corruption

The corrupt Hungarian tax authority

Since the fate of the internet tax is still pending, let’s turn to the systemic corruption that has a debilitating effect on the entire Hungarian economy. The existence of corruption on all levels of the administration didn’t escape the attention of the demonstrators who were brought to the street by their concern over the government’s plans to restrict access to the internet through onerous taxation. They protested against the “mafia government” and chanted slogans about thieves who become rich off their own hard-earned money. They deplored the activities of the corrupt officials of NAV, the Hungarian equivalent of the American IRS. NAV spends untold millions if not billions trying to track down small fry while letting the big fish off the hook. Or worse, it is alleged, high officials of NAV receive kickbacks from corrupt businessmen for services rendered. And what is the most disturbing about this whole story is that the highest officeholders of the government party, Fidesz, have known about these fraudulent activities–and have benefited from them–for years.

How can I say with such confidence that members of the government and the party have been aware of these illegal activities for a long time? Almost a year ago András Horváth, an employee of NAV, spilled the beans. He collected evidence that proved that certain crooked businessmen were receiving preferential treatment by NAV. In the wake of Horváth’s revelations nothing happened. After a quick internal investigation, NAV declared that Horváth’s accusations were baseless. And, for good measure, they fired Horváth. Soon enough the police arrived at Horváth’s apartment and took away the evidence.

The fraud that high NAV officials “overlooked” involved all sorts of financial shenanigans that resulted in Hungarian businessmen not paying the admittedly very high 27% value added tax on certain agricultural products like sugar and cooking oil. With that move, and with the active assistance of the Hungarian tax office, these crooked Hungarian businessmen gained a considerable advantage over their main competitor, the American firm Bunge. These Hungarian businessmen were the ones András Horváth was talking about and who are now, after the American revelations, suddenly  in custody. Without the American announcement to ban certain individuals from entering the U.S. these people would still be writing out their fraudulent bills of sale. The thoroughly corrupt Orbán government had no intention of doing anything about the crooked businessmen or, as it turned out, the equally corrupt tax officials. The American ban is invoked only in countries where there is no hope for justice because the government itself is corrupt. Usually third-world countries.

With the American revelations Horváth’s accusations were corroborated. Horváth and Goodfriend obviously were talking about the same cast of characters. But the Americans added another crucial piece of information that Horváth couldn’t have known about: high NAV officials offered their services to the CEO of Bunge for 2 billion Hungarian forints, to be paid to a foundation with ties to Fidesz. In return, they offered a lowered VAT on foodstuffs, a demand of long-standing by the honest producers of sugar and cooking oil. For this sum they also offered to go after Bunge’s competition.

The government’s reaction to all these revelations is fascinating. First, government officials–most notably Mihály Varga, minister of national economy who is in charge of NAV–focused on the corrupt businessmen, ignoring the NAV officials. Why is the Hungarian government accused of doing nothing? After all, three or four people are already in custody. When asked about Ildikó Vida, the corrupt head of NAV who was seen at Vienna’s airport leaving for an unknown destination, he played the innocent. Vida is taking her vacation, to which she is entitled. To the question whether Ildikó Vida is banned from the United States as rumored, Varga announced with a straight face and a hefty dose of the exculpatory conditional, that if she were, surely she would have reported this fact to him as she is supposed to.

Who is this Ildikó Vida? She, like almost all Fidesz bigwigs, lived in the countryside before she entered law school in Budapest. (One reason for the heavy concentration of non-Budapesters among the original Fidesz leaders is that they lived in university dormitories.) Vida was also a member of the by now famous Bibó College which Orbán; Lajos Simicska, former treasurer of Fidesz and now a wealthy businessman; László Kövér, president of the parliament; and József Szájer, a member of the European parliament, attended.

Ildikó Vida at her desk

Ildikó Vida at her desk

As one Hungarian media outlet complained, we know very little about the president of NAV. She does not have a large Internet presence and NAV’s webpage has no biographies of the organization’s top leaders. However, she seems to be a very important person in Orbán’s mafia state.

About a month ago a long study by atlatszo.hu, one of those NGOs who receive money from the Norwegian Civil Fund and whom the government is trying to defund, identified the key persons who “captured the Hungarian state.” Ildikó Vida is among them. She must know about the siphoning of public money into Fidesz coffers and most likely into Fidesz politicians’ own pockets as well. Lajos Simicska, whom Orbán called a “financial genius” but who elsewhere would be considered a criminal, was put in charge of the tax office in 1998 as soon as Orbán won the elections. His job was to get rid of all the incriminating evidence about the illegal financial activities of Fidesz-owned businesses that folded and were subsequently “sold” to people unreachable by Hungarian authorities so their unpaid taxes couldn’t be collected. Ildikó Vida was one of Simicska’s deputies and, once Simicska left a year later, Vida became the head of the almighty APEH, the predecessor to NAV. Most people assume that APEH under Vida was no better than NAV is today. I assume that then, just as now, the tax office serves three purposes. One is to assist certain businessmen close to Fidesz to gain an advantage over their competitors by closing their eyes to their fraudulent activities. The second function is to extract money from business leaders, part of which goes to party coffers through an intermediary, like a foundation. And third, the tax office frightens certain persons and businesses Fidesz does not deem friendly to the party and the government into submission. In brief, the picture is grim–and I suspect we don’t know the half of it.

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.

Ten Hungarian businessmen and government officials can never enter the United States

A bombshell: the U.S. government placed ten Hungarian businessmen and government officials on a blacklist of sorts. They are barred from ever entering the United States. The businessmen in question are known to belong to a small circle of people very close to Fidesz. As for the government officials, they are apparently employees of the Hungarian equivalent of the Internal Revenue Service.

As of now there are two narratives of the event circulating in the Hungarian media. One is the government version, leaked to Napi Gazdaság, a financial paper recently purchased by Századvég, a Fidesz think tank. The other comes from the U.S. Embassy in Budapest.

