Tag Archives: Sándor Holbok

The latest revelations in the Roland Mengyi case

People unfamiliar with Viktor Orbán’s Hungary might think that I’m spending far too much time on the case of Roland Mengyi, a Fidesz MP. So what, they might say. They caught a politician who is a crook. Happens in the best of countries. What’s the big fuss?

Well, that’s not how things work in Hungary. The Orbán government has been in power for more than six years, during which the independent media reported on a raft of suspicious cases. Not once did the “independent” prosecutor’s office ask the president of the parliament to initiate proceedings to suspend a Fidesz MP’s immunity, even when such a request was warranted.

Yes, Hungary’s chief prosecutor is independent in the sense that he and his office are not subordinated to the ministry of justice, unlike in most European countries or the United States. That was not the case between 1867 and 1949. The prosecutor’s office was the judicial arm of the state. After 1990 a restoration of the old system was briefly discussed and rejected, for fear of government interference in the judiciary. Thus, Chief Prosecutor Péter Polt, an important ally of Viktor Orbán, is responsible to no one except, of course unofficially, the prime minister. He is a man of immense responsibility and power. He could theoretically topple Orbán’s corrupt regime or, being a faithful servant, keep it in power by burying all the embarrassing and even politically lethal cases.

Very often the prosecutor’s office doesn’t even start an investigation of cases reported to the police. In a few bigger cases they begin an investigation but the prosecutors find the cases too weak to go any further and drop them. Then, there are those cases when the prosecutor’s allegations are so poorly worded that the judges have no recourse but to acquit the accused.

The Mengyi case is testing the “see no evil” prosecutorial system. Péter Polt was forced to act. He had no choice once 168 Óra released the third installment of the story of Roland Mengyi and his accomplices. It reported that the National Tax and Customs Administration has a video on which one can see two of the accused men handing Mengyi a small plastic bag that might have contained the 5 million forints Mengyi demanded from them. An hour after this information hit the newsstands Polt wrote to László Kövér requesting that Mengyi’s immunity be lifted.

Mama Rosa, Italian restaurant, where the Roland Mengyi allegedly received the money

Mama Rosa, the Italian restaurant in Tiszaújváros, where Roland Mengyi allegedly received 5 million forints in cash

In this post I will concentrate on what we learned from the third installment of Attila Rajnai’s series on the Mengyi case, but before that I will try to clarify why the National Tax and Customs Administration/NAV is involved in this case since it has nothing whatsoever to do with tax fraud.

Initially, NAV was not investigating Mengyi but Márta F. of Tiszaújváros, an accountant whom the NAV investigators suspected of being involved in tax fraud by gaming the special tax status of employees of social cooperatives. These employees, who are disadvantaged, pay lower taxes and have lower social benefits payroll deductions than employees of ordinary businesses. Márta F.’s scheme was to change the status of employees of ordinary businesses to social cooperative employees. The scheme worked this way. The worker was let go by his employer and immediately hired by one of the social cooperatives, but in reality he worked in his old workplace except that his employer now hired him as a social cooperative worker with a reduced tax burden. Márta F. was apparently arranging these switches in status in such huge numbers that NAV investigators became suspicious and began their surveillance of her activities. Mengyi’s bad luck was that Tibor B. and Zsolt E., the two friends who turned to Mengyi for help, got in touch with Márta F., who was known as an expert in setting up social cooperatives. Thus their conversations with Márta F. were also recorded. These conversations prompted a second investigation that led to Mengyi.

So, what did the public learn from 168 Óra’s third installment? Plenty. One important piece of information is that if NAV investigators find a political thread in the course of their investigation, they have to report the case immediately to the prosecutor’s office. The prosecutor’s office can then, if the chief prosecutor so desires, stop the investigation altogether. In fact, Rajnai is aware of an earlier case where an important business partner of one of Viktor Orbán’s oligarchs was in trouble with NAV but the prosecutor’s office stopped the investigation. It is quite possible that the same thing happened in the Mengyi case because just when the investigators were ready to arrest the Fidesz MP, their superiors refused to give them permission to proceed.

