Tag Archives: residency bonds

The Orbán government’s corruption unveiled by investigative journalists

Index published an extraordinary piece of investigative journalism on November 11, written by András Dezső, Szabolcs Panyi, and Nikita Hava. The first two reporters are well known for their hard-hitting stories about Jobbik and Fidesz. The third person, who appears on Facebook as Hava Nikita Vladimirovics, calls himself “egy ruszki Magyarországon.” He is well versed in Russian-Hungarian affairs.

The team has been looking into Antal Rogán’s shady business ventures for about a year. As we know, investigative journalism is an expensive affair and Hungarian media outlets are far too poor to undertake such ambitious projects on their own. But thanks to the financial assistance of Transparency International Magyarország and Független Médiaközpont (Independent Media Center), plus of course a lot of hard work, these three young journalists did a bang-up job. I should add that for the Georgian aspects of this complicated corruption case Tazo Kupreishvili, editor-in-chief of News.On.ge, assisted the Hungarian team.

The article is a detailed account of the close working relationship between Balázs Kertész, a lawyer who has been making a concerted effort to stay out of public view, and Antal Rogán, currently the number 3 man in the Orbán government. His job title, minister in charge of the prime minister’s cabinet office, is intentionally meaningless. His real task is to spend government money on Fidesz propaganda. He was responsible for funding the anti-immigrant campaign, including staging the referendum. Rogán has long been suspected of being corrupt. But between 2006 and 2014, when he was mayor of Budapest’s posh District V, he gained the reputation of being one of the most corrupt officials in the Orbán administration.

If the relationship between Lőrinc Mészáros and Viktor Orbán is often described as that of a mafia boss and his front man and if the Simicska-Orbán alliance was more like a business partnership, with Simicska acting as a financial adviser, the Kertész-Rogán alliance is a combination of the two. According to the authors, Balázs Kertész is the person who came up with all the schemes that made Rogán (and I assume Kertész as well) a very rich man.

Balázs Kertész at Antal Rogán's inauguration of minister

Balázs Kertész at Antal Rogán’s inauguration as minister

Although stories about Rogán’s more than shady real estate deals have been circulating for only a few years, he began his unsavory career much earlier. His and Kertész’s names first came up in 2003 when the K&H Equities scandal surfaced. A stockbroker named Attila Kulcsár was running a Ponzi scheme. Fidesz, then in opposition, tried to dump the whole scandal on the socialists, but it turned out that several people close to Fidesz were also involved. Among them, Antal Rogán (age 29) and Balázs Kertész (age 27), whose names were found in Kulcsár’s VIP list. Although the members of the parliamentary committee that investigated the case had questions about the two men, thanks to Péter Polt, the chief prosecutor, their names were dropped from the list of suspects.

This early brush with the law was nothing in comparison to what happened in District V. Balázs Kertész was the first to become a member of the district council. Soon enough he was followed by two of his friends from Fidelitas days, Antal Rogán and András Puskás. (Fidelitas is Fidesz’s youth organization, a place where aspiring young politicians learn the tools of the trade.) In no time the trio was running the show, despite the fact that the mayor was a socialist. In 2006 Rogán decided to run for district mayor against the socialist Pál Steiner and won easily. By that time Kertész was deeply involved in the district’s finances. Apparently he was the one who came up with the idea of selling expensive pieces of real estate at below market prices. He designed the transactions in such a way that neither he nor Rogán would suffer any legal consequences from cheating the district. The buyers, of course, had to pay a “surcharge”/kickback, apparently thousands of euros. How much of this money went to Kertész we don’t know.

Kertész also seems to be behind Rogán’s lucrative residency bond business. After Kertész left politics in 2010, he returned to the prestigious law firm where he began his legal career. A couple of years later, most likely in 2013, he joined a much less distinguished law firm. It was this firm that got the job of handling the administrative work for the applicants for residency bonds. Their fee was €5,000, and we are talking about 2,000-3,000 applicants so far. Of course, we don’t know whether, in addition, the Kertész-Rogán duo received kickbacks from the intermediaries abroad who got €50,000 per transaction. I suspect yes.

