No Internet tax but attacks on the United States continue

On Friday Viktor Orbán was still determined that after a national consultation the internet tax would be introduced sometime next year. Today he retreated from this position. He suggested that the internet providers’ unanimous opposition to the tax was the reason for removing the item from the government’s 2015 budget proposal. I very much doubt that the joint letter of the providers addressed to Mihály Varga had anything to do with the decision. Rather, Orbán recognized that his attempt to simply postpone the decision would not appease the multitudes of internet users. There was a very good possibility that the demonstrations would be repeated from time to time, further damaging the reputation of the government and Viktor Orbán personally. Despite this retreat, however, I have the feeling that in one way or the other curtailing internet access will be back on Viktor Orbán’s agenda. He is only too aware that almost all of the large demonstrations against his government were organized on Facebook. Social media is a danger to autocrats.

Now that this issue is behind us, I would like to return to the Orbán government’s relations with two of its adversaries at the moment: the United States and Norway. You may recall that János Lázár invited the “appropriate Norwegian minister” to meet with him either in Budapest or in Brussels. I predicted that Vidar Helgesen, the minister in question, would not oblige. And indeed, Tove Skarstein, Norwegian ambassador in Budapest, held a press conference today where she announced that Norway does not recognize the right of the Hungarian government to investigate the Ökotárs Foundation. Norway is in the middle of conducting its own probe, which will be ready by the end of November. Until then, the monies of the Norway Civic Fund will continue to be distributed through Ökotárs. It is unlikely that the Hungarian government will be the winner of this dispute. So far the Orbán government has been left holding the short end of the stick: the Norwegian Funds suspended payment of some 40 billion forints that the Hungarian government was supposed to distribute for various projects.

After the meeting of the Fidesz parliamentary caucus a journalist asked Viktor Orbán about the U.S. travel ban on the six Hungarian officials and businessmen. As we know, the reason for the ban is not just simple corruption but also American fear that the reported cases would not be investigated by the police and the prosecutor’s office. In plain English, there is a well-founded suspicion that the government is complicit in the crime itself.

Viktor Orbán does not like to talk about this sensitive topic, and apparently the subject did not come up at today’s meeting of the parliamentarians. Of course it didn’t because it was not on the agenda. When asked whether he knows the names of the six people in question, Orbán’s answer was: “if the Americans tell me, then I will be glad to tell.” The game Orbán is playing is rather simple-minded. He would gladly investigate and if necessary bring the culprits to justice, but the Americans with their stupid laws prevent him from doing so. One has to be very naive to think that Orbán does not know the names or that the prosecutor’s office could not investigate their cases.

It seems to me that there is still a huge confusion about how to deal with the frayed American-Hungarian relations. On the one hand, Viktor Orbán at least twice tried to discourage the far-right leaders of the Peace Marches from organizing an anti-American rally. On the other hand, members of his government are accusing Bunge, the American agribusiness corporation, of corruption. Bunge is most likely the company that reported the corrupt tax authority officials to the American embassy. A few days ago Magyar Nemzet accused Bunge of corruption in Argentina, and today András Tállai, undersecretary in the Ministry of National Economy, went further. According to him, “it is a very interesting situation that in the final analysis it is possible, nay it is certain, that the informer itself is involved with the fraud.” That is, Bunge is being accused of tax fraud. And that’s not all. Magyar Hírlap learned that Carol Browner, Barack Obama’s adviser on environmental matters, recently became a member of Bunge’s board of directors. And, the paper added, Browner was also a member of the Clinton administration. The headline reads: “The threads may lead all the way to Barack Obama.” Wow!  Magyar Hírlap is a big game hunter.

Bunge says it is not under VAT fraud investigation Source:

Bunge says it is not under VAT fraud investigation

János Lázár also made it clear how he feels about the United States’ role in shining a light on corruption in the Hungarian tax authority. When an MSZP member of parliament inquired about Ildikó Vida, the head of the office, Lázár retorted: “How do you know that she is involved? For an answer it would be enough to bring the flag of the United States and put it between the European and the Hungarian flags because then we would understand that behind the MSZP caucus there is the Budapest chargé of the United States.” He also suggested to Bernadett Szél (LMP) that she go to the United States embassy and ask them why they intimate that part of Hungarian officialdom is corrupt.

