American-Hungarian relations are crumbling

Let me summarize what we know so far about the U.S. action against certain Hungarian businessmen and government employees.

Initially it was reported that ten people were banned from entering the United States, but by now that number has been reduced to six. We definitely know of one businessman who reported on his fate to ATV. It was he who mentioned three employees of the Office of Taxation and Customs (NAV). One of the three was allegedly the president of NAV, Anikó Vida. The spokesman for the tax office did not deny the charge. If the number six is correct, there are still two people about whom we know nothing.

Although the Hungarian government feigns total ignorance of the details and keeps repeating that it is unable to move against the corrupt officials, in fact they have known for two weeks about the American resolve to pursue those Hungarians who have been trying to blackmail American firms and extort kickbacks of billions of forints from them.

M. André Goodfriend, chargé d’affaires of the U.S. Embassy in Budapest, sketched the timeline of events this afternoon. According to him, on October 6 he had a talk with Levente Magyar, one of the undersecretaries in the Ministry of Foreign Affairs and Trade. During the meeting Goodfriend explained the significance of Proclamation 7750, which is an executive order signed by George W. Bush in 2004. The Proclamation gives the State Department power to ban corrupt individuals and their families from entering the United States. Such a ban can be imposed only by the undersecretary for political affairs–in our case by Wendy Sherman, who is the department’s fourth-ranking official. (Here is a handy chart of the structure of the State Department.)

Levente Magyar must have understood the gravity of the situation because a subsequent meeting was arranged at the request of the Hungarian foreign ministry between Péter Szijjártó and André Goodfriend. This meeting took place on October 13. The American chargé repeated everything he had already told Magyar. Szijjártó then insisted that he reveal the names of those would be affected by the ban. Goodfriend in turn explained that the American government never reveals names in cases connected to Proclamation 7750. What the U.S. expects is swift action against the culprits.

Let’s stop here for a minute. I assume that Viktor Orbán was notified immediately after the encounter between Magyar and Goodfriend on October 6, and I also suspect that the prime minister’s advice was to insist on “proof” from the Americans. When that failed, in typical Orbán fashion the decision was made to launch a counterattack. NAV leaked information to Napi Gazdaság, a financial paper owned by Századvég, a consulting firm and think tank close to Fidesz, that the United States is contemplating evoking Proclamation 7750 against certain Hungarian businessmen in retaliation for NAV’s tax probes against certain American firms. If the Hungarian government hadn’t decided on this counterattack, we perhaps would never have found out about the travel ban on the six, still unnamed individuals. Colossally stupid move, but I think it is typical. Viktor Orbán always has to have the last word.

Since October 16, the day that Napi Gazdaság published its article containing the disinformation concocted by the Hungarian government, the controversy between the United States and Hungary has been escalating rapidly. The Hungarians kept insisting on “creditable proof” while the Americans steadfastly refused to fall into the trap. Moreover, while at the beginning the controversy seemed to be connected only to widespread corruption in Hungary, as time went by it became obvious that the United States might also take action against the Orbán government’s increasingly anti-democratic behavior. A day after the appearance of the accusations against American businesses in Napi Gazdaság, an article was published in Foreign Policy magazine from which we learned that “at a meeting last month, the Community [of Democracies] set in motion a process that could result in Hungary’s removal from the council and withdrawal from the Community. If Hungary leaves, it will be an international acknowledgment  that the nation has ceased to be a democracy.”

What is the Community of Democracies? It is a global intergovernmental coalition of states founded in 2000 at the common initiative of Madeleine Albright and Polish foreign minister Bronislaw Geremek. The organization is headed by a Governing Council consisting of 26 countries, among them Hungary. Apparently it was the United States that suggested that Hungary be removed from the Council and perhaps even from the organization. Or perhaps Hungary might consider a voluntary withdrawal from the Community in order to avoid embarrassment. The likelihood of an American initiative in this case was reinforced by André Goodfriend’s observation that such a move might be warranted under the circumstances.