Let’s start with the government version of the story. The Hungarian internal revenue service became suspicious of some American firms doing business in Hungary and launched investigations into their  finances and tax returns. The U.S. government decided to retaliate by barring several Hungarians from ever entering the United States. Behind this “diplomatic duel” are the recent critical statements of former President Bill Clinton and President Barack Obama with regard to the Hungarian government’s attacks on NGOs. The two American Democratic leaders were especially upset over the fate of the Ökotárs Foundation, the distributor of the Norwegian Civic Funds, whose tax number was recently suspended. Why this particular concern? Because, the article contends, the Norwegians are also generous contributors to the Clinton Global Initiative.

At the end of the article Napi Gazdaság casually mentions that because of the link between the American Democratic Party and the Norwegian government, the Ökotárs Foundation “will not go against the interests of the Democratic Party.” So, the Hungarian government’s investigation of Ökotárs will actually have a beneficial effect. It may “place Hungary’s reputation on neutral ground in the political warfare between Democrats and Republicans.” Here Századvég is speaking, the think tank that owns Napi Gazdaság. Századvég just received a huge contract from the Orbán government to engage in public relations/propaganda in Washington over the next few years. But there might be a bit of a problem here; as we will see later, its CEO is barred from entering the U.S., which might crimp its effectiveness.

Napi Gazdaság contacted the U.S. Embassy, where they were told that they know nothing about any investigation of American firms and that the decision of the U.S. government to bar some individuals from entering the United States has nothing to do with alleged probes by the Hungarian internal revenue service. However, they have good reason to believe that the people on the black list were engaged in criminal activities. They tried either to force American firms to give them kickbacks or to extort special favors from them. They cannot release the names because of American laws prohibiting it.

It didn’t take long for one of the people involved to arrive at the doorstep of ATV and to offer some details about the case. According to him, he and nine others were asked to visit the U.S. Embassy where they were administered the bitter pill. ATV was not allowed to reveal the name of the informer, but the article described him as “an especially important partner of the Hungarian government who currently is participating in several important projects. In the last few years his name appeared frequently in the Hungarian media…. He considers himself a businessmen who is very close to Fidesz.” There is a sentence in this report that strongly suggests that our mystery businessman is not entirely innocent. After all, he found “the measure disproportionate, which further damages American-Hungarian relations.” So he did something illegal, but he thinks that the punishment is too harsh.

corruption4

Both the Fidesz parliamentary delegation and the Ministry of Foreign Affairs and Trade reacted promptly to the news. Fidesz sticks to the story leaked to Napi Gazdaság. The United States government is putting pressure on Hungary because they want to avoid the investigation of certain American firms by the tax office. M. André Goodfriend, the U.S. chargé d’affaires, was called into the ministry, but before his appearance Judit Fülöp, the ministry spokeswoman, gave a short press conference. She stressed the Hungarian government’s zero tolerance toward corruption. She announced that they  are ready to investigate the cases but are waiting for documentation from the American Embassy.

Meanwhile investigative journalists were hard at work. From unofficial sources 444 learned that in the last year and a half there were several instances where government officials and businessmen closely associated with the government party approached American firms for kickbacks. In one case a large American firm applied for an EU grant. At first the government turned them down, but in the second round the management was told that they would receive the money but only if they hire a certain consulting firm that would perform no work at all.

A few hours later some names also appeared. Among them is Péter Heim, CEO of Századvég, the think tank that was launched by Fidesz in its infancy and that is now tasked with improving Hungary’s image in Washington. The news about the Hungarian internal revenue service seems to have been on target. Ildikó Vida, the head of the office, is on the list. Vida is one of the original founders of Fidesz. She is the same age as Viktor Orbán and was a fellow student in the college where the party was born. This is not the first time that she is in charge of the tax office. She held the same position during the first Orbán administration between 1999 and 2002. One must keep in mind that the Orbán government uses the internal revenue service as a political club. Index reported that in addition to Vida two other employees of the tax office are also involved. And then there is Árpád Habony, the eminence grise of Fidesz. He has no official position, but  he is perhaps one of the most important men behind Viktor Orbán. I devoted a whole post to him a while back. Rumors about his shady financial affairs have been circulating for some time. His source of income is shrouded in mystery. According to the latest information, Habony denies being on the list and is planning to visit the United States shortly.

On the surface the affair is solely about corruption, but the American reaction to these cases is politically charged. One has to assume that in countries with rampant corruption such as Hungary the U.S. Embassy receives reports of bribery attempts often enough. There are several ways of dealing with such cases. For instance, one can pay a visit to the country’s foreign ministry and report that such behavior is unacceptable. At the same time the American official can express his hope that in the future there will be no discriminatory measures against American firms and that extortionist activities will stop. But in this case the United States government came out with the big gun. The Americans in Budapest must have known for years about the high level of corruption in government and its satellite business circles, yet it is only now that they decided to move into high gear. This is, in my opinion, a political message to the Orbán government and part and parcel of a new, more forceful policy being conducted by the U.S. government toward Hungary.

Bálint Magyar’s post-communist mafia state: front men, transaction brokers, and gatekeepers

Yesterday we left off with a description of the kinds of oligarchs who play an important role in Viktor Orbán’s mafia state. Today we move on to the front men (stróman/Strohmann) and their function in the system. According to Bálint Magyar’s definition, they are people without formal position either in politics or in the economic sphere who “serve as bridges between legitimate and illegitimate realms.”

Magyar identifies two kinds of stróman, political and economic. The political front men are people who originally came from Fidesz itself and were put in important government and parliamentary positions–for instance, president of the parliament and president of the Hungarian Republic. Soon enough the leader extended the circle from which he could choose people for key positions. They were either relatives or close friends, or friends of friends. Such appointees can be found heading the prosecutor’s office and the National Office of Justice. Eventually, he drew from employees of companies owned by members of the political family–managers, accountants, lawyers–to fill posts in the ministries. These people are front men of the poligarchs, only instruments, not autonomous actors. In this mafia state the majority of government officials fall into the category of political front men.