Meanwhile the right and far-right media are full of attacks on the stupid, ignorant and boorish Americans and their representative, M. André Goodfriend, as opposed to the Russians of Tolstoy, Chekhov, and Dostoevsky. Since we all know that a single word from Viktor Orbán would be enough to silence these hacks, we can safely assume that the rants from the staff of Magyar Nemzet and Magyar Hírlap are not against the wishes of the Orbán government.


  1. According to the Budapest Business Journal Bunge issued a statement on Friday October 31 that “it has met in full its obligations under Hungarian tax requirements and is not the subject of any VAT fraud.” That is pretty definitive isn’t it? The NAV and Fidesz needs to put up or shut up. See

    As to Eva’s reference to the press conference by the Norwegian ambassador and the fact that they will be releasing their own analysis related to the KEHI report and issues of fraud, I find that to be reassuring. I also find it interesting that the article Eva linked indicates that John Lazar wants to settle this issue with the Norwegians apparently instead of going forward with a prosecution for embezzlement. I also found it sad that the Norwegian ambassador wants to continue with bilateral relationship building with the Hungarian government after numerous Hungarian officials accused Norwegian embassy staff of falsifying documentation and interfering with the investigation. Clearly the Norwegians know how to turn their cheek after being slapped by Fidesz. While some might find this an admirable Scandinavian trait, I find it absurd.

  2. Update on the Hungarian “green card for 5 year government bond” program.

    The total profit of the unnecessary intermediary offshore companies is 75,000 euros/permit.

    The number of permits issued through October 2014 is 1430.

    This means a total profit of 107 million euros (33.1 billion forints) to the offshore companies.
    These companies were handpicked by Fidesz (A. Rogan is in charge of the committee)

    My statement: the Hungarian state loses [extra] money on the scheme!


    If the state issues a regular 5-year bond, the interest it pays on the free market is currently 3.37%. This means that the state has to pay 45,000 euros in interest on a 250,000 euro bond in 5 years.

    This is what happens in the program, according to the available information.
    The foreign applicant gives 295,000 euros to the offshore company, which gives
    220,000 euros to Hungary in turn for the nominally 250,000 euro bond.

    The yearly interest Hungary pays to the offshore company on the bond is 3.37%-1.5% = 1.87%. This way Hungary will have paid 24,000 euros in interest by the end of the 5 years.

    Final cost of the European residence permit to the foreign applicant:
    295,000 – 274,000 = 21,000 euros.

    Cost to the Hungarian state:
    274,000 – 220,000 = 54,000 euros,
    a 9,000 euro extra expense compared with the issuance of a regular 5-year bond.
    (54,000 = 30,000 discount + 24,000 interest)

    Total extra expense of the Hungarian state so far =
    1430*9,000 euros = 12.87 million euros = 4 billion forints

    Profit to the offshore company:
    75,000 = 45,000 fees + 30,000 discount

    Data sources for the calculation:

  3. Refinement:

    According to the first article, Hungary has to pay a minimum of 2% interest on this special bond.

    Total interest in the 5 years: 26,000 euros/permit

    Total cost to Hungary = 56,000 euros/permit, i.e. the state pays 11,000 euros more that it would have paid by issuing a regular 5-year bond.

    Cost to the foreign investor: 295,000 – 276,000 = 19,000 for the European residence permit.

  4. Profit of the offshore company on each permit:

    56,000 from Hungary + 19,000 from the investor = 45,000 “fees” + 30,000 “discount”

  5. The norwegians do what they do out of solidarity with the hungarian people, at least those who are not part of the orbanian regim. To be discontent with scandinavians is not an easy task. They are proud of their democracy, do not tolerate corrupcy and have a long tradition of helping other nations to reach a better life. Scandinavians are not stupid, they see and understand what is going on in Hungary. They are going to be helpful and loyal with the NGO-s as far as it is ever possible. It is embarrassing to se all the hanchmen of the dear leader and listen to their stupid argumentation on Klubradio. Especially boring is when they try to explain to scandinavians what democracy is and that in Hungary there is democracy. I use to feel my bloodpressure rise. While I am not living in Norway but in Sweden, I know we all scandinavians share a lot maybe most values. We are not whitout stain but OV should not teach us about democracy.