M. André Goodfriend at one of his press conferences

M. André Goodfriend at one of his press conferences

While the Hungarian government is stonewalling, the U.S. chargé d’affaires in Budapest, most likely following instructions from the State Department, is delivering tougher and tougher messages to the Hungarian government during fairly frequent press conferences at the embassy. Perhaps the strongest language could be heard this afternoon when Goodfriend explained the reason for American action. In Hungary prior to 2010 the level of democracy and transparency, especially in comparison to some other post-socialist countries, was high. But while in other countries the trend is toward greater democracy and transparency, in Hungary the opposite is true. “If that trend continues it may reach a level where the United States can no longer cooperate with Hungary as an ally.” Clearly, the United States is not joking–as Antal Rogán assumed only yesterday during an interview.

Let’s return briefly to the three high officials of the Hungarian tax office who most likely are implicated in the case. In what way can they engage in fraud and corruption? Here is an explanation offered by Dávid Jancsics, who is currently conducting research at the City University of New York. His expertise is corruption. He learned from two independent sources that the NAV employees demanded kickbacks from two American companies in exchange for tax breaks and a lower VAT. Apparently they demanded 2 billion forints in exchange for these favors, money that the American companies were supposed to pay to a foundation associated with Fidesz for purposes of “research and analysis.” In addition, the NAV officials promised heavy fines on the American firms’ competitors. When the Americans didn’t bite, the NAV officials began threatening them with tax probes. It was at this point that the firms turned to the American embassy and reported the bribery attempts. The implication of this analysis, if it is accurate, is frightening because in this case the tax office is part and parcel of a corruption scheme that appears to be centrally organized.

This takes us back to an old story about a whistleblower at NAV who claimed that high NAV officials refused to investigate obvious fraud cases. András Horváth, the whistleblower, said that he was mostly involved in investigating companies that dealt in agricultural products. Index came to the conclusion that one of the two American companies in question was Bunge, a leading agribusiness and food company. It is a global firm with 35,000 employees in forty countries, including Hungary. They produce among many other things cooking oil sold in Hungary under the label Vénusz. It was well known that the management of Bunge was very unhappy about the VAT fraud and that their efforts to enlist the help of NAV were fruitless. It is possible that after a lot of complaints from the Bunge management NAV officials offered to do something about the competition’s fraudulent business practices but only at a price.

Hungarian journalists in the last few days have asked several business groups, like the German-Hungarian Chamber of Commerce, about the extent of corruption in Hungary. The answer is that foreign companies have known for years about corruption involving billions. “Hungary is a part of the Balkans” by now, and the situation is only becoming worse. According to foreign business leaders, Hungarian business life is corrupt through and through. Healthy competition is impossible under such circumstances.

Péter Szijjártó is leaving Budapest for Washington tomorrow to meet Victoria Nuland. I wouldn’t like to be in his shoes.


  1. I quite like Mr. Goodfriend. It’s too bad he’s not a major political donor–he’d make a terrific ambassador.

  2. @Julie, I also like Mr. Goodfriend. Yes, he would make a fantastic ambassador. Maybe he will one day be one. It would be nice if he were appointed to be ambassador to Hungary. By the way, Mr. Goodfriend follows Hungarian Spectrum. He even contributed a couple of comments a couple of months ago. It was a great exchange. We were all very happy that he took the time to write to us.

  3. “Szijjártó then insisted that he reveal the names of those would be affected by the ban. Goodfriend in turn explained that the American government never reveals names in cases connected to Proclamation 7750. What the U.S. expects is swift action against the culprits.”

    I am confused. If the names of those affected are not disclosed, how is swift action to be taken against them?

  4. “András Horváth, the whistleblower, said that he was mostly involved in investigating companies that dealt in agricultural products. Index came to the conclusion that one of the two American companies in question was Bunge, a leading agribusiness and food company.”

    András Horváth is an amazingly interesting person. According to his latest proclamations, he was personally investigating American companies involved in tax fraud in the agricultural sector.

    Remember his famous Green dossier, which had the name of corrupt and fraudster companies? Some American companies were in that dossier, he personally knows were committing tax fraud in Hungary. One company he mentioned from the dossier was a leading agribusiness and food company that is often mentioned in the press these days.

    He stated that he personally investigated American companies that were part of the “tax fraud chain”. They were not necessarily the ones forging documents and, but they were definitely part of the whole chain that committed the fraud, and the profits from the tax fraud were going to these American companies. They were part of the fraud ring and part of the group of companies that were heavily investigated for their role in the massive tax frauds.

