Another corruption case and the news of the day

Yesterday I promised to write about another scandalous affair, this time involving a close friend and business partner of Viktor Orbán, István Garancsi. This morning after I read a number of articles on the subject I almost gave up on the idea. The case is so complicated–surely for good reason–that it takes some doing to figure out exactly what happened. Here is what I managed to put together. I’m waiting for more input from readers.

Shortly after Viktor Orbán won the election, companies dealing with distance heating wanted to raise their prices, a move that would not have been popular and something the new government wanted to avoid. So the government instructed the state-owned MVMP Partner Energiakereskedelmi Zrt. to supply gas to these providers from its reserves at a lower rate. In return, the government made sure that MVMP would receive cheaper western gas by way of compensation. In fact, the government bought a great deal more gas than was necessary to replenish the reserves. The extra, which was in fact the bulk of the purchases, was sold by MVMP to a company called MET. It then sold the inexpensive gas at a handsome profit.

MET has its headquarters in Switzerland, but some of its subsidiaries are in Cyprus, the British Virgin Islands, and the Cayman Islands. Behind its complex business structure are two Hungarians:  György Nagy and István Garancsai.  György Nagy was the founder of Wallis Rt., an investment company, whose CEO between 2000 and 2006 was Gordon Bajnai. Subsequent to Wallis Nagy was involved in several successful business ventures. István Garancsai is the owner of Viktor Orbán’s favorite soccer team, Videoton. He also owns a small credit union, Duna Takarék, which miraculously was not nationalized when all others were. It turned out that it was Duna Takarék that gave a loan of 600 million forints to Viktor Orbán’s soccer foundation in Felcsút.

These offshore companies got inexpensive gas thanks to the largesse of the Hungarian government. They then sold it at the going market price in Hungary. According to estimates, their profit was 50 billion forints in 2012 alone.

Those of you who are interested in the extremely complicated details should read the two articles published by atlatszo.hu on January 28 and February 3.

Just a taste of the complexity of the businesses involved / Source: atlatszo.hu

And now let’s move on to some important news of the day. Early in the morning it became known that although the Hungarian government claimed that the European Commission supported its agreement with Russia concerning Paks, the claim is not true. Of course, that doesn’t surprise me because members of the Orbán government are not known for their truthfulness. On Monday, for example, Viktor Orbán delivered a twenty-five-minute speech in parliament in which there was not one truthful statement about the real state of affairs. At any event, when the government initially made its claim that the EU was on board with the Paks deal,  HVG was skeptical and inquired from the commissioner for energy about the case. The reporter was told that the commissioner hadn’t received detailed information and that they were waiting until they had it in hand. Today came the news that the European Commission will investigate the case very soon.

And in a blow to the Hungarian government’s tax policy, the European Court of Justice ruled that

Articles 49 TFEU and 54 TFEU must be interpreted as precluding legislation of a Member State relating to tax on the turnover of store retail trade which obliges taxable legal persons constituting, within a group, ‘linked undertakings’ within the meaning of that legislation, to aggregate their turnover for the purpose of the application of a steeply progressive rate, and then to divide the resulting amount of tax among them in proportion to their actual turnover, if – and it is for the referring court to determine whether this is the case – the taxable persons covered by the highest band of the special tax are ‘linked’, in the majority of cases, to companies which have their registered office in another Member State.

To translate this convoluted sentence into plain English, the extra tax that foreign-based retail chains had to pay since 2011 is discriminatory. The judges instructed the Hungarian courts to make a ruling in accordance with EU laws in those cases where foreign companies suffered financial discrimination. Apparently the contested tax revenues amounted to about 90 billion forints. According to legal experts, it is likely that the Hungarian government will end up paying a great deal more compensation to these companies.

As for a resolution on the fate of the “Gabriel” monument, the suspense remains. Tomorrow János Lázár will have a meeting with various Jewish organizations. A leak published by Népszabadság claimed that the erection of the monument has been “postponed,” a statement that was promptly denied by Antal Rogán. Meanwhile one Jewish organization after the other is returning the money received from the government for the events of the Holocaust Memorial Year. In brief, it is a mess. But Viktor Orbán doesn’t like to admit defeat, and therefore there is a good possibility that he will go ahead with the project. Let’s hope that he realizes the gravity of such a decision given the general climate both within and outside Hungary.

“Is Hungary being ruined by a scoundrel or a fanatic?” A debate

Bálint Magyar’s interview describing the Orbán regime as a post communist mafia state made a big splash in Hungary. The phrases “mafia government” and “mafia state” spread like wildfire. Readers may recall that I gave a fairly detailed summary of this interview in three parts under the title “Bálint Magyar: Viktor Orbán’s post-communist mafia state.”

Given the Hungarian penchant for open discussion it was not surprising that soon enough a critique of Magyar’s thesis appeared in the same publication, Élet és Irodalom, in which the original interview had been published. Gábor Horn, the author of the critique, is, like Magyar, a former SZDSZ politician. Horn disagrees with Magyar in fundamental ways. A week later, Horn’s article was analyzed by Mihály Andor, a journalist whose articles and short pieces often appear on the Internet site Galamus.

