Tag Archives: Sándor Demján

Viktor Orbán and his fellow oligarchs

The Orbán government has given up the idea of solving the forex loan problem quickly and in one fell swoop. For a couple of weeks it looked as if Viktor Orbán was thinking of a radical solution that would have meant making the banks pay the difference between the exchange rate at the time of the issuance of the loan and the current exchange rate. This could have been a tremendous burden. Just to give you an an idea, if someone took out a loan in Swiss francs in 2008 he paid 143.83 forints for one Swiss franc. Today the exchange rate is 241.51 forints to one Swiss franc.

The original idea was borrowed from the Croatian government’s decision a few weeks ago. There is, however, a huge difference in the number of people with forex mortgages in Croatia and Hungary.  Apparently the “nuclear option” was abandoned because the government realized that the entire Hungarian banking sector could go under as a result.

In no small measure Sándor Csányi was responsible for this change of heart or at least for the government’s realization of the possibly grave consequences of such a move. After all, he sold a large number of his OTP shares which by itself prompted some panicky follow-through on the Budapest stock exchange. By now most observers interpret his move as a warning to Viktor Orbán. This is what can happen, and on a much larger scale, if the government goes through with its plan.

Those who don’t quite believe this scenario point out that no one knows how many OTP shares Csányi actually owns. A German source claims that what Csányi sold amounted to no more than 1% of his holdings. So, the argument goes, this shouldn’t have made a great impression on Viktor Orbán, who surely knows the details of Csányi’s finances.

But Ferenc Gyurcsány, who was interviewed on the subject, dismissed this argument. Csányi’s sale of this allegedly tiny portion of his holdings was not itself a threat. But implicit in this sale was the threat that if the government goes through with its plans he may dump the other 99%, the consequences of which might be immeasurable.

Gyurcsány knows Csányi only too well. When he was prime minister he had quite a bit to do with him because, after all, “he is a big player … with a tremendous amount of power.” In fact Gyurcsány agrees with János Lázár that Csányi and the other oligarchs have far too much power, which a prime minister must keep in check.  He himself normally sent them away and told them that they cannot expect special treatment from him. He admitted that as a result his relationship with Csányi and the others was not the best. He didn’t sit with them with in the VIP section at soccer games spitting out sunflower seeds, a reference to Viktor Orbán’s not exactly elegant habit.

As for János Lázár’s reference to Csányi as an octopus, apparently Orbán suggested that his chief of staff sit down for coffee with Csányi to smooth things over but Lázár ignored the suggestion. When Orbán inquired about the meeting, Lázár told the prime  minister that he has no intention of ever apologizing to Csányi. Orbán didn’t press the issue. I guess by then he decided that Csányi didn’t really deserve an apology, especially since he learned that Gordon Bajnai’s foundation had received a small grant from him. I’m sure that this “sin” will not be forgotten by the vengeful Viktor Orbán.

The relationship of Csányi, and the other oligarchs as well, with Orbán is complicated. For one thing, Csányi doesn’t seem to like him as a person. When Orbán was in opposition, Csányi often talked about him disparagingly in Gyurcsány’s presence. Admittedly, it is in the interest of these oligarchs to seek close relations with the powers that be. And yet if they feel that the government is working against their interests and that no amount of pressure will cause it to change its ways, they will not hesitate to abandon the prime minister and his party. Orbán cannot trust Csányi, Demján, and some of the others because they are not his men the way Lajos Simicska is. The behavior of Sándor Demján, who is up in arms about the nationalization of the credit unions, and Sándor Csányi seems to indicate that these oligarchs are fed up with the unpredictable, anti-business policies of the Orbán government.

There is another aspect of the relationship between the oligarchs and Viktor Orbán that has received very little attention. One mustn’t forget, Gyurcsány said, that the Orbán family’s wealth puts him and his family among the top five richest families in Hungary. Orbán has cleverly hid his and his family’s wealth, but he cannot hide behind front men and legal tricks forever. One day he will be caught. He became an MP practically straight out of college and today he is a billionaire. He is using his position to enrich himself and his family. That is not only immoral, it is a crime.

This is not how you become a billionaire

This is not how you become a billionaire

This interview took place with Olga Kálmán on ATV, and the reporter was visibly shaken by the news that the extended Orbán family may have become one of the five richest families in the country. Therefore she decided to follow up on the story. The next day she invited Mátyás Eörsi, a former SZDSZ MP and an old acquaintance of Viktor Orbán. Eörsi was also one of the members of a parliamentary committee that was supposed to find out how the former prime minister managed to acquire so many assets in a few years, allegedly from his modest salary. Unfortunately, creating these investigative committees in Hungary is a waste of time because they have practically no enforcement authority. They can’t even require witnesses to appear. This particular committee was just as useless as was, for example, the investigative committee on the sudden and unexpected decision of the first Orbán government to purchase Gripen fighter planes. Although the family’s enrichment was highly suspicious, the committee didn’t manage to pin anything on him. Olga Kálmán also took a good look at Orbán’s financial statements, the kind every MP must fill out yearly. These statements indicate that, especially given his five children, he could have led at best a modest middle-class life.

Like Gyurcsány, Mátyás Eörsi is convinced that the Orbán family is among the richest in Hungary. In fact, he is pretty certain that way back in 1992 when Fidesz sold the half of a very valuable building it received from the Antall government, the whole amount landed in the Orbán family’s coffers, laundered through about twenty phony companies. These were the companies that were later sold to two phantom buyers for one forint each.

