Tag Archives: Quaestor

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party at the end of September 2015, to provide a list of Fidesz politicians and government officials who may have withdrawn their money from Quaestor in the last few days before the brokerage house’s collapse.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.

insider-trading

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

Fidesz can’t escape from the shadow of the Quaestor scandal

Medián came out with a new poll. This time the company wanted to find out how much Hungarians know about the scandal that followed the collapse of several brokerage firms and what they think about it. One of Medián’s conclusions is that people see a connection between the failures of the brokerage firms and the unpopularity of the government. More failures will only increase people’s distrust of the government. The majority of those questioned, despite the government’s best efforts, think that Fidesz bears a greater responsibility for the lack of proper oversight of these financial institutions than the earlier administrations. It is becoming increasingly difficult to blame the socialists for events that happen after five years of Fidesz governance.

One finding of the poll, which may have important repercussions for the future of the Orbán government, is that the Quaestor affair made the greatest impression on those surveyed. Over 70% of the people asked could name the firm without any help, and another 17% recognized the name from a list of brokerage firms. The other two companies, Buda-Cash and Hungária, are considerably less well known. And this is bad news for the government, because every day, it seems, more details about the close ties between the government and Csaba Tarsoly, CEO of Quaestor, are revealed.

birds

Two recent discoveries further support the suspicion that the Quaestor-Orbán government connection was very close indeed. One of the latest revelations is that the Nemzeti Befektetési Ügynökség, known as HIPA (Hungarian Investment Promotion Agency), which is a government office attached to the ministry of foreign ministry and trade, worked hard to find investors for a Quaestor project called Dunacity. As it turned out, the idea of a “city within the city” was first floated in 2006. It was supposed to be an entirely new building complex in the Soroksár area of Budapest, close to the present National Theater and the Palace of Arts, but not surprisingly, given the 2008 financial crisis, nothing came of it. It seems, however, that in the fall of 2014 HIPA began promoting the idea of Dunacity and published a pamphlet trying to recruit investors for the one billion euro project, along with some other desirable investments. In fact, 444.hu learned that shortly before the March 9 collapse of Quaestor, Levente Magyar, undersecretary in charge of foreign trade, escorted Arab businessmen to the planned future site of Dunacity. The English-language brochure spoke in glowing terms about the “new type of living, where the harmony of apartments, workplace, commerce, entertainment and relaxation is provided.” The government promised a new bridge across the Danube, a free port, and a new metro line. But what was perhaps most telling was that investors were guaranteed a 9-10% return.

The second revelation might be even more damaging, at least indirectly, to the Orbán government. Today János Lázár, who holds lengthy press conferences every Thursday, released the list of 24 municipalities that had purchased Quaestor bonds, which includes the city of Győr, whose football team Csaba Tarsoly owned. Győr’s loss–1,004,505,299 forints–doesn’t top the list. Százhalombatta lost 3,591,830,000 forints. But then why is Győr in the limelight? The reason is that the city of Győr wired this amount to Quaestor’s account on January 16, a day after the National Bank of Switzerland allowed the Swiss franc to strengthen some 20% against the euro. This unexpected currency decision hit large banks and brokerages hard, since most of them were net short the Swiss franc. For instance, Citigroup lost between $150 and $200 million, Interactive Brokers $120 million, and Deutsche Bank $150 million. The Swiss decision also had a negative impact on Hungarian banks, forex dealers, and brokerages. We know that Buda-Cash lost about $22-29 million. Most likely Quaestor was in the same predicament.

It was on April 3 that 444.hu first reported on this “strange coincidence.” Although one of the Győr city officials insisted that the only reason for investing the money with Quaestor was the attractively high yield, the reporter was not convinced. Something was wrong. If Győr purchased government bonds, their yield wouldn’t fluctuate from broker to broker. Therefore, the reporter justifiably suspected that the sudden decision to place that large sum of money with Quaestor, whose owner has invested billions in Győr, was not a coincidence. Moreover, 444.hu checked the city council minutes, where there was no sign of any approval of the money transfer. It was, the reporter concluded, most likely the decision of Győr’s mayor, Zsolt Borkai, a former Olympic champion and currently the president of the Hungarian National Olympic Committee. Let me add that Borkai is a favorite of Viktor Orbán. The prime minister even changed a law to make sure that Borkai could become a member of parliament in 2010. Borkai, before becoming a politician, was the principal of a military school with the rank of colonel. And there was a law on the books that said that a policeman or soldier can become a candidate for or serve as a member of parliament only five years after his departure from the military or the police force. The opposition jokingly called the legislation “Lex Borkai,” something Borkai was actually proud of.