    I would like to thank Eva for an exelent site about Hungary. It is a great help to me to understand what is going on there. Thank you again and keep up the good work.

    And I thank you all for your parttaking and sharing your knowledge and skills.

    From the beautiful Scandinavia – Stockholm.

  6. When did the Hungarian government know? After she the read the letter from the US informing her she was banned. Orban caught in a major lie.

    From Tappanch’s link:

    – Amikor a levelet elolvasta, az abban foglaltakat jelezte a kormánynak?
    – Igen, egy illetékesnek jeleztem.

    – Kinek?
    – Mindegy a név, a lényeg, hogy a kormány tudott az ügyről.

    – Ha mindegy a név, akkor el is mondhatná.
    – Nem szeretném ebbe az irányba elvinni az ügyet, mondom, a kormány tudott arról, hogy mi történt.


    -When you read the letter did you let the government know?
    -Yes, I told a government official.

    -It does not matter who, what matters, is the government knew.

    -If the name doesn’t matter, then you can say who.
    -I don’t want to go in that direction, I say the government knew about what happened.

  7. Q: “Here is [whistle-blower] Horvath’s green file. You spent one day examining [and refuting the validity of the charges]. Shouldn’t have you spent more time on it?”

    Vida: “We spent exactly as much time as [the case] needed”

    Vida: “The amount of VAT-gap [measurable VAT fraud] was about 1000 billion in 2011 & 2012, while it was [only] 900 billion forints in 2013.”

    She says that the EU found the Romanian and Slovakian VAT-gap larger as a % of the total VAT collected. This is correct, but it is NOT the full truth. Romania and Slovakia are the worst offenders in the EU, but most countries are better than Hungary.

    I already quoted the relevant EU document on October 30:

    “tappanch, October 30, 2014 at 9:23 am

    Hungary lost an estimated 2.971 billion euros in 2012 due to VAT fraud.
    This is 32.7% of the actual tax revenue from VAT.

    The same ratio is 9.3% in Slovenia, 13.2% in Austria, 64.4% in Slovakia, 78.9% in Romania.

    See pp. 61 & 62

  8. Ms Vida is also mistaken. The latest EU statistical data contains only the 2012 VAT-gap.

    As you can see on page 62, the Hungarian gap, the estimated amount of fraud, had been growing each year.

    2009: 2.42 billion euros (30.9% of the collected VAT)
    2010: 2.66 (31.5%)
    2011: 2.74 (32.2%)
    2012: 2.97 (32.7%)

    So the tendency is that of worsening, as opposed to improving suggested by Ms Vida in the interview.

  9. “also found it sad that the Norwegian ambassador wants to continue with bilateral relationship building with the Hungarian government after numerous Hungarian officials accused Norwegian embassy staff of falsifying documentation and interfering with the investigation.”


    It is diplomatic-speak; a bit like when a diplomat says “there has been a full and frank exchange of views” meaning really that there was a blazing row.

    Don’t worry, the Norwegians know exactly what kind of scumbag, lying regime they are dealing with but they do also have to play a PR game .

    Apparently the thug Lazar is literally frothing at the mouth at the lack of “response” from the people he really expected to surrender meekly. But he is limited, at this stage, by the complete lack of fear on the part of the NGOers and the Norwegians and Americans who are backing them 100%

    I really do hope Orban’s neo-Nazi colleagues get the sheep out for another Bekemenet rally, a few stars and stripes being burnt by the pro-regime loyalists will really put the cat amongst the pigeons.

  10. Re the US/Hungarian relations:

    The Democrats suffered big losses in the midterm elections.What do “our Americans” here think – will this also have some influence on the acceptance of Orbán’s policies re Russia etc?

    Istvan already commented in that direction.

  11. @wolfi

    The Republicans are more hawkish with respect to Russia. On the other hand, foreign policy is the prerogative of the presidents.

  12. There’s one important message of the US mid term elections. It absolutely doesn’t matter how crazy you are, never mind your policies will make voters’ live worse, if you are relentless and your opponents are impotent (ie. the dems compared to the republicans, who never yield an inch and will never miss an opportunity to gerrymander or put their trusted folks into positions which will later help them) you will win big time. Especially in places where there have been only two options for centuries and thus the pendulum must swing back to the crazy party.