Of course, the newly appointed NAV president, András Tállai, might have put an end to the investigation, especially since in one of the conversations Péter K., the middle man between Mengyi and the two applicants for the grant, tries to quell their fears by telling them not to worry because András Tállai and Roland Mengyi are “on very good terms.”

The other revelation of this third installment is that last fall someone in the ministry of human resources told Péter K. that NAV investigators had paid a visit to the ministry and that they should be careful because their telephone calls are being monitored. At the moment we don’t know who that person was, but Rajnai suspects that his name is known to the prosecutors. Because revealing such information to subjects of an investigation is a crime, this person is probably also in trouble.

As the network of corruption expands, another possible culprit is the owner of Public Sector Consulting Kft. (KSC), Sándor Holbok, whom I described earlier as an “ősfideszes” or “primordial member” of the party. Although at the moment only Szilvia B., an employee of the company, is in jail, Holbok was most likely fully aware of what was going on in the firm. In one of the conversations one can hear that Mengyi is in negotiation with the owner of KSC, discussing the financial details, meaning who will receive what portion of the 600 million.

Whoever interfered at the level of the ministry saved Mengyi from a much more serious charge. The tender was rewritten, and therefore the deal couldn’t proceed. As it stands, Mengyi and his co-conspirators are accused only of attempted fraud.

Now it is up to Péter Polt to contain the investigation to the smallest possible circle. If the investigation goes much further, it could reach high officials in the ministry of human resources and perhaps even in the prime minister’s office. After all, there are rumors that even undersecretaries might be part of the conspiracy to illegally acquire EU money. Szilvia B. talked about her close relationship with Nándor Csepreghy, deputy of János Lázár. I’m sure that Polt will do his best as usual. Maybe the whole thing will peter out and Roland Mengyi will be the only one who is charged. And if Mengyi is deemed to be critically important to the party, the prosecutor’s office will probably prepare a case so full of holes that he will get off.

August 20, 2016

Corruption in Hungary is a cooperative effort between government and business

Before I return to the continuing saga of the corruption scandal surrounding one of many EU-sponsored projects, I would like to call readers’ attention to a relatively new website, Hírvonal (http://hirvonal.hu/index.html), which in my estimation might be the best newsreader in Hungarian. Unlike other similar Hungarian websites, it is organized along the lines of Google News, but with many extra features that make it more user-friendly. Unlike with Hírkereső, here one can find all the articles on the same topic in one place, which is a great time saver. One can look for domestic, foreign, and economic news as well as separate items on culture, sports, science, literature, home, lifestyle, etc. And what is perhaps its best feature, it has an archives going back to May 1, the day that Hírvonal launched, where one can find all the top news items for any particular day.

And now back to the troubles of Roland Mengyi, the honorable member of the Hungarian parliament. As was expected, Attila Rajnai, the well-known investigative journalist, had more up his sleeve than he let on in his article published in the August 4 edition of 168 Óra. In that article he wrote about Roland Mengyi’s attempted bribery in connection with a 500 million forint grant for a network of social cooperatives, allegedly serving the downtrodden in one of the poorest regions in the country. If the participants had succeeded, practically the entire amount of the grant would have ended up in the hands of corrupt politicians and businessmen.

I summarized the case right after the appearance of the article. At that point there was no direct evidence of Roland Mengyi’s involvement. The transcripts of telephone conversations Rajnai got hold of spoke only about Mengyi in the third person, so Mengyi’s attorney, Barnabás Futó, the super lawyer of Fidesz leaders in trouble, could easily brush the whole affair aside as nothing more than malicious hearsay by two or three crooks from Tiszaújváros. But then came August 11, when Attila Rajnai published his second installment.