Győr promptly denied the charge, claiming that they made the decision to transfer the money to Quaestor earlier and signed the papers already on January 13. Since no one had seen the contract that the city signed, suspicion lingered on.

Today there was another twist in the story. János Lázár, during his press conference, talked about municipalities purchasing Quaestor and not government bonds. He specifically pointed to the city of Győr as “one of those municipalities that invested money in unsecured Quaestor bonds.” Borkai, whose nerves must be frayed by now, snapped back. Győr bought government bonds, and anyone who says otherwise is a liar. It is his duty, he said, “to protest in the name of all 130,000 inhabitants of the city.” This time Borkai arrived with the original copy of the January 13 contract and a document that allegedly proved that the city had purchased government bonds.

So, who is telling the truth? Is it possible that Borkai thought he was buying government bonds but that Quaestor, hard pressed by the events of January 15, used the money to fill some holes in its own portfolio? Yes, it is possible.

The constant barrage of Quaestor stories is further damaging the waning reputation of the Orbán government. And the clashes between prominent members of the Fidesz hierarchy, like Borkai and Lázár, don’t help the cause either. One is just waiting for the next bomb to explode.

Fidesz as an enabler of financial corruption

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

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

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

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

Orban hazug

War = Peace; Freedom = Slavery; Ignorance = Strength

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

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

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

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

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

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

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

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

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

Another poll, another loss for Fidesz ahead of a by-election

Three new Medián polls were released today. One is the company’s monthly poll of political support for Hungarian parties. The second is a survey of the population’s assessment of the financial disaster caused by irresponsible management at a number of brokerage firms. And third is a survey of the population’s opinion about the government’s decision to close retail stores on Sundays.

I was looking forward to Medián’s survey of Hungarian political opinion at the end of March because of the forthcoming by-election in the Tapolca-Ajka-Sümeg district that, according to some commentators, Jobbik has a good chance of winning. In addition, it was about two weeks ago that Ipsos came out with a poll indicating a spectacular growth in Jobbik support in the last few months. I’m relieved to see a second poll with a different set of results.

Here are the main findings of the political poll. Since the end of February Fidesz has lost another 3% of its support. The standing of the opposition parties, however, hasn’t changed, with the exception of DK, which gained 2% among committed voters. People’s opinion of the government’s performance is low. Only 29% think that the third Orbán government is doing a good job. In fact, a majority of the people today think that the Bajnai government’s performance was better than that of the Orbán government in the last five years.

orange = total population beige = eligible voters blue = committed voters

orange = total population
beige = eligible voters
blue = committed voters

Jobbik’s popularity has remained constant over the last year: 15% of the population are Jobbik supporters. But the composition of the Jobbik camp might have changed, since 18% of current Jobbik supporters claim that they voted for Fidesz a year ago. The only thing I found surprising in the survey was the relative zeal of Fidesz voters: 60% of them say that they would definitely go and vote if the elections were held next Sunday. This figure seems high to me in light of the recent Veszprém election where one reason for the devastating defeat of the Fidesz candidate was the refusal of Fidesz sympathizers to go to the polls.

When it comes to the financial scandals, the Orbán government has been trying to pin the bankruptcies and their consequences on the socialist-liberal governments. But it is difficult to blame Péter Medgyessy, Ferenc Gyurcsány, or Gordon Bajnai for the bankruptcies after five years of Fidesz supervision of financial institutions. Although government communication hammers the “socialist” theme from morning till night, the people aren’t buying it. The majority of the population (56%) find the current government completely or partly responsible for the situation that developed in the last few months. Only 17% of the population believe that the socialists are largely or completely responsible for the collapse of Quaestor and other brokerage firms.

The results of Medián’s survey on the Sunday closing of retail stores are, for the most part, similar to those of Ipsos on which I already reported. But the Ipsos survey did not break the data down by party sympathies. Medián does, and it looks as if even Fidesz voters are split on the issue (48% for it, 45% against, 7% undecided). The majority of Jobbik voters oppose the new law, and an overwhelming number (70%) of socialist and liberal voters are against it. And 75% of those who at present have no party preferences would like to have the stores open. This last figure is especially ominous for the government party.

Back to the Tapolca-Ajka-Sümeg election. This election has become a litmus test for all three major parties. If Fidesz loses (and it is their race to lose), a further erosion of voters will be inevitable. If Jobbik wins, it will be a sign of the growing acceptance of the party, able at last to send a representative to parliament who was elected in his own right. If the MSZP-DK candidate wins, it will strengthen the left’s image as a force that can replace the Fidesz government. After all, this would be the third by-election in which the candidate of the left wins. So, all three parties are putting a lot of work into the campaign.

