent press release by the Romanian Foreign Ministry on the twentieth anniversary of its signing.

The Romanians’ response was surprisingly mild: “it is hard to understand such a decision because honoring the values and national symbols of a country certainly belongs to the basic precepts of the European Union and the Atlantic community.” As we have had to learn in the last six years or so, however, such “niceties” are not observed by the Hungarian government. Just as Viktor Orbán told the delegates of the Hungarian Diaspora Council on November 30, “political correctness, as a way of speaking, is the instrument of worldwide intellectual oppression,” which he naturally refuses to accept.

The pro-government media naturally greeted the Orbán government’s decision with elation. “At last we’re handling the Romanian national holiday as we should,” opined 888.hu. At last we have a foreign minister who behaves as he should. Leaders of the socialist-liberal governments behaved abominably, according to the news site. For example, on December 1, 2002 President Árpád Göncz, Prime Minister Péter Medgyessy, and Foreign Minister László Kovács were among the guests at the reception where they met Romania’s prime minister Adrian Nãstase and representatives of the Democratic Alliance of Hungarians, the major Hungarian party in Romania. Fidesz, which had lost the election only a few months before, raised hell. Fidesz sympathizers quickly organized a demonstration of about 500-600 people in front of the Kempinski Hotel where the reception was held. The party, by then in opposition, did everything in its power to create a scandal.

A few years of respite followed when we heard nothing about the treasonous Hungarian socialists and liberals attending the Romanian receptions on December 1. But then came 2010 when Róbert Alföldi, the director of the National Theater whom Viktor Orbán and his friends hated, made the mistake of renting one of the halls of the National Theater to the Romanian Cultural Institute for the event. The most clamorous critics were the politicians of Jobbik and the Christian Democrats, but Fidesz also chimed in, saying that “the leader of one of the most important national organizations should know that the loss of Transylvania for the majority of the nation means trauma with lasting effect” and therefore no state institution should facilitate the reception. Under pressure, Alföldi withdrew his verbal agreement with the Romanian Cultural Institute.

Kolozsvári Szalonna, which naturally is more familiar with Romanian-Hungarian affairs than I am, brings up past occasions when Hungarian patriots inside and outside of Romania were quite happy to celebrate together with Romanian politicians. For example, Jenő Szász, then mayor of Odorheiu Secuiesc / Székelyudvarhely and a great friend of László Kövér, happily celebrated the Romanian national holiday with President Traian Băsescu in 2006. Géza Szőcs, former undersecretary for cultural matters in the prime minister’s office, back in 1990 even made a speech in Alba Iulia praising the democratic nature of the declaration of the National Assembly of Transylvania.

So, why this strident move, which will only further erode the already tenuous ties between Romania and Hungary? The most likely reason is Viktor Orbán’s newly found self-assurance which, as far as I can see, has grown substantially since Donald Trump’s victory on November 8. In his speech to the representatives of the Hungarian diaspora he rehashed the points he had made in his speech to the same body the year before. This gave him an opportunity to tout the wisdom of his political views and emphasize his belief that time is on his side. The real proof is “the surprising result of the American presidential election and the expectation that this election ushers in a new era.” The American election “supports [his] earlier view that a major worldwide realignment is forthcoming.” With Trump at the helm “instead of liberal democracy we can return to a democracy whose essence is freedom.”

By now he sees himself as the premier politician of Central Europe who has brought considerable prestige to Hungary. “Central Europe hasn’t had so much influence on European affairs since the House of Árpád or perhaps since King Matthias.” Of course, he is talking about his own influence on the common policies of the Visegrád 4 countries.

Finally, I would like to call attention to Orbán’s comments in this speech on the Hungarian military. We all know that European countries will have to commit a larger percentage of their GDP to the NATO budget. In fact, Hungary has already promised an increase in defense spending. Perhaps I’m reading too much into the following couple of sentences, but they gave me a pause. First, he said that Hungarians settled in a very difficult spot and “our first question is always what kinds of dangers we will have to face next.” Then, a few lines later, he told his audience that the Hungarian army must be beefed up not because of some outside threat but because Hungary “mustn’t fall behind the striking powers of the armies in our region.” I don’t know whether these statements are significant or just the usual imprecise talk.

December 1, 2016

Letting the fox guard the henhouse: Hungarian prosecutors undermine justice

The thread that connects today’s topics is the state of the Hungarian legal system. As it stands, Hungary has a thoroughly corrupt prosecutorial system and a judiciary that at times shows itself to be truly independent despite considerable pressure from the executive branch. All three topics I’m addressing today are in one way or the other connected to these two branches of the legal system.

Let me start with a surprising verdict handed down today by the Budapest Court of Justice. Altus Zrt., Ferenc Gyurcsány’s company, sued Viktor Orbán because in May 2015 Orbán claimed that Altus is a bogus company created for the sole purpose of generating revenue from the European Union to finance Gyurcsány’s party, the Demokratikus Koalíció. Altus is actually managed by Gyurcsány’s wife, Klára Dobrev, an economist and law professor who teaches banking and financial law. The firm received, in an open bid process, a large contract from the European Union to evaluate the use of subsidies by member states and to suggest solutions for their more effective use. Given the political atmosphere in Hungary, Altus, regardless of the quality of its associates, can’t get jobs in the country and must offer its consulting services abroad.