An originally Fidesz-appointed stróman after a couple of years can be removed and replaced by another Fidesz-appointed individual, as we have observed recently. Magyar’s explanation is that some of the original appointees owed their allegiance to top poligarchs, for example, Lajos Simicska and his business partner, Zsolt Nyerges. Because of the internal power struggle that is currently going on between Simicska and Viktor Orbán, several of Simicska’s front men have been removed from important positions, like the Hungarian Development Bank and the Ministry of National Development. Perhaps the best example of such a personnel change occurred a few months ago in the Ministry of National Development which was considered to be the stronghold of the Simicska-Nyerges poligarchic duo. Here, after the election, Viktor Orbán replaced Mrs. László Németh, clearly a puppet of Simicska, with his own man, Miklós Seszták, a crooked lawyer. Seszták then fired 200 people from the staff of the ministry, which Magyar calls a bloodless decapitation.

The economic front men act like proxies of the poligarchs, although oligarchs can also have their own front men if for one reason or other they want to hide their presence in an enterprise. Some of the money accumulated by these people eventually ends up in the poligarchs’ secret bank accounts.

What are the characteristics of the economic ventures of strómans? (1) With practically no capital or expertise they receive large state orders. (2) The increase or decrease of their economic activities depends not on economic but on political cycles. They often receive tenders when they are the sole bidders. (3) They act as gateways to the state. They collect the profits generated by large bona fide companies which themselves would be able to do the job but which are are forced to work as subcontractors. (4) Profits of these companies are much larger than of companies not politically connected. (5) The managements of these companies pay themselves inordinately large dividends. Normally, especially in the case of a new company, most of the profit is reinvested in the firm. But these companies don’t have to worry about business expansion. It is the subcontractor’s headache. (6) While successful companies without political connections often encounter aggressive takeover attempts by the government, the companies of strómans never have to worry about such an eventuality.

In sum, the basic goal of the mafia state is the elimination of autonomous positions in the political, economic and societal spheres and their transformation into a patron-client relationship. The men whose names appear in the regularly published list of the most influential Hungarians are all dependent on the good will of Viktor Orbán, be they politicians, entrepreneurs or university professors.

In addition to oligarchs and front men, there is another group of people Magyar calls transaction brokers who are mediators between the actors in illegitimate transactions. These people are often lawyers who are involved in writing grant applications, for example. They are the ones who have the personal network that can facilitate the transaction between, let’s say, the government bureaucracy in charge of monies coming from Brussels and the applicants. Transaction brokers, mostly law firms and institutes attached to ministries, by now have taken over some of the functions of ministries. They are the ones who actually write legislative proposals submitted by individual members of parliament.

There are two types of transaction brokers. One is the so-called gatekeeper who works from inside the administration and who defends and legitimizes illegitimate businesses. The other is the representative broker who by the size of his business could in fact be an oligarch but who is only an economic stróman.

Finally, Magyar spends some time on the nature of the family’s guard and the secret services. One of the very first decisions of Viktor Orbán after he became prime minister was to create a large force of personal bodyguards misleadingly named the Anti-Terror Center (TEK). In addition, there are private security firms often owned by Fidesz oligarchs that have the support of the police or TEK. Magyar even includes in this category the infamous soccer fans of Fradi, a club headed by government functionaries. These football fans can be mobilized if necessary as they were in the fall of 2006. Fidesz again called them out in 2013 when a few students surrounded the Fidesz headquarters. TEK itself has practically limitless powers. Sándor Pintér, minister of the interior under whom the police force functions, is a stróman of Viktor Orbán.

Viktor Orbán and his old body guard, János Hajdu From major to brigadier general overnight

Viktor Orbán and his old body guard, János Hajdu
From major to brigadier general overnight

Supervision of the secret services, since there are several of them, has always been close to Fidesz poligarchs’ hearts. Magyar recalls that in 1990 when Gábor Demszky became mayor of Budapest he resigned his seat in parliament. The chairmanship of the parliamentary committee overseeing the activities of the secret services thus became vacant. Fidesz insisted that the post should go to one of its own. László Kövér was chosen. Until 2005 Fidesz through this committee managed to keep the secret services under its influence. In 2006 the governing socialists closed the secret services’ avenues to Fidesz by firing a number of people known for their close ties to Kövér and others in Fidesz. These Fidesz loyalists who found themselves without a job established their own private concerns and continued their spying activities through old friends still employed by the government. As soon as Fidesz won the election, these people were immediately rehired. Earlier there was a minister whose sole job was the supervision of the activities of the secret services, but after 2010 Sándor Pintér took over this role. Thus both the police and the secret services report to him.

I still have covered only half of the introductory essay by Bálint Magyar. Time permitting, I will continue my summary sometime in the future. However, I think that today’s and yesterday’s posts give you an idea of how Orbán’s mafia state functions. Dismantling it will not be an easy task when the time comes.

Péter Szijjártó bought a luxurious house from gifts and loans

Over the last four days the Hungarian media have been having a heyday with Péter Szijjártó’s real estate purchase in Dunakeszi, a town northeast of Budapest on the left bank of the Danube, right across from Szentendre Island. It was RTL Klub that broke the news that the young couple with two small children had just purchased a house for 167 million forints or $680,000. Just for comparison, the average Hungarian employee earns 2,850,000 forints a year. The news broke on the very day that Szijjártó was sworn in as foreign minister, but interest in his finances have been the subject of scrutiny before. It turned out that according to his most recent financial statement he saved more money in 2013 than he earned. Demokratikus Koalíció and Együtt-PM turned to the chairman of the parliamentary committee in charge of possible corruption cases among members of parliament and asked for an investigation. Since such efforts have failed earlier, György Rubovszky (KDNP), who by the way thinks that the Orbán administration’s mandate empowers it to introduce “the dictatorship of the majority,” will undoubtedly turn their request down. For Rubovszky, Szijjártó’s word is enough. And Szijjártó told him that the money came from investments.