Fidesz seems to be the most active. Practically all important Fidesz politicians have showed up in the district and, as far as we know, Viktor Orbán himself will make an appearance in Tapolca, perhaps tomorrow. Fidesz at last seems to taking Jobbik seriously, with both László Kövér and János Lázár calling Jobbik a Nazi party. But it is difficult to attack Jobbik in any detail because Fidesz has moved so far to the right in order to compete with Jobbik that the two parties’ programs are almost identical by now. Because of Orbán’s pro-Russian policy, it is practically impossible for Fidesz politicians to accuse Jobbik of being too close to Russia or to claim that Russia is financing the party which is most likely the case.

According to local gossip, Fidesz ordered a survey that showed a massive Fidesz defeat on Sunday, which may explain László Kövér’s remark that the party didn’t have a critical stake in this election. In the last few days, however, the Fidesz leadership must have decided to try to reverse the situation. This is a risky undertaking. If Orbán goes to Tapolca and Sümeg as promised, makes rousing speeches, and Fidesz still loses, this would further undermine the prime minister’s popularity and the belief in his superior political talent.

At the moment it is difficult to predict what Fidesz will do in the next three to four days. As of this morning, it looked as if Zoltán Fenyvesi, the Fidesz candidate, would take part in a three-man debate on Olga Kálmán’s Egyenes beszéd tonight, but in the last minute he cancelled. This is a surprising move given the party’s earlier decision to show him as a fighting candidate who does not hide from the public as his counterpart was ordered to do in Veszprém.

Parties and supporters of the parties on the left believe that the real contenders are the MSZP-DK candidate, Ferenc Pad, and Jobbik’s Lajos Rig. Jobbik leaders are convinced that the campaign is really only about Fidesz and Jobbik. I have no idea what will happen on Sunday, I can only keep fingers crossed.

Our man in Moscow: Szilárd Kiss

The big news in Hungary is still the financial collapse of the Quaestor Group, which may involve the loss of 150-200 billion forints to those who used the companies’ services. The consequences of the bankruptcy might be far-reaching, including a loss of trust in Hungary’s financial institutions.

The more we hear about the details of Quaestor’s ventures the clearer it is that the Hungarian government was heavily involved in the business affairs of Csaba Tarsoly, the CEO of the firm. As the story unfolds, it looks as if two ministries in particular are implicated: the ministry of foreign affairs and trade and the ministry of agriculture. A closer look at the cast of characters reveals that there was one man who had a close working relationship with Tarsoly as well as the two ministers: Szilárd Kiss. Commonly described as an adventurer of dubious reputation, Kiss may have posed, and in fact still may pose, a national security threat to the country.

I wrote about Szilárd Kiss once, but here I would like to say a few words about the likely relationships between Kiss and Csaba Tarsoly; Péter Szijjártó, minister of foreign affairs and trade; and Sándor Fazekas, minister of agriculture. Today, a month after I wrote a post on Kiss, I believe that he had a much more important role to play in Viktor Orbán’s “eastern opening” than I suspected earlier.

As we know, Kiss has been living in Russia at least since 1990, where he moved in the hope of exploiting business opportunities. His specialty was agricultural products. Eventually, he worked as an unofficial lobbyist for Hungarians who wanted to do business in Russia. But how did Péter Szijjártó and Sándor Fazekas come to know Kiss? I suspect through Csaba Tarsoly, whom Kiss most likely tried to entice into some Russian business venture. Their relationship goes back to 2002 and 2003, way before Viktor Orbán ever dreamed of any “eastern opening.” Szilárd Kiss could be persuasive. As early as 2003 he was named to the board of Quaestor Financial Consulting. Three years later, in 2006, he became a board member and part owner of Quaestor Energetics. He resigned both positions in April 2011 when he became a civil servant.

After the 2010 Fidesz victory and the announcement of the “eastern opening,” Szilárd Kiss’s time arrived. It must have been Tarsoly who called the attention of Péter Szijjártó, an old friend from Győr and the key person in the new foreign policy introduced and directed by Prime Minister Viktor Orbán, to Szilárd Kiss, who allegedly had important connections in Russia with both businessmen and officials in the ministry of agriculture. Although at present Sándor Fazekas doesn’t want to remember anything about Szilárd Kiss, it had to have been the ministry of agriculture that named him agricultural attaché in the Hungarian Embassy in Moscow.