Altus decided to sue Viktor Orbán for slander. Today the Budapest Court of Justice declared that Viktor Orbán’s claim was false and ordered the prime minister to refrain in the future from similar libelous statements. He will have to pay Altus 270,000 forints for court costs. And finally, and this is the one that must hurt Orbán the most, he has to openly express his regret for ever having made such a statement. I don’t know who that brave judge was, but the verdict is simply breathtaking. No one remembers such a verdict against a sitting Hungarian prime minister. Of course, this decision is not final. I’m sure it will be appealed.

Viktor Orbán must be livid. Fidesz immediately released a statement which, in total disregard of the verdict of the court, declared that “even a blind man can see that Ferenc Gyurcsány is financed from Brussels.” Fidesz’s spokesman quickly segued into Péter Medgyessy’s business transaction with Alstom, the French company that provided cars for the new Budapest metro line, the M4. “On the left only the companies and the size of the bribes change, the essence remains. Both Gyurcsány and the other socialist prime minister [meaning Medgyessy] conducted business through their wives. We are looking forward to Gyurcsány’s answer about how much money he received from the bribe of Alstom because, after all, it was during his premiership that the Alstom contract was signed.” Well, it is time for Gyurcsány, who a few years back swore that he would sue anybody who falsely accuses him of anything, to start proceedings again, this time against Fidesz.

That takes us back to the Medgyessy case, which I already mentioned in a post. Since then ten articles dealing with Medgyessy’s involvement with Alstom have appeared in Magyar Idők. The government obviously finds the case extremely useful politically. But how did Magyar Idők get hold of the story in the first place? The articles that appeared in the government paper are based on detailed information, including individual bank transactions. It is unlikely that the source of the information is the Medgyessy couple’s bank. We mustn’t forget that in the last couple of years the Hungarian prosecutor’s office has been investigating Alstom’s possibly illegal activities in Hungary in connection with the metro cars. So it is highly probable that Magyar Idők, just like its predecessor Magyar Nemzet, received the documents directly from the prosecutor’s office, headed by Péter Polt, chief prosecutor of Hungary and an old friend and protector of the prime minister. And this is a crime.

Marianna Polt-Palásthy

Marianna Polt-Palásthy

One cannot overemphasize the importance of Polt to Orbán’s system. It is no exaggeration to say that without Polt, or someone as crooked and loyal as he is, Orbán’s mafia state would have collapsed a long time ago. He is the one who stands between Viktor Orbán and justice and ultimately jail. So, it’s no wonder that Polt receives special treatment. A few months ago we heard that TEK, Orbán’s private bodyguard, will also guard this precious man, who is not entitled to such protection by law. And a few days ago, thanks to the documents released by the Hungarian National Bank’s foundations, we learned that Polt’s wife, Marianna Polt-Palásthy, personnel director of the bank, is also the chair of the board of Pallas Athéné Domus Scientiae, a member of the board of Pallas Athéné Domus Mentis, and a member of the Kecskeméti Duális Oktatás Zrt. She was hired by György Matolcsy in 2013, originally with a salary of 2.3 million a month, but by now she makes five million. Matolcsy’s salary was just raised to five million. So, while the chairman of the bank was making only two million, the director of the personnel department made five million. I wonder why. (Oh, those wives….) We also mustn’t forget about the extra remuneration for her jobs on the foundations’ boards.

And one more story about the Hungarian prosecutor’s office. It has something to do with the Quaestor scandal about which I wrote a year ago. The Quaestor affair is often described as Hungary’s Madoff case, except that here it is likely that the Orbán government itself was involved. Several ministries invested in Csaba Tarsoly’s pyramid scheme, and to the very last minute before the company collapsed Tarsoly was hoping for, and expecting, a government bailout. In brief, a thorough investigation of Csaba Tarsoly’s fraud case is not to the advantage of the Orbán government. And that takes us to our next story.

The victim's of Tarsoly's pyramid game The sign reads: "Orbán get lost and take your cronies along"

The victims of Tarsoly’s pyramid game
The sign reads: “Orbán get lost and take your cronies along”

It is becoming an everyday occurrence that the prosecution’s cases are so poorly prepared that cases that seem very strong even to outsiders are lost time and again. One of the worst offenders is Budapest Chief Prosecutor Tibor Ibolya who, contrary to his family name, is anything but a “violet.” In fact, he has gotten into all sorts of trouble with the courts and judges for speaking in ways the judges found unacceptable. In the Quaestor case Ibolya’s office dumped thousands of documents, absolutely unsorted, into the lap of the judge, not even indicating which documents supported what charge. Among the documents the judges found music, private documents, and photos that had nothing to do with the case. The court sent the whole mess back, asking Ibolya’s office to put their case together in a proper manner because what the court received was useless. Thus far Ibolya refuses to oblige. But the court isn’t budging either. If there is no action by May 31, the whole case against Tarsoly will be dropped. The suspicion is that this is exactly what the prosecutor’s office, with the active encouragement of the Orbán government, wants.

And one final word. It is Péter Polt’s office that is supposed to investigate the legality of the establishment of the Hungarian National Bank’s foundations even as his wife is deeply involved in and profits from the whole illegal scheme.

April 29, 2016