APEH

Another corrupt official: The minister of national development and his “businesses”

Today’s scandal involves the newly appointed minister of national development. In case you get confused with all the “national” stuff, this is the ministry that was led in the last couple of years by the mysterious Mrs. László Németh. The one nobody had heard of before and the one who had only a high school education.

In 2010 when the ministry was created it looked as if the minister initially appointed to head this new ministry was destined to play a major role in the affairs of the Orbán government. Viktor Orbán appointed his former professor and senior adviser Tamás Fellegi to the post. Fellegi, especially at the beginning, traveled madly back and forth between Beijing, Moscow, and Budapest. It was also this ministry that was supposed to handle the subsidies coming from the European Union. After a few months, however, Fellegi’s job of dealing with China and Russia was taken over by the prime minister himself and Péter Szijjártó, the young “genius” of Orbán’s inner circle. Fellegi resigned or was let go. Then came Mrs. Németh and with her a total lack of transparency about the activities of the department. She was presumably unable to handle such a high position in a “key ministry.” She was the only minister whose tenure Orbán decided to terminate this year.

The new minister is Miklós Seszták , a member of the Christian Democratic People’s Party (KDNP). The appointment raised some eyebrows for at least two reasons. One was Seszták’s lack of any background in economics, finance, or administration. He is a small-town lawyer. Actually the only one in his hometown, Kisvárda (pop. 16,000), 22 km from the Ukrainian-Hungarian border. And the second problem was Seszták’s less than sterling record as a lawyer; he has been linked to some very shady business ventures.

Viktor Orbán had to be aware of Seszták’s participation in suspected corruption cases because at least since January 2013 his name had been all over the newspapers. Miklós Seszták was involved with an EU financed venture which the European Commission’s European Anti-Fraud Office (OLAF) found fraudulent. This was not the first time that the EU questioned the allocation of grants, but the Hungarian government normally protested or at least tried to explain them away. This time there was no question and the Orbán government did not contest the allegations.

The story goes as follows. There were five companies that received 21.25 billion forints from the EU to develop broadband internet access. But there was a bit of a problem. All five companies were established only a couple of weeks before they applied for the grant and some of the owners overlapped. In addition, Seszták happened to be a member of the board of one of these companies, Enternet Invest Zrt.

Miklós Seszták / Photo MTI

Miklós Seszták / Photo MTI

Miklós Seszták has considerable experience in establishing companies; as it turned out, his services were used to set up over 800 bogus companies in the last decade. The story goes back to 2005 when Figyelő, a respectable paper dealing with business and finance, reported that these companies were all registered under two addresses in Kisvárda where Miklós Seszták had his law office. When the reporter visited the two family houses, they found a middle-aged woman, Erzsébet Kovács, who hailed from Ukraine. When asked, Kovács announced that she is handling an international business venture that concentrates on direct marketing. The business has partners in ninety different countries and for easier communication and flow of goods it was necessary to register these foreign nationals in Hungary just as the Hungarian companies are registered in those countries where they have business interests. When the reporter inquired from APEH, the tax office, he was told that everything was in perfect order with these companies. Nothing illegal was going on. It seems that APEH did not find it odd that all the owners of these companies were citizens of countries outside the European Union. Russians and Ukrainians.

By 2009 Index found that the largest “company cemetery” was in Kisvárda. Why are they called “company cemeteries”? Because not long after their establishment and registration they disappear. In one of the Kisvárda addresses four-fifths of the 550 companies were already liquidated while at the other address three-fourths of the 201 companies were gone.

According to Index‘s updated account, 700-800 companies were registered at three different addresses in Kisvárda. Index claims that the “company cemeteries” were still functioning between 2007 and 2009, by which time four-fifths of them were liquidated, leaving substantial debts behind. All three buildings belong to Miklós Seszták. In one of them, in addition to the phony businesses, one could find until recently the local Fidesz office.

Establishing phony companies must have been a lucrative business. At least Seszták did very well financially in the last decade or so. It was only in 1996 that he opened his law office in Kisvárda, and he couldn’t have amassed a fortune from an ordinary small-town practice. Yet today he is one of the richest members of parliament.

LMP, Együtt-PM, DK, and Jobbik are demanding Seszták’s resignation. MSZP has said nothing as yet. What will happen? I assume what normally happens when a Fidesz scandal hits the newsstands. Fidesz acts if nothing has happened. They are sure that eventually the noise will die down and everything will go on its merry way, including Seszták’s appointment. And they are right. In any other country such scandals would have brought down the government years ago. But not in Orbán’s Hungary. I don’t know what is needed for the Hungarian people to wake up and say: no more!