The most spectacular achievement of the Index team was the discovery of two videos. One proved that Balázs Kertész, Antal Rogán, and Árpád Habony met, despite Rogán’s denial. The other showed three highly-placed Georgian businessmen discussing a power plant to be financed by the Hungarian Eximbank. The parties to this discussion were the representative of the Bank of Georgia in Hungary, a Georgian-Israeli businessman, and the former prime minister of Georgia (2009-2012), Nika Gilauri, who earlier had served as minister of energy and minister of finance.

Unfortunately the meeting took place on a very noisy street, so not everything is audible. It is, however, clear that 5% of the Eximbank loan for the power plant has to be paid to Balázs Kertész. It is also obvious from the partial transcript that the money should be paid in advance in order “for them to start working.” I assume the work entails convincing Eximbank to grant the loan. The man who most likely has that job is András Puskás, deputy CEO of business operations at Eximbank, who used to be Rogán’s right-hand man and deputy in District V. So far no decision has been reached on the Georgians’ request for $68 million. And after these revelations, I doubt that they will see a penny of the promised loan. Whether Kertész has already banked over $3 million on this deal is unknown.

From Index’s article as well as some other commentaries we get a sense of how Kertész and Rogán have reacted to the probe. First, Kertész must have known for some time that journalists were after him. As the investigative team noted, “the closer we got to him, the more evidence of his existence disappeared.”

Second, there is a very good possibility that Kertész and Rogán laid a trap to discredit whatever Péter Juhász, Együtt’s sleuth, and the journalists might uncover. They enlisted a couple of “reliable” Fidesz sources to claim, independently of one another, that Balázs Kertész had been arrested by TEK and that many hundreds of forints were also impounded. The story was, of course, a hoax. If newspapers reported a false story, it would cast doubt on any subsequent stories about Kertész they might publish. At least one Hungarian newspaper fell into the trap.

Third, it is hard to believe how stupidly Antal Rogán tries to cover up his misdeeds. He thinks that if he denies that something ever happened it will simply go away. He denied his helicopter trip (documented by Népszabadság) and in this instance denied his meetings with Habony and Kertész (where again, hard evidence proves the contrary).

Fourth, perhaps his stupidest move once the Index story broke was to remove the recent picture showing Kertész at his inauguration as minister. For such an occasion a politician can normally invite his family members and a very small number of his closest friends. By removing the picture he practically admitted his guilt.

The most important question still remains. How much does Viktor Orbán know about all this? He has stuck with Rogán through thick and thin in the last couple of years, so my suspicion is that he is privy to everything.

November 13, 2016

Vona, under vicious attack, may yet outfox Orbán

Viktor Orbán is bent on the destruction of Gábor Vona, chairman of Jobbik, and with him the whole party. I know it was only two weeks ago that I wrote a post titled “Power struggle on the Hungarian right?” but I think that recent political developments warrant a second look.

By now I believe that this struggle is more than a turf war between two right-wing parties. Since Jobbik succeeded in foiling Viktor Orbán’s plan to amend the constitution, Fidesz has put Jobbik and its chairman squarely into the enemy camp, along with the parties on the left. Before the confrontation over the amendments Viktor Orbán viewed Jobbik not only as his competition on the right but also as an ally on whom he could call in time of need. Therefore, Fidesz criticism of Jobbik was always muted. But by now these relatively amicable relations have frayed to such an extent that Lajos Kósa, head of Fidesz’s parliamentary delegation, declared two days ago that even Ferenc Gyurcsány was a more decent politician than Gábor Vona. In Fidesz vocabulary one cannot find a more damning description of a political opponent.

Viktor Orbán has come to realize that Jobbik is behaving like a full-fledged opposition party, which from the look of things seems to have surprised him. And he is hitting back hard, which makes the Jobbik leadership fight back even harder. The result is that there are more and more signs of a commonality of interests among all opposition parties. For the time being both sides deny that they have any plans for even limited cooperation, but I wouldn’t be surprised if they changed their minds in the not too distant future. Because, let’s face it, without some cooperation between the left- and right-wing opposition parties Viktor Orbán cannot be unseated in 2018. In fact, if nothing changes, Orbán might die in office. After all, he is only 55 years old.