    Horvath the former tax inspector called these American companies “beneficiaries” – companies who financially benefited from the spoils of the tax fraud, the money stolen. Horvath even said that from his own descriptions the Americans probably realized which cases was he talking about and knew exactly which American companies were involved from documents he put on the internet. Now the most explosive accusation by Horvath was that in certain cases against guilty, tax fraudster companies, the investigation was slowed or stopped from above. This was his whole point that the budget could have gained so much money by properly punishing the tax fraudster companies.

    And if you think about it, it makes perfect sense. Whoever heard about someone shaking down a clean company, it is retarded to think these American companies were clean. Every decision the IRS equivalent NAV makes can be taken to court, and then appellate court. You could never get a case even started against a company that was clean, it would be thrown out of court immediately. It is much easier to promise to “forget” to investigate a dirty company that is in the tax fraud business. Against a clean company you do not have any leverage and if they go to every single clean company how would they pick them anyway? Throw a dice to decide which one to go to?

    Everything points to the fact that these American companies were dirty and committing massive tax fraud as Horvath says. But still it is possible that Andras Horvath is lying and the American companies were not dirty as he says. Anything is possible at this point, don’t really know who to believe any more.

    It is hard to believe though that Horvath would make stuff up like “the data about the American companies is in the green dossier” or “I personally investigated American companies that are involved in the tax fraud chain in Hungary”.

  5. gdfxx, the swift action _is_ the travel ban against these individual persons, which can be implemented without any public disclosure whatsoever. The ban, being between those individuals and the United States, does not involve the Hungarian state in any direct way and not only does not require any publicity to be implemented but is and should be conducted without public disclosure of individual identities.

    If I may modify Dr. Balogh’s sentence a bit, the expectation of Hungary on the part of the U.S. is less swift action against the individuals in question (which is a matter of local law — after all, tax evasion in Hungary hurts Hungary first) than swift action to end the practices in questions, which are against local law, against international standards and agreements, hurtful to both domestic and international competition, unfair to consumers, make the country less attractive to both domestic and foreign investors, and are unfair to businesses, in this case US firms which have here sought the assistance of their embassy, which wish nothing more or less than to play by the rule of law and do business on an even playing field.

  6. GW, I understand what you are saying.

    Obviously the US, like any other country, can restrict travel to anybody in the world (although when it comes to government officials of another country, who due to their function may have to travel there, I guess this would require an explanation, just to respect diplomatic norms). What I don’t understand is that unless this is a purely punitive action, how is the US expecting for any improvement in this area if those who are accused of wrongdoing – and now are banned – are not made known to the Hungarian authorities?

    And yes, I know that our assumption – most likely correct – is that the Hungarian government is involved in this scheme and probably knows who are the individuals involved. But this gives them an excuse to do nothing.

  7. @last flight: links to the articles where Horvath implicates the American companies, please…

    I was following much of what Horvath told to the press… nowhere he claims that the American companies were part of the fraud. In fact, he says that there were attempts to bribe American companies. He also states that one a HUNGARIAN trading company, who was a trading partner to the American companies, were implicated in VAT fraud. Horvath initiated an investigation against this HUNGARIAN company but the investigation was dropped by NAV.

  8. Eva put a massive amount of work into that incrediably coherent post that merged a huge amount of information. I would like to thank her for that. It is fairly obvious that Fidesz simply does not understand that they can’t spin a tale to escape from the implïcations of this situation. The New York Times article was just very hard hitting and the comments from other unnamed european sources about Hungary’s well known corruption really has significant ramifications for trade.

    It should also be noted that throwing Hungary out of the Communities of Democracies is a profound slap down because even several marginally democratic Latin American nations with human rights problems have not been thrown out. I know there is a feeling among some of the posters on this blog that Orban must protect all of the crooks that support him because backing down weakens him, but the situation seems to be unraveling and throwing a few of his supporters to the wolfs might be the easiest thing to do. Oh, but I forgot even PM Orban doesn’t know who these bad guys are.

  9. Already before this scandal broke word was spreading that tensions between Orbán and Simicska have reached a point where it’s only a matter of time before the gloves are off. What happens if tensions escalate simultaneously on both fronts, the internal and the international one, is anyone’s guess. By the way, remember Colleen Bell’s Senate confirmation hearing back in February? Enough said. How fortunate that this situation is being handled by André Goodfriend, who is clearly on top of his game.

