The plight of a Hungarian whistleblower

It was a month ago that András Horváth, a former employee of NAV (Nemzeti Adó- és Vámhivatal/National Office of Taxation and Customs), turned to the prosecutor’s office to report a breach of fiduciary duties committed by the top management of this 23,000-employee office. He claimed that large-scale cheating goes on with fictitious VAT reimbursement payments, especially in the case of large commodity distributors and food chains, both multinational and domestic. The figures Horváth was talking about are staggering. He estimates the loss of revenue at 1.7 trillion forints a year.

Since then András Horváth has been in the news constantly. There has been hardly a day that he wasn’t in the electronic media, and thousands of articles have appeared about what is called the NAV scandal. Some people predicted that this affair might bring down the Orbán government, which I very much doubt. These guys are far too foxy to trip over such a “trifling” item as a 1.7 trillion forint fraud.

On November 19 I reported about the affair in as much detail as was available at the time. Predictably, since then politics entered the fray. The first party that offered assistance to Horváth was András Schiffer’s LMP. Schiffer is a lawyer who made sure that Horváth had good legal counsel. At the same time LMP began an effort to get the 78 signatures necessary to set up a parliamentary committee to investigate Horváth’s allegations. MSZP and DK were reluctant to join forces with Jobbik in calling for the committee, which I think was a mistake. I understand that the overwhelming majority of DK’s membership shared my opinion. Well, by the end they managed to get the 78 signatures without current Jobbik members, but Fidesz boycotted a hearing that was supposed to question Horváth on the details. Later Fidesz thwarted the opposition’s effort to set up the committee, claiming  that the existence of such a committee is illegal when a criminal investigation is already underway. I don’t want to delve into the legal complexities of the issue, but legal experts claim that Fidesz as usual was not exactly on the up and up on this issue. Moreover, as it turned out, Horváth was never informed of the investigation launched against him, and his report to the prosecutor’s office on the wrongdoings of the management of NAV wasn’t followed up with any investigation.

Meanwhile direct evidence was mounting that underscored Horváth’s claims. Economic Minister Mihály Varga, under whose ministry NAV operates, admitted in response to a question posed to him by a couple of LMP MPs that NAV investigated only the distributors, not the food chains themselves. This is exactly what Horváth was talking about.

For two years Horváth tried to call attention to the wholesale tax fraud at NAV. He approached several top Fidesz politicians. For example, Antal Rogán and János Lázár. I don’t know why he didn’t go to the Ministry of National Economy where Gábor Orbán, no relation to Viktor, is the undersecretary in charge of taxes and finance in general. Perhaps he had his reasons, although yesterday he said that it wasn’t the government that put pressure on NAV but influential businessmen, oligarchs as he called them.

Yesterday was no ordinary day for the poor Hungarian whistleblower. Out of the blue, at 7:30 a.m., four detectives arrived at Horváth’s apartment and took his famous green dossier, which he carried everywhere he went, claiming that all the information he has is in that folder. For good measure they also took the hard drive from his computer as well as his notebook with the names and telephone numbers of journalists, politicians, and lawyers with whom he has been in contact lately. The sudden and apparently illegal raid reminded people of the surprise visits from the state security authorities during the Rákosi period. They usually arrived at the crack of dawn to arrest people. Everybody agrees that the aim of yesterday’s raid was intimidation. Indeed, Horváth seemed to be genuinely shaken last night when he talked to Olga Kálmán of ATV, although he promised to fight on.

Source: cherispeak.wordpress.com

It was during during his encounter with the detectives that Horváth learned that a charge had been filed against him: breach of confidentiality. Considering that up to this point Horváth didn’t divulge any details about those companies which were, according to him, purposefully not investigated, it is really questionable whether this charge can be maintained. Later it also became clear that NAV already on December 11 filed a police report against Horváth with the Emergency Police’s National Detective Section, not only in connection with the breach of confidentiality but also with the abrogation of fiduciary duties. They only neglected to inform András Horváth of the charges against him.

A right-wing blog gleefully announced that Horváth might receive a three-year jail term. On the other hand, TASZ, the Hungarian equivalent  of the American Civil Liberties Union, alongside other groups active in the defense of the law like Transparency International, considers the police search most likely illegal. Whistleblowers have appropriate protection in Hungary. According to a 2009 law (Law  CLXIII, Act 21 § (5) “filing for breach of confidentiality cannot be applied unless it was done in bad faith .” That is, if it turns out that Horváth made malicious and unfounded charges. But first his charges must be investigated.