I will leave a discussion of  the merits of Horn’s arguments to the readers. I’m sure that an animated debate of his and Arnold’s arguments will follow. Here I will merely add a few new pieces of information that might be relevant to the discussion.

Gábor Horn considers Magyar’s analysis a good starting point, but he himself sees Viktor Orbán and his regime “fundamentally differently.” After briefly outlining Magyar’s thesis, Horn says that Magyar is on the “wrong track.” His findings are the “result of wrong perception.” Because “the situation is worse.” It would be better if Hungary were a well organized mafia state. Mafias work rationally.  Mafia leaders want to gain maximum profit, they leave those who don’t break the rules alone, they are interested in prosperity.

But, Horn claims, “the government of Orbán is anything but rational. … Viktor Orbán is not a godfather, not an anti-Semite, not a racist as so many people want to portray him. None of that is true.” He is not a mafioso, although Horn admits that people close to him “managed to receive considerable economic advantages.”

Instead, “Viktor Orbán truly believes in his own version of a unique third road for Hungarian economic development.” Here Orbán echoes those populist/narordnik/népies writers and ideologists of the 1930s who thought in terms of a third road, something between socialism and capitalism, that would make Hungary a prosperous, mostly agrarian state.

Source: artsjournal.com

So, Horn continues, the “mafia-like signs” are not the bases of Orbán’s system; they are only “collateral expenses” of the real goal. After all, Orbán knows that politics costs money. He “tolerates these political expenses but neither individual enrichment, money in general, nor economic gain is the goal of his politics.” This (I guess the mafia-like behavior) is “an important instrument in the service of the GREAT BELIEF.”

In Horn’s opinion it this zealous belief in an ideal economic and social system that drives him to take on the European Union, the IMF, the multinational companies, the banks, and everything else that stands in his way. Just as he truly believes that the old-fashioned school system serves his vision because it will lay the foundations for a better world. He is doing all this not because of dictatorial impulses but because he is convinced that “individual ideas are common fallacies and fallacies lead to blind alleys.” Orbán truly believes that the steps he is taking will lead to “the salvation of the country.” They are “not for his individual enrichment and his family’s economic supremacy.” Horn quickly adds that naturally Orbán has no objection to “doing well himself, but that is only a secondary question for him.”

Horn is also certain that “not for a moment does Orbán think that we don’t live in a democratic country. He just thinks that interpreting the law according to his will also serves the interests of the people. As all followers of the third-road ideology, he moves in a system completely outside the realm of reality, except in his case he manages to receive unlimited authority to execute his ideas.”

This is more or less the gist of Gábor Horn’s argument which, it seems, didn’t convince everyone. It certainly didn’t convince Mihály Andor. After reading Bálint Magyar’s interview and Gábor Horn’s article, he posed the question whether “the country is being ruined by a scoundrel or a fanatic.” That question can be answered definitively only by looking into Viktor Orbán’s head. Since we cannot do that, we have to judge from his actions, and from his actions “a cynical picture emerges of a man who wants to grab and hold onto power at any price.”

Andor outlines a number of Orbán’s moves that aim at sowing hatred between different groups in order to ensure his own unlimited power. If it were only great faith that motivates him, he wouldn’t have to turn man against man. When it comes to ideology, the originally atheist Orbán “paid off the churches that would take up the work of educating obedient servants of the state.”

If Orbán is not primarily interested in his own enrichment, what should we do with all the information that has been gathered over the last ten or fifteen years about the shady dealings of the extended family? Andor finds it difficult to believe that Orbán’s attitude toward money is no more than “collateral expenses in the service of politics.” Andor, like so many others, including Ferenc Gyurcsány and Mátyás Eörsi, believes that the Orbán family’s enrichment is one of the principal aims of the prime minister of Hungary.

Andor brings up a recent news item. Lőrinc Mészáros, mayor of Felcsút and chairman of the Puskás Academy, just took out 800 million forints worth of dividends from his construction company that employs 250 men. I wrote about this mysterious fellow who not so long ago worked as an artisan. He used to lay down gas pipes going from the main into the houses of Felcsút. Today he is obviously a billionaire. And, by the by, he also received 1,200 hectares of land through the land lease program of the Orbán government. Some people think that the connection between Orbán and Mészáros is more than meets the eye. They suspect that Mészáros is a “stróman” (the Hungarian spelling of the German Strohmann, dummy, front man) in Viktor Orbán’s service.