Szilárd Kiss / válasz.hu

Szilárd Kiss / válasz.hu

István Íjgyártó, the Hungarian ambassador to Russia between 2010 and 2014, knew about Kiss’s shady business dealings and even his brush with the law. And in September 2013 Kiss was about to be dismissed from his diplomatic post. What was behind this sudden decision when apparently both Fazekas and Szijjártó were satisfied with Kiss’s work? The foreign ministry, it seems, learned that Kiss had been vetted by the national security office and had failed the test. It had become evident during the investigation that Kiss had connections to the Russian mafia. His dismissal was not automatic, however, because the Orbán government had changed the law on the vetting of officials. An official’s superior can make his own decision about the dangers involved. Fazekas suggested to Kiss that he resign, thus avoiding the stigma of dismissal. In compensation, Fazekas immediately appointed Kiss commissioner of eastern economic relations. Why the change? Because the new appointment was based on a contractual agreement for which one didn’t need national security clearance.

Szilárd Kiss was also involved in a profitable “visa business” on the side, which he continued even while he was a member of the Hungarian diplomatic corps. All told, he was responsible for getting Hungarian visas for about 2,500 Russian citizens. Considering Kiss’s relations with the Russian underworld, it is very likely that some of his friends from the Russian mafia are today the happy owners of a Hungarian visa. Kiss was also known to be involved in human trafficking. Hundreds of prostitutes received visas through his good offices. How did he manage to acquire all these visas? It was fairly simple. He approached one of his influential Hungarian businessmen to invite Igor, Olga, or Natasha, and with this invitation he managed to convince the Hungarian consulate in Moscow to issue them visas. There was a 2011 case which came to light during a court proceeding against Kiss where a certain Yevgeny Dubrovin gave him 80,000 euros to acquire visas “for his friends.” At the exchange rate at the time, this transaction alone netted Kiss 20.8 million forints. Apparently Kiss had powerful backers in the government and the local officials could do nothing to stop his activities even if they wanted to.

Consulates in general are run quite independently from the foreign ministry, and the Moscow consulate was considered to be a hotbed of corruption. It was for that reason that some officials familiar with the situation in Moscow welcomed the idea of setting up a visa center. A lot of other countries had established such visa centers, all of them run by an Indian company, VFS Global. The Orbán government doesn’t like “orthodox” solutions, however, and therefore the Hungarian visa center in Moscow, VisaWorld-Center Szolgáltató, is owned by Csaba Tarsoly of Quaestor fame and Yelena Tsvetkova, wife or girlfriend of Szilárd Kiss. In addition, Index found out that Tsvetkova has a joint business venture with the same Yevgeny Dubrovin who earlier wanted to buy visas for his friends. There is a good possibility that both Kiss and Tsvetkova have friendly relations with the Russian secret service.

According to a well-informed source, the VisaWorld-Center in its present form may well be a hole in the “shield of Schengen.” In his opinion, it is impossible that the Russian secret service wouldn’t have a fair idea of what’s going on there. Altogether Hungarian consulates have issued more than two million visas since January 2008. The Russian share is staggeringly high: 400,000. That is, every fifth visa has been issued to a Russian citizen.

I think that even this brief description of the network that exists among politicians, businessmen, and the Russian and Hungarian underworld highlights the dangers the Hungarian government poses to the security of the European Union.

The Quaestor scandal and football

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

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

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

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

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

Photo by Sándor H. Szabó

Photo by Sándor H. Szabó

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

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

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

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

The Quaestor story is becoming less transparent despite the release of documents

It was four days ago that I wrote an article titled “A Crime in Search of a More Coherent Cover-up.” Well, the Orbán government is still searching and the story, instead of becoming more coherent, is getting more confusing. It’s hard to know whether the government is intentionally obfuscating the issue or whether it simply can’t concoct a halfway believable plot in which nobody in the government is at fault. The prime minister, we have been told, misremembered. It seems that the buck didn’t stop with him after all. But at the same time he doesn’t want to implicate any of his colleagues. That wouldn’t be good for business.

Meanwhile the police twiddled their thumbs, presumably waiting for instructions from above. Although Quaestor collapsed on March 9 and rumor had it that Csaba Tarsoly, its CEO, was a flight risk, they did nothing until March 26. Finally, two days ago, they arrested Tarsoly.

The chief prosecutor of Budapest, Tibor Ibolya, tried to explain away the delay by saying that “he did not want to prejudice the case” by acting hastily. In order to bolster this claim he had the temerity to quote the guidelines of the European Court of Justice. It is hard to tell whether Ibolya is just incompetent or, more likely, an eager accomplice of the Orbán government like his boss, Péter Polt. To get a sense of the man, I recommend Olga Kálmán’s interview with him on Egyenes beszéd (Straight talk).