  10. Another stinking troll…”last flight”

    Please note the obfuscation these trolls inject. As I read, I was fairly certain that the whistleblower
    was implicating his own government and NAV. Now “last flight” turns all the facts on its head and tries to refashion Horvath’s statements to accuse foreign (American) firms. (KGB lesson #49).
    These bugs/trolls are everywhere hereabouts.
    But note that if I hadn’t known about Horvath and what went before, this trolls droppings could do their intended harm…

  11. Addendum:

    We are constantly to be on our guard against the recurring efforts at misinformation and disinformation. We must be ever vigilant because these ‘termites’ wish to bore into our good
    intent and sow discord.

  12. To introduce the phrase “stinking troll” rather lowers the tone.

    Perhaps *lastflight* will be able to post links to information that supports his interpretation of events. He has been asked to do so. Should he not — then we can shrug and move along.

  13. @Wondercat

    Quite right, sir, it does….
    So you can imagine my consternation at having been reduced to such indignities being mired in the horse dung that suffocates me, and all decent folks now living in Hungary.

  14. @Wondercat

    The other problem is that we give too much credit to such as ‘last fight’. It is part of the bag of trickery that faux governments like that of Pyutin and Orban, to query every accusation and counter-attack.

    Why should we elevate these ‘last fight’ types to ‘noble opponents’ deserving of a hearing when they try to sink us with their many shaded lies and falsehoods?

  15. As usual Nepszabadsag is the place where Fidesz leaks – seemingly credible – bullshit. (Remember that under the szocis the US also used Nepszabi to get attention).

    Oh, Orban was taken by surprize and he is angry and he, Orban thinks this is a very important case (the good cop) vs. Lazar (the bad cop), see, there are even people in the government who are thankful, even, at last finally somebody does something, in the long term this cleansing of the public life can actually be good for the government…Right.

    Poor Nepszabi, it’s really nothing more than another fidesznik media channel, just like is (operated by foreign investors of course who were tamed). Almost all media now serve Orban in one capacity or another.

  16. How many of the “strategic partner” companies might have given kickback to the Fidesz or people close to Fidesz between July 2012 and March 2014?

    On the list we can find Coca Cola, Daimler, Suzuki, Audi, GE, HP, IBM, Jabil, Teva, Sanofi, Siemens, Ericsson ….

    The agreements speak about supporting research and development in general terms. In return for what? Special treatment. It is rumored that this is how the NAV people demanded the money from the latest American companies.

  17. Deutsche Telekom: 02-21-2014 [remember the firing of the journalists from on June 3, 2014?]

    There a few cuckoo’s eggs:

    Lutheran Church: 10-31-2013
    Serb Orthodox Church of Buda
    “Sports leaders”
    Trucking companies

  18. The US, by working quietly and diplomatically, offered the Hungarian government cover to address a corruption problem and lay blame on isolated individuals. If Orban and company had been wise here, they could have taken this opportunity to make a show of fighting corruption, prosecuted a small group of people and claimed a significant victory and restored some of their international standing. The decision however to leak false claims to the press suggesting tax evasion by US entities forced the US embassy to respond in public as far as US policy and law allows — meaning no names of individuals — means that the government now owns this corruption and their willingness to pursue such a leak strategy can only encourage the impression that the corrupt practices are both wider and sanctioned by the government.

    Corruption, tax evasion in particular, is likely to emerge as the Achilles heel of this government, if simply and at the very least because rampant fiscal corruption necessarily means that the government will be unable to afford to do all it promises the public. But the risk of this rising to unavoidable criminal prosecutions, even when officially sanctioned or tolerated, has also got to be very high because a corrupt system inevitably leads to individuals attempting to steal much more than the system can bear, with two many hands in the cookie box. Given the finite size of the Hungarian cookie box and the growing demands on its contents from within the Fidesz family, it is inevitable that conflicts within that family over the distribution of this diverted public wealth will come

    It may be useful to remember here that it was tax evasion that finally got Al Capone put in prison, not his bootlegging or racketeering.

  19. Which large foreign companies in Hungary did no submit, i.e. not on the list?

    Nokia [they left Hungary instead], Vodafone, RTL, Pepsi Cola, Michelin, Google …

  20. “the impression that the corrupt practices are both wider and sanctioned by the government.”