Others rightly compared the case to the UD Zrt. scandal in which the victim, Ibolya Dávid, president of Magyar Demokrata Fórum, a since defunct right-of-center party, ended up being the accused. UD Zrt., most likely at the behest of Fidesz, spied on her and on her party. That was in 2008. By the summer of 2009 she was a defendant, and as of today she still hasn’t been able to clear her name in court. Only recently, after she and her co-defendant Károly Herényi were acquitted, a judge ordered that the whole procedure be started again from the very beginning. Viktor Orbán doesn’t forget easily. He blamed her for his defeat in 2006 when she refused to go along with a joint Fidesz-MDF ticket. But Dávid knew what she was doing. Her experience in a Fidesz-MDF-Smallholders coalition when she was minister of justice taught her a thing or two about how Orbán deals with those whom he needs to acquire power and how he subsequently ruins them.

Viktor Orbán naturally has been fairly quiet on the subject of the possible tax fraud at NAV.  He spent the last two days in Brussels. During the press conference after the meetings he was asked about the scandal. He made no mention of the search and seizure at Horváth’s apartment yesterday morning. Instead he explained why “the state machinery hasn’t moved yet.” He would like “to have answers to three simple questions: who committed what and when.” Can you imagine what would have happened to Horváth if he had obliged and answered these questions? Surely, given how the Hungarian system works, by now he would be in pre-trial detention.

When Viktor Orbán is honest: The Hungarian constitution is not a liberal document

It was only today that I managed to find more than an hour to listen to Viktor Orbán’s speech to the honorary consuls who gather every five years in Budapest to reinforce their ties to the country they serve. An honorary consul doesn’t have to be a Hungarian national. For example, I learned that an American professor who teaches in a nearby college in Connecticut just became an honorary consul. Apparently Hungary has honorary consuls in 100 countries, only 54 of which have official Hungarian consular service. In the United States there are 18-19 honorary consuls strategically placed in different parts of the country.

The event took place on September 18 in the chamber that was the home of the Hungarian Upper House before World War II. By all descriptions the consuls found the prime minister’s speech elevating and, although his speech was not interrupted by periodic applause, at the end the audience gave Orbán a standing ovation.

The speech in some ways was quite remarkable. It was a curious combination of surprising honesty and unsurprising falsehood. I doubt that too many people in attendance comprehended the full significance of what they heard.

What did Orbán want to accomplish with this speech? To provide the honorary consuls with ammunition to defend Hungary against foreign criticism. Or at least to explain away Hungary’s bad press in the international media as based on misconceptions. He admitted that these consuls most likely had a hard time in the last three years. Hungarian nationals see their own country differently from those who look at Hungary from the outside. But he offered a few fundamental facts that might make the consuls’ work easier.

First, Orbán tried to explain his government’s position vis-à-vis the European Union. Ignoring the fact that in the last years his anti-European Union speeches have multiplied and become increasingly antagonistic, he tried to convince his audience that he and his government are not euro-skeptics. They are only euro-realists. During the course of the speech it became crystal clear that Hungary has no intention of joining the eurozone and thus adopting the euro as Hungary’s currency. Of course, Hungary is required to join the eurozone eventually, despite the fact that the new constitution includes the statement that “Hungary’s currency is the forint.” Since Hungary is obligated to join the eurozone, avoiding this obligation can be accomplished only by leaving the European Union.

There was another issue about which he was brutally honest. He told his audience that the new Hungarian constitution is not a liberal document because, in his opinion, “a liberal constitution cannot be the basis of the economic renewal of the country.” He admitted that this is “a strong statement, perhaps even debatable,” but this new Hungary he is building cannot be founded on a constitution that emphasizes “the interests of the individuals.” This is a fact that he will not hide from all those countries whose constitutions are based on liberal concepts. One day other countries will come to realize that indeed a “new economic system” cannot be built on a liberal basis. He categorically stated that economic competition and liberalism are incompatible.

He admitted that questioning the validity of individual rights might have given rise to harsh international criticism and huge debates, but Orbán proudly announced that he managed to prevent such adverse reactions by “a political novum” called “national consultation.” I assume you all remember those 13-14 meaningless questionnaires sent out to 8 million Hungarian citizens. One of these inquired about the relationship between the rights of individuals and the rights of the community; 85% of those who answered agreed that both should be included in the new constitution. With that he avoided possible controversy over the new illiberal constitution, or at least so he said.

What can we learn from this speech about Hungary’s breakthrough economic system? Nothing new. Hungary will not be a welfare state but a workfare state. Hungary will handle the economic crisis differently from the rest of the world. Common wisdom holds that after an economic crisis there will be a slow recovery and that as an economy starts to recover investment will grow and with it job opportunities. The Hungarian solution will be the opposite of this sequence of events. They will start with work which will eventually solve the economic crisis. I don’t think that I have tell you how fallacious this argument is. If there is no private investment and the state doesn’t have money, as Orbán admitted in this speech, then only useless public work can be provided. And digging roadside drains financed by public money will never amount to anything. Orbán invoked the example of Roosevelt, but anyone familiar with economic history knows that the end of the Great Depression in the United States wasn’t brought about by FDR’s public work projects.