In May Szijjártó had 82 million forints in addition to three houses he owned in Győr, his hometown; at Lake Balaton; and in Dunakeszi where he has been living since 2006, first as a bachelor and later with his wife. In 2011 the first child arrived and this year the second. That means that his wife’s only income in the last three years has been the child support every mother receives who decides to stay at home with the baby. The first Dunakeszi property, a duplex, was not cheap either. It cost 27.5 million forints. However, as we learned, in the last three years they have been thinking about moving because of the growing family. Well, they found their house. It is not exactly tiny: 700 m². It is a three-level house. The ground floor is 200 m² with a seven-meter cathedral ceiling. The house has a five-car garage with its own car-wash system. Naturally it has a swimming pool, which can be used even in winter because it is covered. It also has a fitness room with a jacuzzi and sauna.  As far as the number of bathrooms is concerned, apparently it has currently three but, according to some accounts, the Szijjártós would like to have five.

The question is how Péter Szijjártó managed to buy this house when he did not take out a mortgage and he had only 82 million forints on hand in May when he purchased the house. Well, Szijjártó presented the public with two versions. The first was that he put in 80 million forints, his wife came up with 10 million, and so did her parents. His own parents gave him 33 million as a gift and lent him 34 million. A day later, he changed these figures. In the new version he paid out only 67 million forints while his parents lent him not 34 but 45 million. I guess the correction was necessary because if the young Szijjártós were left with only 2 million forints to their names he couldn’t explain how he is paying for the very extensive renovations that have been going on ever since May and will continue for several more months. Szijjártó hopes that perhaps by Christmas they will be able to move in.

MTI / Szilárd Koszticsák

MTI / Szilárd Koszticsák

The house, in my opinion, is hideous. The inside is no better, but I understand that the furniture does not come with the property, so perhaps there is hope. For more pictures of this monstrosity built for some Hungarian nouveau riche I suggest looking at the ad the real estate agent placed online in September 2013. It has about 20 photographs of the interior of the house. The original price was 189 million forints. So, just as Szijjártó said, it was a bargain. He managed to “save” 37 million forints.

This is not the first unusually rapid financial success of a Fidesz politician, including Szijjártó’s idol Viktor Orbán, who could never quite explain where the money came from for his family’s extensive landholdings and the purchase and enlargement of a house in a very elegant and expensive part of Buda. Or, there is Antal Rogán, whose several real estate purchases couldn’t possibly have been paid for out of his stated income. Perhaps the most mysterious story is that of Lőrinc Mészáros, the humble pipe fitter from Felcsút who in four years became a billionaire. All that while Viktor Orbán promised a “puritanic” and “plebeian” government.

Here, instead of playing detective, I would rather talk about the generosity of Szijjártó’s parents. His parents are very well-off people, and it looks as if ever since his late teens and early twenties they have been coddling him. He is perhaps even financially dependent on them. Here are a few facts. When Szijjártó was eighteen years old, his parents bought him a house in Győr. When he became a university student in Budapest, they bought him an apartment there. They were the ones who bought him the Dunakeszi house he and his wife currently live in. In that year, at the age of 28, he had three pieces of property and 43 million forints in savings. So, I am inclined to believe that the purchase of his new house was largely facilitated by Szijjártó’s parents.

Not long ago we talked about how Hungarian parents dote on their children, especially on their boys who as a result never really grow up and are completely dependent on their mothers and eventually on their wives. I remember that one of our commenters from Great Britain remarked that single Hungarian males are pretty hopeless as immigrants because they are unable to look after themselves. The situation in Szijjártó’s case is extreme because the parents seem to have more money than they know what to do with. The result? The man achieved almost nothing on his own. His early political career was made possible by his financial independence, while it was Viktor Orbán who elevated him to serve as his spokesman, most likely because he was flattered by young Szijjártó’s devotion. At the age of seventeen he decided that his goal in life was to serve the great man.

An article in gepnarancs.hu appeared today with the following title: “Why on earth are you envious of Szijjártó’s house in Dunakeszi?” After all, he was put into a position he knows nothing about. His boss managed to maneuver Hungary into a position of isolation. “Almost everybody hates us. Name me one country where Hungary is thought of with love and esteem. There is not one but, don’t worry, the Szijjártó family will take care of it.” Or, what about an editorial by Gábor Horváth of Népszabadság who is convinced that it is totally irrelevant who the next minister of foreign affairs of Hungary is? “Old or young, an expert or a bungler, a moderate or a hawk, a diplomat with a distinguished career or a spineless official from the ministry of justice, or, as it is from here on, a football player with gelled hair…. According to a historical anecdote, Caligula wanted to appoint his horse consul. The noble animal was called Incitatus and surely it was an excellent horse. But isn’t it all the same?”

Hungarian citizenship offers escape route from troubled Ukraine

The Hungarian citizenship scandal is naturally growing by the hour, especially since today the second installment of Index’s revelations became public. Before I go into some of the details, let me first tell you about the official reaction of Fidesz and specifically of Zsolt Semjén, whose only job seems to be the “unification of the nation.” He claimed yesterday that the process of granting citizenship has been carefully monitored all along by the administration, which if necessary calls on the police and the Hungarian secret service to uncover fraud. The attack against the government’s citizenship program is most likely the work of  foreign powers who want to dissuade Hungarians from applying for Hungarian citizenship. I assume these foreign powers are Slovakia, Ukraine, Romania, and Serbia. Semjén also had a few friendly words for his own compatriots: he warned them that cooperation with foreign secret service agencies is treason. So, Bálint Szalai of Index had best start preparing for a long jail sentence! The same fate might also befall those politicians who dare inquire about the irregularities.

Today Fidesz called on the “left” to refrain from inflaming the public “against Hungarians living outside the homeland.” The statement claimed that the news that broke about the thousands of phony new citizens was actually orchestrated by the opposition parties. It is “part of a campaign against dual citizenship” that the politicians of MSZP and DK opposed already in 2004.