QuaestorAlthough we heard earlier that Csaba Tarsoly, CEO of Quaestor, had officially announced the firm’s bankruptcy, the revised account is that no such notification to the authorities ever took place. Tarsoly simply told the National Bank that the company had collapsed; he didn’t file any bankruptcy papers. As a result, Tarsoly and his associates had plenty of time to get rid of evidence, hide assets, and do all sorts of things that would obscure their allegedly illegal activities.

It is possible that a great deal more public money landed in the coffers of Quaestor than the 3.5 billion returned in the form of cash to the Magyar Nemzeti Kereskedőház (Hungarian National Trading House), which is under the jurisdiction of the ministry of foreign affairs and trade. Népszabadság received information that the ministry of agriculture lost millions, but the paper’s Fidesz sources said that its money was not at Quaestor. I, however, wouldn’t be at all surprised if this ministry also had money with Quaestor because of Tarsoly’s close business connections with Szilárd Kiss, the man accused not only of embezzlement but also of possible connections to the Russian Federal Security Service. Kiss was a special favorite of the minister of agriculture, Sándor Fazekas.

The Hungarian public was promised information about the extent of the loss of public funds by tomorrow. This will be a tricky document to put together.

By now the government seems to have realized that it has lost public confidence. Therefore in the last few days it released a number of documents to build a more believable story.

Among the documents the government released is the March 9th letter of Csaba Tarsoly to Viktor Orbán in which the Quaestor CEO asks for government help in saving his firm. He requested a 300 billion forint loan to protect 50,000 small investors, resulting in greater public trust in the Orbán government. The government even released Viktor Orbán’s answer as transmitted by his private secretary:

We gratefully acknowledge the receipt of your letter. The Prime Minister informed the minister of economics of its content. Mihály Varga will appoint a person to conduct the negotiations you suggest. He will most likely get in touch with you today.

It looks as if Hungary’s prime minister was prepared to make a deal with the man whom now he calls a crook.

One would assume, on the basis of these letters, that the man appointed by Mihály Varga actually had a conversation with Tarsoly on the evening of March 9th, which was unsuccessful. Therefore, Tarsoly had no choice but announce, albeit unofficially, the collapse of Quaestor to György Matolcsy, president of the Hungarian National Bank. Today, however, we learned that this sequence of events, however logical, is wrong.

VS.hu asked for additional information from the ministry of national economy, and it actually got what its reporter asked for. Yes, Mihály Varga did appoint Undersecretary Gábor Orbán (no relation to the prime minister), who met Tarsoly not on 9th but on the following day, March 10th. Apparently he didn’t like Tarsoly’s proposal. Undersecretary Orbán “found the plan unrealistic and unacceptable because it would have put the whole financial burden of restitution on the Hungarian government.” Another inexplicable twist in an already badly twisted story. What was the point of negotiation between Csaba Tarsoly and the Hungarian government a day after the unofficial announcement of Quaestor’s collapse? Why didn’t Tarsoly wait until he had a chance to talk to Gábor Orbán? Is it possible that Tarsoly was still hoping to make a deal, even after March 10th? That he viewed the collapse of Quaestor as remediable?

In this story of twists and turns, contradictions and memory lapses, Népszava noticed another oddity. While the prime minister office’s short e-mail to Csaba Tarsoly was written on March 9 at 17:24, Tarsoly’s letter to Orbán was logged in only on March 10th. Naturally, the Hungarian media immediately picked up this anomaly. Admittedly, it may be nothing more than the usual sloppiness that reigns in Hungarian government circles. It might happen, though it seems odd, that a letter would be received and answered before it was logged in. The official explanation is that the office of the prime minister receives an inordinate amount of mail and that the log-in process–all done by hand–is slow. Surely, even Viktor Orbán’s “plebeian government” could afford an electronic automatic scanner which would take care of all this in seconds.

What is much more difficult to explain is why the Tarsoly letter to Orbán, which Giró Szász proudly showed to Antónia Mészáros, a reporter for ATV, last Sunday, March 29, had no log-in information on it whatsoever. Which letter is authentic? The one the government released, with the log-in date of March 10, or the letter Giró Szász showed on March 29, which had never been logged in? I’m sure the government will say that the letter Giró Szász had was a copy of the letter the prime minister received, a copy made prior to its being logged in. But why, when it is in the throes of a scandal, doesn’t the government keep things tidy? It just raises new questions, arouses new suspicions.