Prior to becoming a member of parliament in 1990 Eörsi had a fairly lucrative legal practice. He didn’t start with nothing as Orbán did. Moreover, Eörsi’s parliamentary salary was a great deal higher than average. He claims based on his own experience that there is no way that Orbán could have saved enough money to buy the house he did after he lost the election.

Eörsi as a lawyer is especially interested in the “legal techniques” by which Orbán manages to hide his immense wealth with the assistance of his front men. As long as he is prime minister he has no problem controlling whatever is being handled by others. But what techniques did he use to guarantee access to his wealth once he is out of office?

One reason for Orbán’s many political successes is that his followers believe that he is a man of modest means who takes their side against the bankers, multinationals, and oligarchs. But what will happen if his people find out that their beloved prime minister is in fact one of those hated oligarchs?

Politics and finances: Orbán’s Hungary today

Judging from the comments, most readers of Hungarian Spectrum consider Sándor Csányi’s spectacular exit from the ranks of shareholders of OTP an event that overshadows all other news, including whatever the current opposition is doing. Perhaps in the long run the panic that took hold of Budapest yesterday following the precipitous fall in the stock price of Hungary’s largest bank might prove to be more significant than any purely political event. However, what happened at OTP cannot be separated from politics.

By now we know that even before Csányi, the CEO of OTP, decided to sell his OTP stock worth about 26 million euros, some other high-level officials of the bank had already gotten rid of theirs. I assume they sold because of the probability that the government will “take care of the Forex loans one way or the other.” The exact way is still not entirely clear, but it is likely that the banks will again be the ones that will have to bear the financial burden of the “government assistance.” This rumor began to circulate about a week ago.

And then came Viktor Orbán’s interview with Margit Fehér of The Wall Street Journal. In this interview Orbán made it clear that the bank levies are here to stay. He has reneged on his initial promise that the very high extra taxes on banks would be needed for only a couple of years. Now the official position is that the bank levies will remain until the national debt is under 50% of GDP–perhaps in ten years “if the euro zone could do better.”

Another political decision that most likely had an impact on the misfortunes of OTP was the government’s abrupt announcement of the “nationalization” of 104 credit unions privately owned but functioning under the umbrella of TakarékBank Zrt. TakarékBank and its credit unions are really the banks of the countryside. They are present in 1,000 smaller towns and villages, which means that they cover about a third of all Hungarian communities. One can learn more about TakarékBank here. One thing is important to know. TakarékBank was run by and with the consent of the individual owners and board members. Clearly, the state wants to take over the whole organization and most likely run it as a state bank. What is happening here is no less than highway robbery. As some people said, the last time something like this happened in Hungary was during the Rákosi period. Sándor Demján, chairman of TakarékBank’s board, swears that they will keep fighting all the way to Strasbourg to prove that what the Hungarian government is doing amounts to nationalization without any monetary compensation.

If Orbán succeeds in the nationalization of TakarékBank, it might pose a serious threat to OTP. All in all, it’s no wonder that OTP officials didn’t think that their investment was safe. The alarm bell might sound in foreign banks as well (don’t forget that Orbán’s plans include a banking sector that is at least 50% Hungarian owned), and if that happens the whole banking sector might collapse. But I guess that would fit in with Orbán’s goal of tearing down all the carry-overs from the past and replacing them with his own original creations.

Let’s return now to the interview Orbán gave to The Wall Street Journal. Some of his statements are just a regurgitation of what he said in his rambling speech to the foreign ministry officials about a week ago but this time in even stronger language. For example: “The future of Europe is Central Europe” and by “now we are once again part of [this] powerhouse.” He also repeated some of his often used lines about the nonexistent strides Hungary has made since he took over: the national debt is falling, foreign trade is rocketing, Hungary no longer needs “other people’s money,” unemployment is falling, and finally that when he took office only 1.8 million people paid taxes but now that number is “close to 4 million.” No one has any idea where Orbán got his figures about the number of taxpayers, but they bear no resemblance to reality.

The interview is a rare self-portrait that could be the topic of another post, but here I would like to bring up two points.

This is the first time, at least to my knowledge, that Orbán openly declared that he really doesn’t want to join the eurozone. This despite the fact that Hungary is obligated to adopt the euro as the country’s currency since it was part of the conditions for membership in the European Union. But today Orbán thinks that Hungary “should exploit the advantages of not being in the eurozone.” I was already suspicious when he insisted that the Constitution should include a sentence stipulating that Hungary’s currency is the forint, but in the interview he was quite explicit on the subject: to change the constitution’s declaration that Hungary’s currency is the forint “will require a two-third vote of Parliament. So, to join the euro will require a strong, unified majority. This guarantees that it will not be a divisive issue. Whether Hungary joins will depend a lot on how well the new, integrated eurozone functions.”

www.lorettahelson.com

www.lorettahelson.com

And finally a point that might interest amateur psychologists. Orbán said: “When you have to save your country, to renew your country–that is when a job like this is appealing to someone like me. This is a real challenge, not just like reorganizing a bureaucracy. People like me, we like to do something significant, something extraordinary. History has provided me that chance. Actually, it provided it three times. I’ve always gotten historical challenges as a leader. When things are going well, I seem to lose the elections, because the people don’t need me anymore.” There is a Hungarian saying “A próféta szólna belőled!” meaning I hope your prophecy comes true. But all joking aside, it seems that Orbán is not confident about winning the next elections. He is afraid that all his extraordinary accomplishments will only make an opposition victory more likely. I guess the winning campaign slogan, contrary to everything we know about electorates, would be: “If you’re better off than you were four years ago, throw the bum out!”