    The Hungarian left wing just forgot about the visa issue and fails to hit the iron while it’s hot. Among others. It has no strategy and no discipline. And it treats crazy fideszniks with “respect”, “let’s talk and have a compromise, let’s debate the issue”, instead of calling crazy corrupt idiots what they are. The weak and stupid-appearing will lose in politics.

  13. Goodfriend:

    “If American companies had received unjustifiable advantages that can be construed as corruption, US authorities and lawyers could examine the case”

    (strategic partnership agreements with the Hungarian government in return for payments to Fidesz foundations)

    Q: “Is there a secret executive order to topple the Orban government?”
    Goodfriend: “This is in the realm of fantasy.”

  14. More smelly news:

    “The firms of minister Lazar’s maternal uncle have received 300 million forints of state support”

    “The firm of [Orban’s Felcsut friend] Meszaros firm is cutting down a small forest on Gellert Hill to build”

  15. The gross debt of the central government was 24.736 trillion forints [= 80 billion euros] on October 31.

  16. Lazar invites the appropriate norwegian minister to discuss the issue. The norwegian authorities attempted to contact him over more than a half year. He did not even answer, and now when he blows the whistle, those horrible wikings should com at once. Very tacky, boorish and unsportsmanlike.

    The hungarian opposition demand OV to bring the culprits to court. They do not understand that OV is the boss, godfather of the hole corruption. His dilemma now is what to do. Shall he offer som thugs or keep silence. The US bore down upon the hart of the hole rotten system, the maffia state. It will be interesting to see how he manages to solve the equation. I would like to have them all in supermax within the framework of the erpataki model.

  17. The government has been shown to have been lying. So it will be interesting to see how the opposition handles it.

    There is some grounds for suspecting not much will happen. As Tappanch has shown, these VAT frauds are not something that began in 2010, even if they are now even larger in extent. They were going on prodigiously during Gyurcsány’s government, and probably Medgyessy’s (and during the first Orbán administration). So I suspect that MSZP and its friends were benefiting in the same way and through the same methods as Fidesz is now. Which rather limits what MSZP can actually do or say.

  18. Just 2-3 short comments.
    I’ve kept wondering all these weeks whether by generating the no entry scandal OVi just wanted to avoid traveling to the US, officially or unofficially. Such expectations if any were false from the onset. The FTFM was sent into the lion’s cave instead. Just may be that is so simple?
    RE. your post yesterday: “Petike” (that’s how some bloggers call him) may look incompetent abroad and try not to be an FM at all but for one he is unbeatable. As a person who was “carrying the suitcase” of the PM for years he has knowledge of who is the Right and the Honorable in Hunnia’s business word and who may have fallen out from grace. The previous troika was just not suitable for this role.
    As long as there is a discord (of interests) between the US and the EU/ Angela the Savior how to act on this isolation the PM can/ will keep his playground open. No doubt the stakes are getting higher. He IS the real FM so no one needs a second one for the time being.

  19. Any theories on why Ildikó Vida decided to speak out now?

    I have one: I think this interview was the the government’s going on the offensive against the US on this issue.

    Vida mentions that now NAV will re-examine “with a microscope” every company concerned. [“felállítok a NAV-on belül egy vizsgálati csoportot, amelyik képletesen szólva mikroszkóppal fogja újra átvizsgálni a Magyarországon működő összes számba jöhető céghez kötődő eddigi ügyeket és szálakat”] To me, that sounds like a threat, likely retribution, but perhaps a deterrent from the US putting anyone else on their blacklist.

    And then she appears to threaten legal action to clear her name. [“a NAV és a magam nevében megindítom a ránk szórt rágalmak miatt a szükséges polgári és büntetőeljárásokat”] What is she going to do, sue the US government? André Goodfriend personally?

    Anyone else share my interpretation of this?

  20. More interesting is why this embarrassing interview (for the government) appeared in the usually pro-government MNO. I’m speculating but remember that this belongs to SImicska’s sphere of interest and it has been criticising aspect of the government ever since it has become clear that Orbán is trying to reduce SImicska’s power. So it may actually be a symptom of this other battle going on behind the scenes.