Viktor Orbán, who had taken Jobbik for granted, feels double-crossed. And we know that in such circumstances Orbán goes into attack mode. The first move was to launch a media campaign against Jobbik. The Fidesz propaganda machine dredged up all of Jobbik’s past sins, real and invented. Ripost.hu found “shocking evidence” that Jobbik is behind the murder of a policeman by an armed right-winger, which is a fabrication. On the other hand, Jobbik does have plenty to hide, including murky relations with Russia and contacts with far-right organizations in Hungary. The Hungarian security offices surely have plenty of incriminating evidence, including photos. Some of this material is being given to Fidesz-friendly media outlets to embarrass the party.

But everywhere they turn they encounter common skeletons in the closet. Ripost.hu made a big deal of the fact that Adrien Szaniszló, who works for Jobbik’s “foreign affairs cabinet,” was born in Moscow, which seems to be an indelible stain on one’s pedigree. The problem is that she is the daughter of Ferenc Szaniszló, a controversial commentator on the right-wing Echo TV, whose high decoration from Zoltán Balog a few years back was greeted with such an outcry that Balog had to ask Szaniszló to return the award. As for Adrien Szaniszló birthplace, it is something she couldn’t help. Her father was Magyar Televízió’s correspondent in Moscow.

It seems that the propaganda ministry didn’t think that warming up these old stories had been effective enough. So they recycled Terry Black’s 2013 story of Vona’s alleged homosexuality. Such stories make a huge splash in Hungary. In 2015 Klára Ungár, a former SZDSZ member of parliament who is openly gay, wrote on her Facebook page: “Viktor blabbers about those members of the gay community who do not provoke and explains why this is a good thing. What do Máté Kocsis and Szájer say to that? Surely they agree and that’s why they are hiding.” Viktor’s blabbering refers to a speech he gave in which he explained that one can live peacefully with gays as long as they don’t make too much noise. He added that gays are different, and therefore they don’t deserve the same rights as heterosexuals. He was referring to the marriage of same sex couples. That’s what got Ungár’s goat. Szájer had the good sense to remain quiet, but Kocsis sued Ungár and lost the case on appeal.

Fidesz was in an uproar over Ungár’s accusations and made a big deal about the immorality of resorting to such methods in order to discredit someone. But now that the government and its servile media are doing the same thing, Fidesz leaders no longer have such compunctions. In fact, Ungár’s little note on Facebook cannot be compared to the onslaught against Vona. I have no idea how successful the smear campaign will be, but the pro-Fidesz media is convinced that it’s working. For example, Ripost.hu claims that Vona finds this accusation so damaging that Jobbik created a special “crisis center” to handle the fallout. It’s no wonder, Riport.hu continues, since in the past Jobbik was a homophobic party that “on several occasions sharply condemned any homosexual relations and, in fact, demanded harsher penalties than are in the existing criminal code.”

I don’t know about the crisis center, but Vona’s wife posted an open letter to Anikó Lévai, wife of Viktor Orbán, asking her to intercede with her husband to put an end to these ad hominem attacks on her husband. She understands that there is “confusion, resentfulness, and vindictiveness” because of the failed constitutional amendments, but political fights should remain within the realm of politics. “I suspect that you are the last person he perhaps still listens to.” To which the website Kolozsvári Szalonna responded: “I want to warn you not to expect miracles from Anikó Lévai, who has as much say in this affair as in her own shitty little life.”

Gábor Vona and his wife, Krisztina Szabó

Gábor Vona and his wife, Krisztina Szabó

If Magyar Nemzet’s information is correct, Gábor Vona is not retreating. In fact, he is ready for a second round with Viktor Orbán. Fidesz already announced that it is abandoning the constitutional amendments and that by the end of the year the sale of residency bonds will also come to an end. Apparently, Jobbik is planning to resubmit the Fidesz bill on the amendments as its own. Only half a sentence will be added to the original text: “settlement requests for financial compensation” cannot be considered.

Such a move would put Viktor Orbán in a very awkward situation. I assume he would not agree to allow Jobbik’s, or any other opposition party’s, bill to reach the floor. Every proposed bill first has to go to committee, where it will probably die. But how will Viktor Orbán explain that his precious bill is not important enough to be discussed and voted on? Even the extra half sentence should be acceptable to Fidesz because the government has already decided to stop the sale of residency bonds. So why should it be dead on arrival?

This is shaping up to be the third major political embarrassment for the infallible political genius. Gábor Vona is obviously a talented politician who has managed to do something no other opposition party has: score a major victory over Viktor Orbán’s government not just once but perhaps twice.