Although the government and Fidesz try to minimize the gravity of the situation, if the news turns out to be true and the details are accurate, the European Union might be alarmed by these developments. As Attila Ara-Kovács, head of DK’s foreign policy cabinet, pointed out this morning on ATV’s Start, one reason that Romania has so much difficulty joining the Schengen nations is its earlier decision to offer Romanian citizenship to residents of Moldova. If the estimates of the number of people in Ukraine who now hold Hungarian citizenship legally or illegally as well as those who may apply for citizenship in the near future are at all accurate, it might mean an eventual exodus of as many as 120,000-150,000 people from Ukraine where the current political and military situation is grave. As the Ukrainian-Hungarian Miklós Kovács, whom I quoted yesterday, said today in an interview with György Bolgár of Klubrádió, a newly granted Hungarian citizenship is like Noah’s Ark for Ukrainians. These people are convinced that a flood is coming that will engulf the country in the form of the Russian army. In this case, they will have a means of escape.

Hungarian citizenship is Noah's Ark for Ukrainian citizens

For the time being there are no comparable problems in Serbia, but the country is in terrible financial straits and it looks as if Serbia will not be able to join the European Union any time soon. There are 250,000 Hungarians living in Serbia, in addition to all those non-Hungarians who can easily find an ancestor who was a citizen of Hungary before 1920. A fair number of those who took out Hungarian citizenship plan to use the Hungarian passport as a way to get to Western Europe.

In his second article Bálint Szalai gave more details about how the whole scheme works. As I wrote yesterday, right after January 2011 the government set out to acquire as many new Fidesz-friendly citizens as possible. Semjén appeared from time to time to triumphantly announce the latest figures. As it stands now, 654,534 people have applied for Hungarian citizenship since the beginning of the program.

The Index article has a breakdown of these applicants by country. Perhaps most shocking are the figures for Ukraine whose Hungarian population was 150,000 in 2001, a number that most likely has decreased since. Yet 91,275 people applied for and about 80,000 received Hungarian citizenship. The numbers for Serbia are also high: 124,811 out of a Hungarian population of about 250,000.  The Romanian figures are modest in comparison: 420,345  applied for citizenship out of a Hungarian population of 1,230,000.

Altogether only 20,867 applications have been rejected since January 1, 2011. These rejections most likely took place after March 2013 when the rules were tightened somewhat. Prior to that date even village notaries or mayors were allowed to grant citizenship, and we know they could easily be bribed. After March 2013 only government offices of járások, sub-units of counties, could handle citizenship matters. Instead of many thousands of offices, an applicant could get a passport at only 300 locations. That meant that the price of Hungarian citizenship went up considerably. The village notary might be satisfied with 500 euros, the officials higher up wanted more. And with tighter scrutiny corrupt officials could no longer approve every case that came to them. They had to be selective. Nonetheless, according to the article, people close to this business venture estimate that 30% of these phony cases still go through.

The Index articles obviously hit home in government circles. Suddenly the authorities became vigilant. The Kemecsei Járási Hivatal (Szabolcs-Szatmár-Bereg) just informed the county police headquarters that a twenty-one-year-old Ukrainian man tried to get citizenship in their office although he does not speak or understand Hungarian. The poor fellow picked the wrong time.

There might be a lull in the sale of Hungarian citizenship, but unless the whole procedure is tightened up the problem cannot be solved. Tightening up means abandoning the “simplified” procedure that was adopted for the sole reason of getting votes for the Fidesz government. Citizenship is a serious matter; it should involve a thorough background check that takes time. I doubt, however, that the present government is willing to be that scrupulous. Their “unification of nation” factory has a fast-moving citizenship assembly line with virtually no quality control. And hence the fraud will continue. It might just cost a little more money for the hopefuls.

The lucrative citizenship business: Hungarian passports for Russians and Ukrainians

Today Index came out with the first of a two-part article on the mass fraud surrounding the acquisition of simplified Hungarian citizenship. The article claims that a group of Ukrainians with the active assistance of corrupt Hungarian officials has been procuring Hungarian citizenship for foreigners who are ineligible: they have no Hungarian ancestors and don’t know the language on even a rudimentary level. The article claims that their numbers might be in the tens of thousands.

The Index article made a real splash and MSZP, as is its wont, again demanded the resignation of Zsolt Semjén, deputy prime minister, whose job is the recruitment of as many Fidesz voters from the neighboring countries as possible.

People have a short memory because the news is not all that new. More than two years ago Hungarian papers reported that “Hungarian citizenship is for sale in Ukraine.” It was discovered at that time that there was a website (http://visa-vengriya.com/) that specializes in the Hungarian citizenship business. In fact, the website is still active and it still runs the ad: “Hungarian citizenship in 2 months! Payment upon receipt of the documents. Our company offers service assistance obtaining Hungarian citizenship within 2 months. Payment service occurs after you get your hands on the documents and become a citizen of Hungary. Contact us to learn more about the procedure and leave a request for more information.”

The website indicated that applicants need have no Hungarian ancestry, did not have to learn Hungarian, and did not even have to appear in person to have an interview or receive their citizenship. Of course, extra services like forging documents to invent a Hungarian grandpa or grandma will cost extra, anywhere between 6,000 and 25,000 euros depending on how complicated the task is. Grateful clients sang the praises of the organizers.

In May 2013, in an interview with  Átlátszó.hu, Miklós Kovács, president of the Kárpátaljai Magyar Kulturális Szövetség (KMKSZ), openly talked about the corruption of Hungarian authorities who hand in hand with the “Ukrainian mafia” handed out citizenship to anyone who was ready to pay them off. Kovács most likely underestimated the price when he thought that for a mere 500-1,000 euros someone could be the happy owner of a Hungarian citizenship document. A Subcarpathian Hungarian-language site claimed to know at that time that a Ukrainian citizen could get Hungarian citizenship for 5,000 euros, but if the person is from another former Soviet republic the price is higher: 9,000 euros. Lawyers took care of missing Hungarian ancestors. All that was done through “legal” channels.

allampolgarsagIn November 2013 Nick Thorpe of BBC, reporting from Subotica, Serbia, described his encounter with a brand new Hungarian citizen who did not seem to know a word of Hungarian. Or at least he looked blank when Thorpe greeted him in Hungarian. “He does understand it—he just doesn’t speak it very well yet,” said the man’s female companion. Thorpe found 50 people working furiously to handle the demand for Hungarian citizenship. They were receiving 800 calls a day. And every day 100 new Hungarian citizens emerged from the consulate in Subotica. The BBC article is entitled “Hungary creating new mass of EU citizens.” To be more precise, Hungary is creating future citizens of Germany, the United Kingdom, the Netherlands, Austria, and Sweden, the countries preferred by East European migrants.