  21. @HiBoM

    One can suspect that the % of VAT fraudsters connected to the ruling party of the day is higher now than it was before 2010, but this percentage is still probably less than 100%.

    In other words, there were politically NOT connected criminals before 2010, and this species might not be extinct even now, only endangered. 🙂

  22. @buddy

    I would be surprised if Orban would not go on the offensive. If anything he sees his politics fundamentally reaffirmed by the Republican victory. That’s fantastic evidence which supports his instinct that compromise and surrender are a almost always a sure way to lose in the long term. Appearing tough, ruthless and behaving as “a leader” at least keeps his stature among his fan base. This interview might be interpreted as a bit of a poke by Simicska at Orban, but they all know that they have to rely on each other. And Magyar Nemzet was rather dutiful in its support of Orban in the last few weeks. Plus I don’t expect any savvy reaction from the opposition, they are brain dead and have been for years.

  23. @dehlman

    I root for Orban’s continuing push for the Russian line, because it would mean his demise and a better future for Hungary, but I do not expect it.

    The Republican victory means one thing:
    he has to back down on Paks-2 and his support for Russia if he wants to survive.

    If he does not survive now, the statute of limitation does not help him, and he and his friends
    might have to go to jail, Polt notwithstanding.

  24. @tappanch

    Except if Orban (becoming a president) or Áder will grant pardon to themselves, but given the 2/3s they can also grant a “general” amnesty (ie. carefully worded to cover only the important politicians). I think they will be afraid in the end and will resort to these, despite Polt, the courts and the constitutional court which are all controlled by them.

    Never underestimate “smart” lawyers.

  25. The state has been captured and the only way that Orbán would ever be prosecuted is if there was an armed revolution that imposed a new order on the country. That really is not likely to happen, is it? I could imagine Orbán being pushed out by an alliance of oligarchs but that is not exactly regime change…

  26. It’s pretty disturbing that Gattyan is by a considerable margin the most wealthy resident of Hungary. Tappanch really didn’t comment on the fact that Gattyán’s weath is based on pornography, he just noted it. Really it is hard to think of many other nations that can claim their most dynamic sector in terms of individual wealth production is pornography. Bulgaria’s porn and sex trade sector is totally linked to its mafia and probably its true wealthiest individual is a gangster. So is the sector in Ukraine and Russia. But Gattyán is unique in that he is the legitimate face in Hungary for a very dark reality that should be a deep national embarrassment for a nation that proudly now proclaims in its constitution to have a one thousand year Christian tradition.

    Anyone who has been to Budapest in the last few years will also be aware of the significant increase in prostitution both legal and unregulated, Hungary is now an international center for sex tourism. Internal trafficking of women for sexual exploitation also occurs. Experts in trafficking have noted a significant increase in trafficking within Hungary, mostly women from eastern Hungary trafficked to Budapest and areas along the Austrian border. Romani women and girls who grow up in Hungarian orphanages are highly vulnerable to internal sex trafficking.

    Gattyán is a national tragedy and the tip of the iceberg of what is being done to many Hungarian women.

  27. @Wolfi – The Republicans are not only more hawkish on Russia, they are far less tolerant of nationalization (“socialism”) and far more supportive of economic liberalization than the Democrats. There is not much in Orban’s economic or foreign policy that they would like, and leading Republican commentators today are as critical of Orban as Democrats – perhaps even more critical.
    The complaint from the Republicans about the Obama administration’s FP is that Obama has been far too soft towards Russia. So, if anything, the Republicans are going to be more critical of Orban’s Hungary than the Democrats have been, and if the Republicans comment on Obama’s policies toward Hungary they will surely say that Obama has been far too gentle (that’s their line about Russia, too). Other than (possibly) some extreme r-wing and l-wing nutcases, Orban has no allies in American politics.

  28. @Webber:

    Thanks! I’m not a big fan of the “repugs” – but your comment for me was today’s good news …

  29. Ms. Ildiko Csuhaj of Népszabadsag was clearly trying to defend Orban by spreading bullsh*** (ie. that Orban didn’t know about the list of prohibited people).