    Impression? Fact.

    Dude, the entire public procurement system is operated via a parallel system in which even the smallest village procurement is distributed on a political basis after paying the prescribed kick-back amount. This system is probably the single most well-run and efficient state (quasi-state) organization in Hungary.

    Anyway, great show, but nothing’s gonna change.

  21. I suspect Orban is driven by a pathological death drive. Really he is seeking to be annihilated but only on the terms he sets. In practice he wants to be defeated by a “worthy” enemy, in other words by someone whom he can respect for his/its power, someone he cannot look down on with contempt (ie, Merkel and other EU Westerners are by default excluded). He is out looking for that person. Unfortunately Putin is such a person. It looked like Gyurcsany could occupy this position but it turned out he wasn’t tough enough. Gyurcsany lacks the killer instinct, he’s too liberal and forgiving for Orban’s taste. I think Orban is also extremely lonely, he is engaging the big Other with his constant struggles because he is desperate to communicate with anybody. This is supported by my experiences. Twice I happened to have a lunch when Orban was eating at the next table and he was talking like a motormouth to his single partner who almost didn’t say a word during the lunch/dinner. I think he is like the homeless person who provokes the fight even if that means he gets beaten up, but at least he can enter a communication of which he feels he is deprived in every day life. Only, Orban is looking for the final “victor” whom he will allow to symbolically annihilate him. What I can surely tell is that that victor will not emerge from the current left wing.

  22. Actually, it wasn’t the staff of the American Embassy but members of the Hungarian government who decided to release this story. Other than informing the Hungarian government, the Embassy was keeping quiet on this.
    And so it should come as no surprise to anyone that the Hungarian government is already putting the usual spin on this. I wouldn’t be surprised if the Hungarian government declared the American Chargé “persona non grata” at some point. The Hungarian government generated this conflict, and is pushing it in its press.

  23. It has been stinking to high heaven.
    …valami bűzlik Dániában…. or more in Budapest.

    Under Milosevich and Janukovich, the conflict errupted, and civil war followed.

    Is Hungary next?

  24. Many people are misinterpreting and debating what Andras Horvath said or did not say. But it is much easier to just take a look of what he actually said, we can attempt to write down what he said most recently :

    András Horváth the whistleblower gave an interview to ATV on 2014. 10. 20. where he was asked about the American companies involved in tax fraud. This is what he said when he first started speaking in the interview:

    “Annyit tudok mondani, hogy ezek a társaságok bent voltak abban a nagy hálózatban, amelyek gabonát és olajos magvakat szereztek be fiktív adócsaló hálózatokból. Ezzel most nem állítom azt, hogy akik a láncolat tetején vannak feltétlen adócsalók ez egy bizonyítási eljáráshak a végterméke lehet. De az tény hogy ilyen számlázási hálózatokban ilyen számlázási láncolatokban vettek részt. És az az ellenőrzési project amiben én részt vettem, az pont arra irányult, hogy felderítse ennek a hátterét, a szervezőit, a haszonhúzóit…”

    “I can say that these companies were part of the big network. This network bought food products like grain from tax fraudsters and fake companies. I don’t want to say that the American companies are necessarily tax fraudsters themselves, this statement could be the end product of an investigation and collection of proof against them. What I can say as fact that they were involved and participated in invoice chains, (tax fraud networks). And the investigation project in which I was involved in (when working at the tax office), wanted to investigate exactly this chain, revealing the organizers, the companies benefiting financially from the fraud and the background of the whole case”

    If anyone doubts that the above is accurate, just watch the interview with András Horváth on ATV on October 20. and go to the place where he first starts speaking.

  25. GW beat me to it with is remark re Al Capone – I was immediately thinking about him …

    A bit OT (or rather):

    My wife and all her female friends use only Venusz sunflower oil – it is the only one with constant high quality, and right now Tesco has it at an attractive price, 389 HUF/l.

  26. There is a very interesting interview in HVG with Horváth András which Éva might consider summarising at some point:

    Interestingly, he does find it credible that Orbán had little or no knowledge of what is going on in the tax authority which he suggests has become an out of control organisation, controlled by Simicska and particularly Nyerges. Indeed, Vida has long been associated with Simicska. Given Orbán’s autocratic practises, it might seem improbable that he wouldn’t know but it is worth remembering that he has little control of certain ministries that Simicska was basically given. So not convinced that Népszabi has been fed wrong information in this instance.