Thus today’s revelations by Index are not new, but they are definitely the most thoroughly researched. According to Bálint Szalai, the journalist who investigated the case, Ukrainians and Russians gather around Deák tér in downtown Pest to negotiate with Ukrainian and Hungarian “businessmen” over the details of becoming Hungarian citizens. Most of them speak no language other than Ukrainian or Russian, but last year the journalist lucked out: he found an English speaker who revealed that his father had already received Hungarian citizenship and now works in Germany. The rest of the family is waiting for the swearing-in ceremony. They will be Hungarian citizens within a couple of hours. Then they will follow him.

The citizenship law enacted in a great hurry in 2010 demands only one ancestor who was a Hungarian citizen before 1920 or between 1940 and 1945 and some minimal knowledge of the language. The citizenship business began in earnest in Ukraine. Ukraine forbade dual citizenship, and therefore Ukrainian-Hungarians were afraid to ask for a visa to Hungary to handle their citizenship applications in person. Therefore, paid agents represented the applicants in some Hungarian village’s town hall where they paid off the local officials. The price of citizenship was between 5,000 and 30,000 euros. Szalai describes one case where, in a village near Kisvárda, the mayor received 200 applications at once. He demanded 1,000 euros for each, which he got. It took him 20 minutes to sign them.

Soon enough it became known that through the Ukrainian network a person could easily receive Hungarian citizenship without much scrutiny. Applications were pouring in with forged birth certificates of non-existent ancestors. Shortly afterward Russians became interested in this fantastic deal. First, the Russians had to acquire Ukrainian identity in order to claim Hungarian ancestors. It would be hard for a Russian to prove that his ancestors were Hungarians. Companies and lawyers specialized in making Russians first Ukrainians and then Hungarians. The citizenship business is apparently still thriving.

The reason that the news made greater waves this time around is because it appeared on a widely read internet site. According to opinion polls, something like 75% of the population are not keen on the citizenship law as it now exists: people don’t like the idea that their fate can be determined by votes coming from abroad. And in fact, in the last election, if we can believe the information given out by the government, the two-thirds majority was determined by the 100,000 mostly Transylvanian voters. Simply put, Viktor Orbán must thank the Hungarians in Romania for his practically unlimited power. Reading that tens of thousands of foreigners who have never had anything to do with Hungary are all over the world now with a Hungarian passport only adds to their anger. The government’s reaction? Tamás Wenczel, undersecretary in charge of “nation policy” (nemzetpolitika) under the watchful eye of Jámos Lázár, immediately threatened Index with a law suit. He did not deny that there have been “irregularities.” However, “lately several measures were adopted that would preclude the possibility of abuse.” Wenczel did not elaborate on the measures, but as long as every village town hall can grant citizenship to foreign nationals the abuse will continue and with it the thriving business on both sides of the border.

Viktor Orbán and his oligarchs: Impending power struggle?

I am always amused when I read that this or that politician from the opposition loudly demands the resignation of this or that minister. Equally amusing, if you can call it that, are the demands that President János Áder not sign this or that piece of legislation. It is also becoming quite obvious that hoping to get redress from the Fidesz-appointed constitutional court is equally hopeless.

A couple of weeks ago I introduced the readers of Hungarian Spectrum to Miklós Seszták, the new minister of national development. The title of the post was “Another corrupt official: The minister of national development and his ‘businesses.'” After Seszták’s highly suspicious activities as a small-time lawyer came to light, there was the usual choir demanding the man’s resignation. Viktor Orbán’s reaction in such cases is always “no comment.” As if nothing had happened. Seszták stays. Moreover, it seems that he was chosen to perform some very important tasks in the new Orbán government.

Only a few weeks have gone by since his appointment, but Seszták is emerging as one of the newest “favorites” of Viktor Orbán. More than a year ago a video circulated on the Internet showing Viktor Orbán, Miklós Seszták, and Károly Nemcsák, an actor, drinking pálinka and singing an off-color song about the hussars of Fehérvár. Surely, their relationship was closer than is normal between the prime minister and a very ordinary first-time member of parliament. But, of course, no one could have suspected at that time that Miklós Seszták would become one of the new confidants of Viktor Orbán.

What is Miklós Seszták supposed to do in the next few months? It looks as if one of his jobs will be to change the management of some state companies. The number of state enterprises is very large as is, but Viktor Orbán is planning to have even more soon enough. Naturally, Seszták is eager to accomplish the task. He promised quick action on the removal of certain undesirable people at the helm while he also announced further nationalizations. For example, Orbán wants to have the whole Magyar Villamos Művek Zrt. be taken over by the state. Seszták assured the public that “there is money for it.” It looks as if the Hungarian government also has money for the purchase of Bombardier MÁV Kft, some percentage of which is currently in foreign hands.

It didn’t take long to learn that Seszták has another job to perform which began as early as May: every state enterprise received a letter instructing the management to suspend all contracts with outside firms. The reason? Allegedly to ensure “responsible business practices” at the state enterprises. The suspension order was e-mailed, which the not too smart employees of the ministry sent out with all addresses visible. Since someone squealed in one of these companies, by now we know that the number of companies is greater than 100. This employee also said that in the instructions it was pointed out that some of the contracts “that are necessary for the normal running of the business can be renegotiated,” but he added that it is hard to pinpoint exactly what one can consider the “normal running” of a business. The same whistleblower suspects that in most of these companies both acquisitions and R&D have come to a screeching halt.

oligarchs

László Szily, blogger of Cink, who received the information from the whistleblower, immediately asked the ministry about possible personnel changes either at the ministry or in the companies. He received the following answer:

We are in the middle of analyzing the effectiveness of individuals both at the ministry and in the companies. In case we think that the lack of effectiveness is the result of the incompetence of the leadership we will make the necessary personnel changes. At the same time we do not want to decapitate the enterprises. If there are personnel changes, we will announce them in the next few weeks because we don’t want to keep anybody in uncertainty.