    Index: “Mindez pedig arra utal, hogy nem életszerű, amit a Népszabadság a botrány kirobbanásakor írt, miszerint Orbán Viktort meglepte a kitiltás híre.”

  30. @delhman – Goodfriend is a career diplomat, not a political appointee. If Orban and his people think they’re going to win points among über-patriotic Republicans by attacking Goodfriend, they’ve got absolutely no comprehension of American politics. I suppose, however, that the attacks will continue because Orban doesn’t care one bit about American politics (why should he?). My guess is he wants to win points among his Russian backers, his radical voting base, and those voters who lean toward Jobbik. He’s already burnt his bridges to both major parties in Washington. I don’t see him rebuilding them.

  31. @Istvan – the saddest thing is that the porn-king Gattyan became rich more honestly than many others on that list of wealthiest Hungarians.

  32. OV-s logic, maybe. Best defence is to attack. He won`t give up the possibility of chaneling out money through NAV.

    The oppisition is totally powerless and out of understanding of the the system. FIDESZ brushes off all their props. They are virtually nothing.

    The US said that the opposition should say: “Guys you`re corrupt and we know that.” Very elegant stylish suckerpunch. A good one.

    Goodfriend is doing fine. He is a good friend of the average people.

  33. Eva in relation to the Democrat/Republican divide on Russia. I agree there is a uniform hostility to Putin in our two major parties. But the Republican Party is far more likely to expand our military budget to take on Putin than are the Democrats. The reason for this has to do in good part on where the money will come from.

    Aside from the standard Republican diatribe against Democrats of being the political party of tax and spend, the truth is both political parties abhor tax increases even for defense spending. So the simple solution is transferring funding from education, social security benefits, and human services to defense spending. Republicans have been talking about cuts in these areas for a long time, up to now they haven’t talked much about transferring these saving to the military budget. The standard Republican line is millions and millions are being wasted in these areas so cuts need to be made.

    Most of the discussion from Republicans has been about lowering taxes, my guess is that will end and the discussion will shift to global defense priorities with tax relief getting less emphasis.

    My recommendation to investors, buy Lockheed Martin Corp, Halliburton, Raytheon Company, and Boeing. Assuming an increase in military spending these firms stocks will likely rise even higher than their current 5 year averages.

  34. Regarding the last paragraph:

    Bayer Zsolt, who had accused last week the U.S. chargé of “breaching his diplomatic status” (by attending the first anti-Internet tax protest) and making an “outright lie” (in claiming he had also attended a ‘Peace March’), has been ridiculed last Saturday when Mr. Goodfriend posted on twitter a picture of … himself at a ‘Peace March’.

    PS: cherry on the cake for those of you who are familiar with (my heartfelt sympathy to you), the pic was posted in a reply to a notorious bully of this site’s comment section, who had to apologize. As to Bayer Zsolt, well …

  35. @Istvan

    istvan, how do you view the election results in the Senate and the House? Was the victory of the Republicans positive in your opinion? And another question, why do you think the US allowed Ukraine to sign a gas treaty with Russia that begins with Ukraine paying Russia 1.5 billion dollars before they get a drop of gas. Will this result in US aid money arriving straight in the Russian treasury?

  36. Apt question from the tumblr universe:

    “I would like to as ask the ex-president of the republic, Mr. László Sólyom whether he thinks there is a moral crisis in Hungary now?”

    — referring to the conservative (anti-communist) president, between 2005-2010, who said in 2006 upon the Öszöd speech given by then prime minister László Gyurcsány that “there was a moral crisis in Hungary”.

    Despite the African style cleptocracy etc. Mr. Sólyom has been silent for years.

  37. I hope it’s clear that Orban is the president now. Áder is a figurehead (though he could be useful is pardons can be granted and he signs anyway everything), and so Orban became a de facto president.

    Janos Lazar is the prime minister, a kinda CEO to Orban’s chairman position.

  38. OT – does anyone at the American embassy read the comments? If so, could they explain why Habony Árpád is allowed into the United States with a criminal record? Presumably he did not declare it when filling out his entry forms at Washington Airport

  39. @gardonista:
    The word “soviet” originally means “council’ – so you may look at it from here again.

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