And that’s not all. Vona seems to have something else up his sleeve. In connection with the clearly dirty business of residency bonds the opposition parties suggested setting up a special parliamentary committee to investigate the matter. Naturally, the Fidesz majority voted the proposal down. Jobbik called a meeting of opposition parties, to which representatives of LMP, Együtt, and the Liberals showed up. They decided that the four parties should form an extra-parliamentary “shadow committee” to investigate the affairs of Antal Rogán’s off-shore middlemen active in the residency bond business. The parties’ bigwigs still have to give their blessing to the idea, but the comments of LMP’s Bernadett Szél were promising. In her opinion, alternative political instruments are necessary because no meaningful work can take place in the Fidesz-ruled parliament. Such an extra-parliamentary body can be as effective as an official one, she said.

The work of a shadow committee might have an invigorating effect on the opposition. I must say that I find the idea attractive.

November 12, 2016

Domestic retreat and preparation for a battle with Brussels

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

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

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

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

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

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

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

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

self-confidence

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

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

November 11, 2016

Gábor Vona and Viktor Orbán: Who will win this political game?

At the end of yesterday’s post I indicated that Gábor Vona, chairman of Jobbik, had just announced his party’s refusal to support the government party’s quest for another round of amendments to the constitution that would introduce a number of changes related to the settlement of foreigners in Hungary. Earlier I wrote an analysis of the notion of constitutional identity, which is the linchpin of the otherwise meaningless constitutional amendments, and published an English translation of the amendments themselves.

The government considers these amendments vital to Viktor Orbán’s impending battle with Brussels over a possibly mandatory distribution of refugees. But changing the constitution requires a two-thirds majority in parliament, which Fidesz-KDNP currently doesn’t have. The government party had been counting on the support of Jobbik, the only opposition party that was wholeheartedly behind the amendments. In fact, it was Jobbik that, from the beginning, championed for constitutional amendments instead of a referendum. Fidesz, however, rejected the proposal and embarked on an expensive, divisive referendum that in the end turned out to be invalid.

What followed was a typical Viktor Orbán move: regardless of the failure of his referendum he decided to go ahead with the amendments to the constitution. But there was a rub. Jobbik demanded a price for its members’ votes, which Gábor Vona set forth early in the game.

For starters, Vona said that he wanted to meet with the prime minister in private. In the last six years, however, it has never happened that the ruler of Hungary sat down alone with an opposition leader. Granting such a privilege to Vona was too demeaning, so Orbán organized a series of “consultations,” starting with Zsolt Semjén of the Christian Democratic Party and his own deputy, which everybody thought was a joke. Then he sent a message to Gyula Molnár, chairman of MSZP, who foolishly accepted the invitation, which he kept secret from the rest of the leading politicians of his party. Once the meeting became known, Molnár tried to explain himself away by saying that the consultation was not about the amendments but about the summit that is taking place at this very moment in Brussels. Since when does Viktor Orbán have consultations with opposition party chiefs about summits?

The long-awaited meeting between Vona and Orbán took place on October 18. In the days leading up to the meeting, Jobbik spokesmen repeatedly indicated that the party would support Orbán and that the Jobbik delegation would cast its votes with Fidesz-KDNP, guaranteeing an easy passage of the amendments. After all, this is what they wanted all along. Yes, but Jobbik was in a perfect position to demand something in exchange for its support of the government party. Vona’s demand was that the government cease selling residency bonds to wealthy Chinese, Russian, and Arab businessmen.

The residency bond sale, which I described as a “colossal swindle,” is the brainchild of Árpád Habony and Antal Rogán. Habony is safely deposited in London. Rogán, on the other hand, has been under incredible pressure, mostly because of Népszabadság’s revelations about his most likely ill-gotten wealth. The residency bond scheme has been severely criticized not only by the opposition but by some higher-up Fidesz leaders as well. In fact, in the last few weeks there were indications that the scheme would be modified. But I very much doubt that Orbán had the total cessation of the program in mind. And this is what Vona demands. If poor immigrants can’t settle in Hungary, rich ones shouldn’t be able to either.

The outcry against the Jobbik demand was not restricted to the government party. Gyula Molnár, chairman of MSZP, also condemned it in almost identical words. Bence Tuzson, one of the many spokesmen of the prime minister’s office, called it “kufárkodás” (profiteering) while Molnár considered it “seftelés” (conducting business in a dishonorable way). The two words are practically synonymous. For good measure Molnár added that Vona’s behavior is “political prostitution” pure and simple.