MSZP finds it amusing that Orbán picked a man accused of corruption to check on the allegedly corrupt state company managers. Amusing or not, something very interesting is going on. Rumors have been circulating for a number of years that both Fellegi and his successor, Mrs. László Németh, were Lajos Simicska’s people. As for Lajos Simicska, his business empire is vast and, especially since 2010, he has been the greatest beneficiary of European Union subsidies and state orders for road building and other construction projects. What the relationship is between Viktor Orbán and Lajos Simicska, besides friendship, no one knows. Until now everybody was convinced that what is good for Simicska is also good for Orbán. But now, the latest moves undertaken by Miklós Seszták on Orbán’s orders indicate that perhaps Orbán has had enough of Simicska and his friends.

There are further signs that something else  may be afoot that would weaken the power of some of the oligarchs. Yesterday 444, an online news site, received a copy of a bill the government apparently wants to put before parliament. It would introduce a 15% tax on all companies that have been involved in road building in the last seven years. That would mean a tax of 20 billion forints on Simicska’s company, Közgép. All this indicates to me that Viktor Orbán now feels strong enough (especially with his budget in desperate need of a new source of revenue) to turn against his former friends and put an end to their further enrichment and thus political influence. Cracks seem to be appearing in the Fidesz monolithic wall.

How to renovate a science lab in Hungary using EU money

A few weeks ago HEC Paris (École des hautes études commerciales de Paris) launched its first “Massive Online Open Course” entitled “Understanding Europe: Why It Matters and What It Can Offer You.” The professor, Alberto Alemanno, is a young, enthusiastic Italian who recounts all the wonderful things the European Union can offer to its citizens. Indeed, the list is impressive. But anyone who is at all familiar with “reality on the ground,” let’s say in Hungary, knows how all those good intentions can be abused. Take the case of a small town in Hungary that received a relatively small grant from the convergence money the country gets from Brussels.

The readers of Hungarian Spectrum have already encountered the hero of our story. On May 1, 2013 I gave an optimistic title to that day’s post: “Greed might be the undoing of Viktor Orbán and his regime.” In it I wrote about two possible corruption cases. One was the allocation of tobacconist concessions in the town of Szekszárd, the county seat of Tolna County. The other was possible fraud in Lajos Simicska’s Közgép, the company that received about 75% of all government contracts financed by Brussels. Of course, I was naive. Although the case of Szekszárd was absolutely clear cut, there were no consequences of the revelations. As for the second case, I guessed wrong: the suspension of EU funds had nothing to do with Közgép.

The hero in Szekszárd was Ákos Hadházy, a veterinarian who had served on the city council representing Fidesz. It was he who discovered that the Fidesz mayor and his colleagues had the list of applicants for tobacconist concessions in Szekszárd and singlehandedly decided the winners: friends and relatives, and people who sympathized with Fidesz. I detailed Hadházy’s struggle with his conscience that eventually led him to HVG, which published the story.

Hadházy subsequently left Fidesz but decided to remain in politics. He eventually settled for LMP and today is representing this party on the Szekszárd city council. Our veterinarian continues to keep his eyes and ears open, looking for possible corruption. He even started a blog, szekszardihetkoznapok.blog.hu. It was here that he published his latest findings about the fate of monies received from the European Union.

The Béla I Gymnasium needed a new chemistry-physics lab. This project involved tearing down a wall between two smaller classrooms to make the new lab 155 m². They also created a room for equipment, laid linoleum down on the floors, and supplied the desks with gas pipes, electricity, and water. The cost was 157 million forints or €518,811.74. As Hadházy rightly pointed out, from that amount of money one can build a nice new house.

The science lab at Béla I Gymnasium, Szekszárd on the opening day

The science lab at Béla I Gymnasium, Szekszárd on opening day

Here is a list of the items that money was spent on. The town paid €21,000 for advice on writing the grant application. Another €6,000 was spent on “planning and technical supervision.” €59,000 went for IKT (információs és kommunikációs technológiák) which included 2 intelligent blackboards, 2 simple blackboards, voting software for 40, a projector, and 4 laptops. Hadházy checked the prices of these pieces of equipment and found that one could buy them for half the price. The town also needed a feasibility study, costing €16,524. Hadházy had difficulty interpreting the item “creation of pedagogical and professional concepts,” which was €21,500. After all, the experiments the students have to conduct can be found in the textbooks; one does not have to develop new concepts for them.

But we are nowhere close to the end of the list. €66,000 was spent on a “multimedia presentation package.” That involved the performance and description of 100 experiments and their representation on videos.  Another €66,000 was needed for “digital material” on chemistry, biology, physics. Almost €66,000  was spent on paper, telephone, and dues. A hefty €51,000 was spent on software that helps allocate space for the different classes in the lab. The project management team received €66,000. And finally €53,000 was spent on outreach, marketing, and the opening day. At the opening there were several speakers, including Rózsa Hoffmann and the local head of the Klebersberg Intézet. There were couple of open house days for students where modest refreshments–coffee, soft drinks, biscuits–were served. Hadházy points out that these kinds of projects are underway throughout the country and the waste is staggering.

As HVG noted in a follow-up article, this particular Szekszárd project by itself is small potatoes; it is just one of 52 projects currently in progress. The entire cost of these projects is borne by the European Union. As one of the Fidesz members of the Szekszárd city council indignantly told Hadházy when he complained about the exorbitant cost, nothing terrible happened here because after all “it did not cost Szekszárd a penny.”