  27. @HiBoM: Then probably Orban Viktor is the only person in Hungary who didn’t know about it, especially after last December when the police took Horvath’s green dossier.

  28. The 2015 budget for state television+radio [which are just part of the government propaganda machinery]:

    121,514.1 billion forints

    Click to access 01577.pdf

    This amount is not much less than the total amount spent on higher education.

  29. @HiBOM:

    Everybody who reads newspapers has been familiar with the VAT matter since at least Horvath came out with his story a year ago, but even before that it was public matter that VAT fraud was rampant. However allowing such fraud was also a kind of political subsidy. Staples like oil, sugar, flour could be sold cheaply to the masses all the while party loyalists amassed fortunes.

  30. @tappanch

    The amount to be spent on media by taxpayers is insane.

    I think Orban (perhaps via Andrew G. Vajna and Arpad Habony, though Mr. Vajna is pretty fond of off-shore vehicles so we may never know exactly, perhaps paid for by the state) is planning to acquire – at least – TV2, which I assume would soon default on its agreement with the original German/American sellers.

    Rumor has it that Orban wants to purchase RTL Klub too, by the way.

    In addition the national media conglomerate is planning to launch a boulvard tv channel from scratch to compete with RTL Klub head on.

    And untold amounts will be stolen too, naturally.

    Fidesz is upping the ante in the media.

    It worked for Berlusconi, it works for Putin and it will work for Orban.

    Nobody is about to retreat here, certainly not Orban.

  31. @HiBoM Horváth all along has had trust in Orbán. In fact, before he went public he tried to approach Fidesz politicians (I think one of them was Rogán) to tell about the corruption at NAV, He was certain that the “good guys up there” were innocent. Of course, he is naive. After all, the kickback was supposed to be paid to a foundation with Fidesz ties.

  32. In the meantime, the deputy Speaker of the Hungarian Parliament in Tehran listened to the anti-American diatribes of his Iranian counterpart.

    “Multiple choice test:
    How can the government destroy the US-Hungarian relationship further?

    1. Sign a treaty with the leader of the Los Zetas drug cartel in return for a few casino shares to Andy Vajna.

    2. Donate a few military boats to the Somali pirates.

    3. Invite Kim Jong Un to Hungary for a basketball game.

    4. Submit a petition to the UN to recognize the “Islamic State” movement as a state.

    5. Give anti-aircraft weapons to the separatists in Donetsk.

    6. Erect a Memorial to the victims of US slavery on Freedom square in Budapest next to tehe US embassy.”

  33. There’s no backing down, the Americans can just suck it up.

    Orban rules and Hungary is his domain. This visa thing is a non-issue and corruption is a myth.

  34. I see only one way Orbán could come out of this scandal unchastened: if he cracks down hard on the perpetrators, demonstrating not only his good faith but moral stance too.
    if he fails to do that, Hungary even formally will sink to the level of any third-rate banana-republic or worse.
    This kind of “problem” one can not talk away to resolve, its gone too far for that, now is time for some sacrificial lambs in order to save (some) face, I think.

    If they really wanted to know the identity of those citizens, why didn’t they just ask them to come forward? As much I know, they are all par of the administration, then how hard could be to identify them?

    At any event, that must act rather swiftly if they want to salvage the situation, I have a feeling that it was only the warm up.

  35. @Marcel Dé
    Hearing of this probably Ramil Səfərov will immediately will start a petition for the behalf of Tibor Navracsics – after all, he was the Minister of Justice who worked pretty hard for his freedom and status as National Hero of Azerbaijan..!

    Long Live the Hungarian Justice!

  36. Csuhaj Ildiko and Zoltan Batka’s Népszabadság article today titled “Orban is angered by the American scandal” [Feldühítette Orbánt az amerikai botrány] was in my opinion pathetic. The article starts with this ridiculous opening sentence: “Viktor Orban irritated specifically over the American visa scandal because they did not know anything about the case before the outbreak.” I would suggest that is nearly impossible and the reporters know that.