As I said at the beginning, the speech was a combination of brutal honesty and outright lies. Here are a few lies. In 2010 Hungary was in a worse economic state than Greece. Since then Hungary’s economic policy has been most successful. In the European Union only five countries managed to lower their national debt and Hungary is one of them. This, of course, is not true. In fact, the national debt has grown. It is true that the excessive deficit procedure was lifted by Brussels against Hungary, but the budget is so tight that there is a good possibility that Hungary will not be able to hold the 2.9% deficit currently projected. He repeated the lie that before 2010 only 1.8 million people paid taxes and now there are 4 million. And, not a lie but a conveniently undated forecast, Hungary will be the leading economic force in the region just as it was ten years ago.

And finally, a few interesting comments from the Q&A session. This is always the time that Orbán improvises and comes up with some interesting “facts.” All cities east of Strasbourg are “German cities.” Like, for example, Vienna, Prague, and and even St. Petersburg. There is only one exception: Budapest. The same Budapest where the majority of the population as late as the second half of the nineteenth century was largely German-speaking? Where first there was a German theater and only afterwards a Hungarian theater?

His thoughts on networking were also amusing. For Hungarians networking is a strange idea because what is networking really? Hungarians are friendly and hospitable, but networking is based on “calculation.” One does something for somebody in order to get something in return. This is really alien to the Hungarian psyche. But the world went a different way and, although it is nice to be old-fashioned occasionally, yes, Hungarians must learn the art of networking.

One final word on Orbán’s illiberal constitution. Yesterday, Károly Herényi, the second man in the Ibolya Dávid-led MDF, wrote an article in Galamus. Here is a man who is not considered to be a far-left liberal. On the contrary. He was a member of a moderate right-of-center party. And what does he say? There is no way that Orbán’s constitution can stay after a (possible) victory by the democratic forces. It must go. He considers any attempt by Gordon Bajnai to make a deal with Viktor Orbán a mistake. He suggests holding a referendum on the constitution right after the election to decide its fate.  I agree with him.

“The beginning of a new era” as Gordon Bajnai’s E14 envisions it

Yesterday was highly anticipated, not only in opposition circles but also among government officials and Fidesz politicians. Gordon Bajnai was to deliver a speech he called “Evaluation of the Orbán Government.” Actually, it was more than that. I would call it an opening bid to become the next prime minister of Hungary.

A blog writer with whom I had been unfamiliar until now considers Bajnai a bad speaker and charged the organizers with placing two even worse orators ahead of him so that Bajnai would look good: Péter Juhász of Milla and Péter Kónya of Solidarity (Szolidaritás).

Juhász led off. A friend of mine who was present thought he gave a splendid speech. Well, the audience didn’t seem to think so. Moreover, I suspect that there weren’t too many Milla supporters present in the rather large audience because Juhász’s appearance didn’t meet with much enthusiasm. The applause wasn’t exactly thunderous.

Several times I’ve expressed my doubts about Bajnai’s decision to join forces with Juhász because I consider him someone whose political acumen is sadly lacking and because it is hard to judge the size of the electorate that stands behind him. I was often disappointed in his interviews that showed a total lack of political finesse and no grasp of the present situation or the rules of modern democracy. One cannot achieve anything in politics by fueling the citizens’ hatred of politics and politicians.

Now to my reaction to his speech yesterday. First, I disagree with Juhász’s contention that in the past twenty years “the powers-that-be excluded people either because they were right-leaning or left-wingers; or because they were liberals, or because they were independent ‘civilians’; or because they were poor, Gypsies, Jews, gays, disabled, or homeless.”  Well, I don’t remember any governments actually excluding these people before 2010, but obviously Juhász and I see the world differently.

I also noticed that Juhász does not always use the right words when describing certain political concepts. For example, he claims that “we want only one thing: we should have representation. We want to be part of Hungary as simple citizens.”  For Pete’s sake, were the simple citizens disenfranchised in Hungary in the last twenty years? Didn’t they have representation?

Or here is another expression used incorrectly in the context of Hungarian politics. According to Juhász “politics is too important a thing to leave it to professional politicians.” Juhász used the expression “megélhetési politikusok”  (megélhetés means livelihood), coined by an MDF politician. The original usage  referred to a former MDF member who changed party affiliation during the first Orbán government in order to become a member of the cabinet. So, he left his convictions behind to be promoted and remain part of the governing elite. He did it for his material and professional benefit. This is not what Juhász had in mind.

One could also argue with the generalization that all governments since 1990 were “sly, contradicting themselves, liars who took us for fools.” These descriptions fit the present government better than any others before. This kind of generalization is good for only one thing: to shake the confidence of the population in democracy. If all governments in the last twenty-two years were rotten to the core, what is the likelihood that this crowd will be drastically different? Because Péter Juhász says so?