And more news about the strange financial dealings touching on the Orbán family appeared only yesterday. In 2008 Mrs. Orbán (Anikó Lévai) purchased a 90m² apartment on Gellért Hill where Ráhel (24), the oldest Orbán daughter, lives. Krisztina Ferenczi, an investigative journalist who has been looking into the Orbán family’s enrichment for at least ten years, found out lately that the apartment right next door was purchased by István Garancsi, who just happens to be the owner of Viktor Orbán’s favorite  football team, Videoton. He is also the man who owns the only credit union that will not be nationalized, ostensibly because he is in the middle of converting it into a full-fledged bank. Most likely Orbán told Garancsi about the impending nationalization and advised him to begin converting his credit union into a bank to save his business. By the way, it was Garancsi’s credit union that lent a considerable amount of money to the Puskás Academy.

It turns out that Orbán’s only son, who plays for Videoton, has been living in Garancsi’s apartment ever since 2011. Apparently the young Orbán is neither a good football player nor a particularly enthusiastic one. He played only once last season. But Garancsi doesn’t seem to hold that against him. He is renting out his apartment to the young Orbán. The financial details are of course not a matter of public record.

Hungarian Football Championship: Another scandal

Unlike me, Zsófia Mihancsik, editor-in-chief of Galamus, is interested in football and therefore notices bits of news I wouldn’t catch.

Saturday was the final match for the Hungarian championship. The Győri ETO won against MTK. This is the first time in 30 years that the team from Győr won the honors. The heyday of Győri ETO was in the early 1980s when twice in a row the team captured the title of Hungarian Champion. After such a long dry spell the fans were understandably excited and decided to make a very nice gesture. Since out of the 30 members of the team 17 are foreigners coming from 10 different countries, they held up a sign saying “Many nations, one team–Thank you!”

Well, some might say that this was a thoughtful gesture, but it wasn’t taken as such by the nationalist football fans. Eventually the organizers of the Győr fan club had to explain that they are “not committed to these countries”; they simply wanted to call attention to the fact that the players come from many different nations. From the apologetic letter it is evident that most of the criticism stemmed from the presence of Romanian and Slovak flags. The fan club’s leaders had to admit that they made a mistake because “unwittingly they hurt the feelings of many Hungarians.” The authors of the letter emphasized that it was only a small number of fans who insisted on celebrating the victory this way and immediately announced that after fourteen years of existence the fan club had folded. Finally, they asked forgiveness “from every Hungarian and fellow fans, but especially from our Hungarian Friends who live outside of the borders of Hungary.”

A group of extremist football fans who call themselves “ultras liberi” led the pack against the Győri ETO fan club. The comments aren’t available at the moment, which is probably just as well. The few Zsófia Mihancsik quotes on Galamus are obscene and mostly abusive, especially when it comes to the Slovaks and the Romanians. There was only one person who took the side of the Győr fan club, but unfortunately his reasoning was based on his belief in the restoration of Greater Hungary under Hungarian leadership. He admitted that he is anti-Semitic and anti-Roma and that he considers “Negroes” stupid, but he saw nothing wrong with the sign of “Many nations–one team” because he believes in a Hungary that extends to the outer perimeter of the Carpathian Basin. “But the players of  these different nationalities (Romanian, Slovak, etc.) helped to achieve the victory of a Hungarian team.” He added that “this is a perfect example of what was going on in Hungary for 900 years when we lived in one country with the Romanians, Slovak Serbs, Croatians, Ruthenians, etc.”

Out of curiosity I looked at the national composition of some of the better known Hungarian football teams, starting with Videoton, Viktor Orbán’s favorite club. Here out of the 26 players there are only 10 Hungarians. As opposed to Győr, where most of the foreigners come from Central and Eastern Europe, Videoton seems to be looking around for talent in Spain, Portugal, and Brazil, although they also have a fair number from the Balkans (Serbs and Montenegrins).  Ferencváros is also full of foreign players, whom Hungarians seem to call “foreign legionnaires.” Out of the 24 players only 9 are natives. Ferencváros’s leadership likes the Brazilians and the French, but Serbia is also represented on the team with two players. The most Hungarian teams are the Loki from Debrecen and MTK in Budapest where the Hungarian players are in the majority.

Nikola  Trajkovic, who won the game for Győri ETO – http://www.sport1tv.hu

I might add that the match’s only goal was by Nikola Trajković, a Serb. The football career of Trajković illustrates how futile it is to think in terms of national teams. He played for several lesser known Serbian football clubs before moving on to the Serbian and later to the Montenegrin national team. He made a little side trip to Greece where he played for the Thrasyvoulus Fylis.

Another player on the Győr team is the Slovak Marián Had, who’s had an even more eventful career than Trajković. He started with lesser known Slovak clubs and then moved on to Brno in the Czech Republic. Soon enough he got a very lucrative job with FC Lokomotiv in Moscow. In 2007 he played in Portugal, and later again in Moscow. In 2009 he played for Sparta in Prague. Now he is in Hungary.

So, what are we talking about? National teams? Forget about them. It is simply business. Hungary doesn’t have the money to get the very best, but they are not stuck in the mud either. If they can’t find competitive Hungarian players the coaches go abroad and get the best they can. It’s time to get used to it.