There is no longer any question about Roland Mengyi’s involvement in this criminal act. A conversation between Mengyi and one of the accused, who is called Dementor in the transcript, attests to Mengyi’s direct participation in the attempted embezzlement of EU funds. From this conversation it is clear that Mengyi has someone inside the ministry of human resources who is most likely not just his source of information but also part of the ring of conspirators. The conspirators included Mengyi as well as the firm Public Sector Consulting Kft. (KSC), whose employee, Szilvia B., came up with the proposal.

And this is the other bombshell in Rajnai’s second article on the Mengyi case. Public Sector Consulting Kft.’s majority owner is Sándor Holbok, who is described by the media as an “ősfideszes,” or “primordial member,” of the party. Before he began his business activities he was chief-of staff of and adviser to József Szájer, who at that time was an important member of the Fidesz leadership. Holbok has worked with practically all the important Fidesz leaders, including Zoltán Balog. From 2006 he has been working closely with Árpád Habony on campaign issues. A high Fidesz official described him as “a good guy who has been for the longest time one of our contacts between the leadership of the party and the business world.”

János Ádár, Mihály Farkas, László Kövér, Tamás Deutsch, and next to him on the right Sándor Holbok

János Ádár, Mihály Farkas, László Kövér, Tamás Deutsch, and next to him on the right, Sándor Holbok

Ákos Hadházy (LMP), who is the foremost expert by now on Fidesz corruption, claims that Public Sector Consulting Kft. is one of the firms specializing in what Hadházy describes as a racket by which an incredible amount of EU money finds its way into the pockets of project management companies. In a conversation with ATV he told the story of two cases in which Public Sector Consulting Kft. was involved. The municipality of Cece invited KSC and two other companies to bid to manage a program called “Let’s live healthy lives!” which would include screening tests, for which the village received 16 million forints from the European Union. KSC had the winning bid, at 16.2 million forints. Many hundreds of kilometers away the village of Lajoskomárom invited the same three companies to bid on exactly the same project. Again, the winner was KSC for the same amount of money. Neither KSC nor the other two companies had anything to do with the health sector. KSC won bids for all sorts of projects, for example, for water management programs and “human research” projects, whatever that means.

According to Hadházy, this racket works as follows. The ministry writes up a project for which there is no need whatsoever. This project is discussed with one of these project management companies, which then begins to “peddle” the project among those who would like to receive unexpected money for a project dreamed up by the ministry and the project management company. The municipalities are told that these companies will take care of everything, but they will have to get the job. Then comes an open tender, and it is obvious which company will win. Hadházy learned that corruption of this kind reaches as high as the level of undersecretaries, who tell their subordinates to turn a blind eye to these highly suspicious projects.

Although it is the ministry of human resources which is under scrutiny at the moment, Nándor Csepreghy, deputy minister of the prime minister’s office, ended up in the center of the affair for at least two reasons. One is that Szilvia B., the employee of KSC who is now in custody for her role in the Mengyi affair, boasted in one of the transcripts about her excellent relations with Csepreghy, whom she had just met at a party organized for their children. Second, Csepreghy is in charge, as Lázár’s deputy, of the disbursement of EU subsidies. Therefore, he, who unlike other Fidesz politicians is quite willing to give interviews even to opposition television and radio stations, has been talking in the last couple of days at some length about the case. Although he is circumspect in his answers to probing questions, he said yesterday morning on ATV’s Start program that KSC alone has been involved in at least 50-70 projects. Expressing his personal opinion, he announced that he will be “reassured only if the circle of writers of tenders and project managers … will be no more.” Csepreghy claims that during the 2007-2013 cycle these companies stole 1,500 billion forints (5.5 billion dollars). During the same conversation, Csepreghy tried to shift the blame for the incredible corruption that exists around the disbursement of EU funds to the former administrations. He blamed Gordon Bajnai and Klára Dobrev, Ferenc Gyurcsány’s wife. These two people were involved with EU funds, but way before the 2007-2013 cycle that Csepreghy was talking about.

I have no idea when the chief prosecutor will feel compelled to take up this case, but it will be difficult to ignore.

August 12, 2016