And finally, Juhász said a few words about MSZP, alluding to the fact that there are voices within the party that mistakenly believe they can win the elections alone. There is quite a bit of truth in that, although the group within the party that advocates cooperation is growing. But it is clear that the party leadership would like MSZP to be the leading force in forging that cooperation. I find that desire quite natural. After all, MSZP is the largest party and the only one with a nationwide political machine. But to say, as Juhász says, that “the socialists traditionally don’t like coalition governments and power sharing” is outright wrong. I don’t know whether anyone read Juhász’s text before he delivered it, but you don’t have to be a political wizard to know that all the governments in which the socialists participated since 1994 were coalition governments. Even between 1994 and 1998 when the socialists had an absolute majority in parliament and didn’t really need SZDSZ in order to govern, Gyula Horn asked the liberals to join his government.

Péter Kónya of Solidarity was the second speaker. It seems that perhaps the majority of the audience came from the ranks of Solidarity, which is a union-based organization. As a former union leader himself, Kónya concentrated on labor demands but always added that the changes employees would like to see depend on economic performance. He listed very specific issues the next government should concentrate on: taxation, minimum wages, new labor laws, unemployment insurance, programs for the Roma, and the right to strike, which has been greatly circumscribed.

And then came Gordon Bajnai. Only a few days ago the organizers of the phony civic organization that is responsible for the 200 million forint anti-Bajnai-Gyurcsány campaign compared Bajnai to a funeral director. Contrary to that image, Bajnai is becoming a good speaker, although he worked from borrowed material. His reference to Hungary not being a “normal country” was first used by Ibolya Dávid of MDF. His emphasis on “hope” reminded me of Barack Obama’s 2008 campaign slogan. His references to the half a million Hungarians who left the country and his emphasis on producing more children were obvious appeals to patriotic, perhaps right-of-center sentiments.

Here I will pick two themes from the speech. One is Bajnai’s attitude toward MSZP and the other his view of his own place in a future “togetherness.”

Bajnai seems to be convinced that the majority of currently undecided and/or disillusioned voters will never vote for MSZP. This assumption seems to me outright wrong if we believe polls that focus on the undecided voting bloc. All polls attest to the fact that the majority of the undecided voters lean toward the left and not the right. Believing, as Bajnai does, that there are at least a million people who would under no circumstances vote for MSZP is simply not warranted. So alienating MSZP in the hope of gaining millions of votes from the allegedly right-of-center voters is I think a mistake. Because I firmly believe that there is no true moderate right in Hungary. The 1.5 million Fidesz voters will never vote for E14. The undecided, if they vote at all, will vote for the left. If E14 positions itself to the right, it may end up nowhere.

If Bajnai had only claimed that MSZP at the moment doesn’t have enough voters to win the 2014 elections alone, he would have been perfectly right. But adding that “it doesn’t have enough credibility or enough expertise to govern” was an unnecessary dig if Bajnai would like to forge an alliance with MSZP.

Glorious new era /aheartforgodsglory

The second theme that will further infuriate MSZP politicians is that Bajnai practically introduced himself as the next prime minister of Hungary. I consider this a premature announcement. At the end of the speech he switched to the first person singular and declared himself to be the leading force in the change that will be more than a change of government but the beginning of “a new era.” To this end he will “not allow any diversionary maneuvers … petty political games, positioning and selfish tactics.” He will “concentrate all his energies to organize the victims of the current regime.” And finally, he “will shape the dreams and hopes of [his] compatriots into a concrete government program.”

“Come with me, join the coalition of hope!” This is how Bajnai concluded his speech. He asked the people to join him at a mass demonstration on March 15, an idea Ferenc Gyurcsány first suggested in his speech at DK’s Second Congress on January 26. I might add that Bajnai didn’t mention the Demokratikus Koalíció at all, which might be a politically savvy move on his part, although he must know that if anyone supports his candidacy it is Ferenc Gyurcsány. One thing is sure: devoted DK supporters are already mightily offended.

MSZP supporters will be too. And if my hunch is correct, this constant harping on the bad governing of the past will not go over well. After all, Gordon Bajnai was a member of the Gyurcsány government that is now being mightily criticized by Bajnai’s associate Péter Juhász. Moreover, he was a prime minister of an MSZP-SZDSZ government that Milla’s leader considered to be as bad as the Orbán government. The difference of the last three years is “only qualitative of everything we didn’t like in the last ten or twenty years.”  And why ten years? Prior to 2002 it was better?

There are just too many contradictions that leave me uneasy about the success of the effort and the program that this odd coalition of a liberal economist and a populist non-politician with a hatred of politics can come up with.