I am amazed at these reactions. In the world of politics this kind of give and take is perfectly normal. If Viktor Orbán needs the help of Gábor Vona’s party, it is natural that Jobbik will want something in return. After the meeting, Vona talked to the press and announced that Viktor Orbán had rejected his proposal, but a few minutes later Orbán sent a message via Tuzson saying that “he will consider the request of Vona.”

The Hungarian media started speculating about whether Orbán would meet Vona’s demands. Szabolcs Dull of Index simply could not imagine that it will be Viktor Orbán who has to knuckle under. After all, Orbán has convinced the Hungarian public that he is always the one who comes out on top. He is always the winner. In fact, Dull suggested, Orbán wants to get rid of the troublesome residency bonds anyway, and therefore he will readily concede to Vona’s demands. In fact, “he will kill two birds with one stone: he will be able to restructure the residency bond scheme and will receive Jobbik’s endorsement.”

Dull’s theory collapsed less than ten hours later when the government indicated that it has no intention of scrapping the residency bond program. Yesterday, around noon, Lajos Kósa, leader of the Fidesz caucus, announced that in their opinion the two issues, the bonds and the settlement of foreigners, have nothing to do with one another and suggested that Fidesz isn’t counting on the votes of Jobbik. They hope to get the necessary two votes from the “independent” members of parliament. Who these “independent” members would be is not entirely clear, but some Fidesz politicians indicated that they think a few “patriotic” Jobbik members could be found who would turn against Vona. By this afternoon most Hungarian journalists were convinced that Fidesz will put the amendments to a vote on November 8 even if they are not assured of Jobbik’s support.

Antal Rogán, carrying Viktor Orbán's briefcase in Maastricht, October 20, 2016

Antal Rogán, carrying Viktor Orbán’s briefcase in Maastricht today

In trying to win concessions from Orbán, did Vona sow the seeds of his own destruction? Today Magyar Nemzet speculated about why a Fidesz defeat would actually be good for Fidesz and bad for Jobbik. If the amendments are not passed and if Brussels insists on compulsory quotas, Fidesz can blame Jobbik.

Tamás Fábián of Index found this hypothesis compelling, adding that from information he received from people close to Orbán, “Brussels cannot be stopped and within months the compulsory quotas will be forthcoming.” If that is the case, “Jobbik politicians will never be able to get rid of the label of being traitors,” which Lajos Kósa already pinned on them. Fábián is convinced that Vona made a fatal mistake by presenting Orbán with an ultimatum. “He started on a narrow path and will suffer heavy blows along the way.”

Fábián also predicted that the sale of residency bonds will be continued, even if with some adjustments. Although in the last few days Fidesz spokesmen did talk about fundamental changes, two weeks ago Orbán called the program “a successful construction.”

I might add that despite all the dirt that was unearthed about Antal Rogán, he seems to have nothing to fear. Orbán will not let him go. I was astonished to see Rogán in Brussels, walking right behind Orbán. Since when do propaganda ministers go to summits in Brussels? I guess the government is sending a message that he is still under the protection of the prime minister.

October 20, 2016

The Orbán government’s colossal swindle: the residency bonds

It’s time to return to one of the largest scams the Orbán government has come up with to date: the sale of “residency bonds.” The project was launched in 2013. It allowed a citizen of a non-European Union country to “buy” a resident permit for a duration of five years by purchasing €250,000 worth of Hungarian government bonds. In 2015 that amount was raised to €300,000.

Many countries, including the United States, offer residency permits to foreigners willing to invest substantial amounts of money. Such an arrangement might be justified on such economic grounds as job creation and an incentive for the influx of foreign capital.

The Hungarian scheme bears no resemblance to the practices of other countries. The sale of residency bonds creates “instant cash” that is spent as soon as it is received and that will have to be paid back, together with the accrued interest, in five years. The sale of 3,874 residency bonds over the last two and a half years has brought at best a minimal benefit to the national economy, at worst a loss. That Hungary has sold so many residency bonds is understandable because this is about the cheapest way for a person to become a lawful resident of one of the member states of the European Union, and hence to be able to conduct business anywhere in the EU.