    PM Orban has much more than likely know that Bunge Ltd. has publicly claimed it has been the subject of VAT fraud in Hungary since at least June of 2012. If you don’t believe me read this Reuters report:

    This article states: “At the heart of the scam lies forged official paperwork which allows an underground network of small firms, many of them operated by criminal gangs, to flourish. Bunge says it has little direct evidence of who is behind the fraud, which is in danger of putting out of business a swathe of legitimate companies in Hungary’s food sector. Auditors say a common approach is to import goods from other EU members without paying import VAT, and sell the products on to retailers via a series of buffer companies, adding VAT for each transaction and pocketing the difference.”

    What is even worse than Csuhaj Ildiko and Zoltan Batka even providing what could be called “plausible denial” for PM Orban is the fact that their article references information that appears to have come from this original Reuters report of 2012. I do understand that Hungarian reporters have some obligation to show deference to the elected prime minister of Hungary, but it also might merit reporting that this VAT fraud issue was made public over two years ago by Bunge and if Orban never got a report of this then he and his staff are profoundly incompetent.

  37. “I see only one way Orbán could come out of this scandal unchastened: if he cracks down hard on the perpetrators, demonstrating not only his good faith but moral stance too.”

    I hear fideszniks madly loughing at this sentence. Please, this is politics and in this game only the domestic voters count, not DC-dwelling burocrats. “If you want morals be a priest”.

    Orban couldn’t care less about this matter. He feels a bit energized, but other than that, this is a non-issue. He is not facing any elections for at least three years, by that time this will have been long forgotten by Hungarian voters, memories overridden by more important memories. The current State employees will have been long ago fired, the new people will need years to get familiar with Orban. But fundamentally the Americans have no real leverage. It’s that simple.

    Orban owns the media and controls the minds, it does work. Besides, people don’t care about this issue, really. They have other things on their minds than caring about corrupt people. People assume and know exactly that politicians are corrupt, what’s the surprize? Orban owns the media, but secondly and equally importantly people voted for Fidesz knowing full well it was deeply corrupt.

    Unfortunately the alternative was deemed even worse, the lefties are corrupt (in any case any politician is assumed to be corrupt by default) and stupid. Thanks, but no thanks.

    Orban just like Iran and other similar personalities are – successfully – buying time. That’s their main strategy and it works. You are against a giant burocracy like the State Department and its reliably slow. Proposals need to be made, meetings need to be held and what not. Orban and his peers know that in the long term success is based on many short term victories. Szijjarto was in the US and he talked so nothing material will happen for another year and a half and so on ad infinitum.

    But every day Orban survives is a huge gain for him and his oligarchs and his power structure. He is deliberately locking himself into a Russian-backed scenario, a Russsia-influenced (controlled) phase of history.

    The Americans can do whatever they want (they cannot really do anything), Orban will not, I repeat will not budge (despite what he may promise). This is not Bulgaria.

    He has no downside, hard this is to understand.

    He is provoking the world so as to elicit a really tough response. He is daring the world. To his lick only the Russians dare to be tough in Europe, even the Americans are weaklings. Orban knows this and unless he is forcibly deposed he will be still ruling this country when these burocrats themselves will have long forgotten about these days. Orban knows what the poor szocis never understood: the world has no means (and much less willingness) to act against dictators short of bombing them down.

  38. Verges: “He is provoking the world so as to elicit a really tough response. He is daring the world. To his lick only the Russians dare to be tough in Europe, even the Americans are weaklings.”

    I am looking forward to learn how long Hungarians will actually be “tough” the moment that the tough response will be there. Somehow I have the feeling that the regime, and the country, will crumble. Hopefully at least some people will have a plan what Hungarians, as a nation, will do then. So far we can only hope that the regime will not crumble immediately as there is nothing to replace it – except for small groups of politicians representing small groups of Hungarians, some “mafia” from the mafia-state, some Russians, and a rather large group of people disinterested in the politics and the future of the country.

  39. @Verges:

    You paint a pretty bleak picture, but there are several aspects missing:

    The USA and the EU will surely not continue financing Orbán at the current level for ever (or do you think so?) and many companies might be pressured to leave.
    Russia will not send lots of money – on the contrary.

    Will Hungary then leave the EU and NATO some day?

    What will happen to Hungarians then?

    Many of them already are fighting hard to exist on the money they earn …

Comments are closed.