Since then the lawyers of LMP decided that the Szekszárd case warrants further investigation. So, LMP asked János Lázár to look into the case. A strange person to ask for help. After all, it is János Lázár who is responsible for the dispersion of EU grants, and surely it is his staff who oversees the projects. So, if they don’t find it excessive to spend €418,811.74 s on a very ordinary looking science lab then surely they will not investigate either this case or any of the many similar ones. As for the beneficiaries of these contracts, the city fathers, mostly affiliated with Fidesz, choose the winners. Out of the fourteen-member council there are only five opposition members (two LMP, two MSZP, and one Jobbik). The majority makes sure that their friends and acquaintances receive the inflated contracts.

I don’t know what happens in Brussels. Does anyone there find these figures excessive or do they just hand the money over without asking any questions? Perhaps they should take a more serious look at what is happening to the money they so generously give to their poorer neighbors.

Orbán’s clan is plundering the state coffers: The world is taking notice

The talk in Hungary is about corruption. Corruption that seems to consume every nook and cranny of political life. It is an open secret that one of the main aims of Viktor Orbán, in addition to making sure that he will be the prime minister of Hungary for a very long time, is the enrichment of his friends and family. Thanks to the work of some investigative journalists, like Krisztina Ferenczi and Attila Mong, more and more evidence is surfacing that Viktor Orbán is feathering his and his friends’ nests.

Orbán is not like Viktor Yanukovycz, who lived lavishly in tasteless gilded palaces. Considering his estimated wealth, Orbán and his family live modestly. They have a comfortable but unpretentious house in one of the more elegant parts of Buda and an outright humble-looking house, designed in the style of the adobe peasant houses of yore, in Felcsút. The family’s landholdings are something else. Year after year Orbán’s wife, Anikó Lévai, added cheaply acquired lands in and around Felcsút where Viktor’s family spent some time when he was a young child. Moreover, almost everybody is convinced that the Orbán family’s landholdings are much more extensive than official documents attest to. The rest, perhaps thousands of acres, is held under the names of front men.

Viktor Orbán's country home in style of old adobe peasant houses

Viktor Orbán’s country house

For some time Hungary has been brimming with anecdotes and speculation about the Orbáns and their friends, but the charge of wholesale stealing from the national wealth could not be contained within the borders for long. Only two days ago an article appeared in one of the most influential German papers, Der Spiegel, with the title: “Orbán’s clan plunders the state coffers.” As Krisztina Ferenczi told the author of the article, Keno Verseck, “Hungary has become in recent years a kind of large estate” and the lord of the  manor is Viktor Orbán himself.

One reason for the disguised land ownership, assuming the charge is true, besides the obvious one of undeclared wealth without any legitimate means of accumulating it, is that the landholdings are heavily subsidized by the European Union even if they are left fallow. Surely, it would look bad if the European Union were paying millions for the lands of the Hungarian prime minister. There are several indications that Orbán has two front men in Felcsút, Lőrinc Mészáros and János Flier. Both by now have thousands of acres they received fraudulently from the state on twenty-year leases. Neither has any experience in agriculture. Flier used to be an electrician and Mészáros had a small business bringing gas pipes to the inhabitants of the village a few years back. Now they are in charge of large farms.

Viktor Orbán is as upstanding in politics as he is in his financial dealings. The electoral law and its execution are based on fraud. Since he has a pathological need for power, he will never allow a reprise of 2002 and 2006 when he lost the elections. This time he is covering all his bases. We talked a lot about the coming elections and concluded that the final results would be questionable, but I still suggest taking a look at some of the comments on the topic by readers of Hungarian Spectrum. Unfortunately, since the Orbán government is in charge of the mechanics of the election we will never be able to prove fraud, however obvious it might be in places.

Orbán is a role model for Fidesz officials, and part and parcel of that model is his outsize accumulation of wealth. The latest official to come under scrutiny for unexplained affluence is Antal Rogán.

Rogán belongs to the younger generation of Fidesz officials. He had just finished high school at the time of the regime change. In college he majored in economics and soon after graduation was heavily involved in Fidesz politics. By the age of 26 he became a member of parliament and three years later one of the deputies of Viktor Orbán. Currently, he is the leader of the large Fidesz parliamentary caucus.

It seems that Antal Rogán was equally successful when it came to enriching himself. We don’t know how, but Rogán, his wife, and two young children live like nabobs in “Pasa Park.” This gated community is in a part of Buda called Pasarét (Meadow of Pasha), hence the name of the building in which many top Fidesz officials live, including Mihály Varga, minister of national economy. The Rogáns have two and a half apartments worth about 300 million forints. People who are investigating the case claim that Rogán’s total career earnings so far amount to no more than 16 million forints. His wife doesn’t work. His current salary is 1.3 million forints a month, but his expenses far exceed his income. He is still paying about half a million forints a month on his 60 million forint mortgage, he has to pay 300,000 a  month for maintenance, he pays 250,000 to lease an Audi 6, and the two small boys go to a private kindergarten for 300,000 a month. And presumably the family doesn’t starve.

Rogán got into trouble because he did exactly the same thing as  Gábor Simon (MSZP): he didn’t tell the whole truth about his wealth on the financial statement he has to provide to parliament. But while Simon is in jail, Rogán only had to “correct” his financial statement. He may have to keep making corrections as new pieces of information surface. It seems he owns property that he inherited from his grandmother and father in his hometown as well as a country house in Balatonlelle.

Given the way Orbán’s “justice” works, we can be assured that nothing will happen even if the accusations turn out to be correct in every detail. Nothing will happen not only because investigation and punishment depend on the ruling Fidesz party but also because all Hungarian politicians made sure that these financial statements are not worth the paper they’re written on. If, for example in this case, Rogán says that the money for the real estate and the lavish lifestyle comes from loans extended by family and friends, the authorities will be satisfied. He will not have to give any proof of actual transactions. Knowing the high moral fiber of Hungarians, I’m sure there would be plenty of people who would gladly swear that they were the ones who extended the money to Rogán.

That’s how things are in Hungary. It’s no wonder that people are not outraged about the rumors of electoral fraud or the plundering of the state coffers. They are accustomed to corruption and think it best to remain silent. They cannot do anything about it in any case.