Hungarian residency bond purchases have another unusual feature. The prospective buyers of the bonds do not manage the transaction directly by dealing with the Hungarian administration. Their only contact is an agent designated by the government. And on paper at least these agents seem to be the only real financial beneficiaries of the sale of the bonds. For every bond package they sell they receive between €45,000 and €60,000 as a processing fee, charged to the purchaser. The other peculiarity of this transaction is that agents don’t pass on the full €300,000 to the Államadósság Kezelő Központ (Center for the Management of Government Debt) because they receive the bonds from the government at a discount of no less than 2%. So between the processing fee they charge and the discount they receive, agents get between €74,000 and €80,000 per bond package. As Népszabadság rightly pointed out, after five years the purchaser of the bonds will gain about as much on the deal as the agent does within a few weeks.

The whole scheme smacks of corruption. Most likely the people who were chosen to be agents were ready to share these incredible sums of money with members of the Hungarian government or Fidesz party leaders. Currently there are four such agents, of whom only one is registered in Budapest. The others operate out of Malta, Cyprus, and Singapore.

Source: Index

Source: Index

Also on the receiving end is a Budapest law firm which, according to Tamás Wiedemann of Magyar Nemzet, must have made almost five billion forints in the last three years. Heading the firm is Kristóf Kosik, who is a close acquaintance of Antal Rogán, who as the chairman of the parliamentary committee on the economy is the mastermind behind the whole scheme. Kosik’s law firm is the only one that can represent the foreign applicants at the Bevándorlási és Állampolgársági Hivatal (Office of Immigration and Citizenship). The Kosik Ügyvédi Iroda receives €5,000 per application. Since 3,784 applications have been approved since 2013, Kosik’s law firm must have earned €18,920,000 in three years from this little business.

Népszabadság also calculated the amount of money the Hungarian government is losing on these residency bonds. The economists who looked at the numbers came up with the figure of €17.4 million to date. The reason for the loss is that in 2013 the government fixed the interest rate they would pay on the bonds at 2.46%. In the beginning the Hungarian government did okay because the interest rate in the open market was almost 5%. So they were getting cheap instant cash. But by June 2014 the interest rate on euro bonds had dropped to under 2.4%, which was lower than the guaranteed rate on the residency bonds. By now the interest rate in the open market is around 0.5%, while the Hungarian government is still paying the rate fixed in 2013.

While the Hungarian government just declared a “total mobilization” in preparation for a referendum against the refugees and has been carrying out a massive campaign against outsiders, it has quietly allowed 3,784 individuals and their families to settle in Hungary. That may mean close to 16,000 individuals, who come mostly from China, Russia, and the rich Middle Eastern countries. Vetting these individuals is extremely superficial. An applicant makes an appearance before one of the agents and gives details about himself and his past activities. On the basis of this information the Hungarian authorities have 30 days to conduct an investigation. Once that is done, the happy new resident and family can settle in Hungary and travel and conduct business throughout the European Union.

As the result, it is likely that some unsavory characters have managed to settle in the European Union through the Hungarian residency program. The same Tamás Wiedemann who found out about the monopoly Kristóf Kosik’s law firm has on handling applications at the Office of Immigration also learned of at least one Russian, who had been convicted of tax fraud and was most likely a fugitive from justice, who easily managed to get permission to settle in Hungary. It was done in the following manner. Each applicant must produce an “erkölcsi bizonyítvány” (certificate of good conduct). But the Office of Immigration accepts the certificate of good conduct even if it comes from a third country. Thus the Russian fugitive from justice first went to Saint Kitts and Nevis, where he obtained the necessary document attesting to his good conduct and stating that he had had no run-in with the law.

Naturally, the government’s reaction was denial. Csaba Dömötör, undersecretary in Antal Rogán’s Cabinet Office of the Prime Minister or, as people on the street call it, the propaganda ministry, announced that the article “is based on frivolous suppositions and calumnies.” He added that it is difficult to take the story seriously because Wiedemann didn’t give the name of the individual. Magyar Nemzet’s journalist pointed out in an interview on ATV yesterday that he is forbidden by law to reveal the name of the individual, and he would also have transgressed the law on securities if he had given details.

Rogán’s propaganda ministry might be cocky but Mihály Varga, minister of the national economy, was much more cautious and told ATV that perhaps the law governing the rules of residency requirements can be changed “if necessary.”

September 7, 2016