How central bank governor György Matolcsy enriched himself at taxpayer expense, part II

April 27, 2017

“If we place all the pieces we have of the mosaic of the network of foundations and companies around Matolcsy next to one another, a system unfolds. It involves a party foundation, a second, closely held, state-owned foundation, a privately owned firm, and front companies. It is operated by a close circle of confidantes, and is mainly kept alive by public money.”

Translation of Jenő Böszörményi’s article “The Matolcsy family’s business affairs, part 2” appearing in the February 9th, 2017 edition of print weekly Magyar Narancs (pp. 13-18) under the title “You can never have enough straw men”.

The editor of the Budapest Sentinel has taken the liberty of separating and highlighting the most important texts of the otherwise lengthy article.

How can we buy a company for pennies that our minister husband earlier financed to the tune of several million? And how can we enrich ourselves from the coffers of a party foundation of which we ourselves are the director? The Matolcsy family has the answer.

In our previous article we described the steps taken by György Matolcsy and his family to acquire from the state-founded Tulajdon Alapítvány “[Ownership Foundation, TA] the economic research institute Növekedéskutató Intézet Kft (and the foundation’s real estate), and the tidy sums the institute made in its heyday under the first Orbán government. An important moment in the acquisition manoeuvre came in the early days of 2001, when Matolcsy’s wife, Gyöngyi László – although according to a matrimonial property ownership contract found among the company papers, in reality the economy minister in the first Orbán government, now president of the central bank – acquired (at least) a 75% stake in the company in question. However, the business machinations of Matolcsy and members of his family do not end there. In the following report, we will show how Matolcsy family members became owners of another two firms that were inflated (at least in part) by state money during his first term in office. We will also explain how Matolcsy used the TA to tap the Fidesz party foundation, of which he was for a time the president, and how he ploughed a not insignificant part of the money into his own family enterprises.

Business going cheap

In April 2001, roughly in parallel with the acquisition of a controlling interest in Növekedéskutató, two firms were established whose main activity was also sociological research. What they also had in common was (1) that in the two years after they were set up – that is, in 2001 and 2002, the time of the first Orbán government – they produced never to be repeated results, and (2) a few years later they came into the ownership of Matolcsy’s wife and son at a very reasonable price. The fact that György Matolcsy was economy minister at the time will be of significance in what follows.

The first company was Eurotourism Kutató és Tanácsadó Bt [Eurotourism Research and Consultancy Partnership] which Mrs. Marianna Harczi Horváth, whose name cropped up repeatedly in our earlier report, set up with one of her children with starting capital of 100,000 forints. Harczi, as internal partner and company director, took a 90% stake in the enterprise. (At the time, Harczi was TA’s secretary and a member of its board of trustees, as well as part owner and managing director of Növekedéskutató – see the section “The president’s men”.)  In its first, incomplete year, the firm promptly saw revenues of 42 million forints and an operating profit of 27 million, then managed to increase its success in the following two years, raising its revenue to 65.5 million forints, and its operating profit to 53.6 million. Besides revenues totalling 107.5 million forints in two years, Eurotourism’s operating profit of 80.5 million (!) and post-tax profit of 64.1 million were quite dazzling. This achievement is particularly noteworthy in light of the fact that, according to its reports, the firm at the time had no employees and hardly any subcontractors, suggesting that Harczi herself carried out the bulk of the commissions.

Then, after 2002, came the crash: the firm’s revenue was a flat zero for two years, and the previous good times never returned. Up to 2015 inclusively the firm produced revenues of 31 million forints (an annual average of 2.4 million), and its total post-tax profit for the period was half a million. It is hard not to link this rise and fall of its fortunes – as we will see later – to the fall of the first Orbán government, and the end of György Matolcsy’s term as minister.

Matolcsy et al bought the firm under very peculiar circumstances in 2006. The first change of ownership took place on new year’s day, 1 January. In the new set-up, Gyöngyi Matolcsy was the internal partner with a 90% stake, while Harczi replaced her child as external partner. In September, Harczi divested her remaining 10% and finally exited, Matolcsy’s older son, Máté Huba took her place, followed two year’s later by his younger brother Ádám György. The firm thereby went in its entirety to the Matolcsy family.

The circumstances of Harczi’s departure raise numerous questions. According to the financial figures, Harczi never once took a dividend from the firm, while according to the contract she carried out her duties as managing director without remuneration (pay). Thus on this legal basis no income whatsoever  arose from the company profits. According to documents relating to the change of ownership, accessible in the company registry, she divested her share in the firm on both occasions for its nominal value, that is 90,000 and 10,000 forints respectively, while the firm was worth over 50 million at the end of 2005. From a business point of view this was clearly an irrational move: Eurotourism’s own capital stood at 51.5 million forints, with total liabilities of half a million. It was the same looked at from the asset side: 37.1 million in treasury bonds, a further 12.2 million in mixed financial products (including 10.5 million in cash!), and in addition the firm had several million in receivables and other assets. The real value of the partnership was without doubt somewhere around 51 million.

On the basis of court documents, the transfer of the stake was structured as follows. Mrs. Matolcsy did not pay Harczi directly, but using a more complex method, Harczi first struck an agreement and settled up with the company, while in parallel Mrs. Matolcsy struck an agreement with the firm and paid in her share of the capital, 90,000 forints. According to data in the company’s financial reports, the balance sheet total at the end of 2005 was 51.9 million forints, while a year after the change in ownership – with 1.9 million in revenue and 2 million in profit – it was 53.9 million. If the company had paid Harczi properly in proportion to its real value, the balance sheet total would have decreased drastically, and in effect nothing would have remained in the company. The numbers only add up if, for a stake worth 51 million forints, Harczi only received its nominal value or something close to it, of the order of 100,000 forints. It is hard to come up with a rational explanation for this other than, as the owner of Eurotourism Bt, Harczi was just the Matolcsy family’s straw.

The case of the other company, Ú-T Eurocon Tanácsadó és Szolgáltató Bt, is similar. The partnership was set up by Dóra Újvári and János Tornallyay with initial capital of 80,000 forints. Újvári had qualified majority control (registered at 87.5%) but remained the external partner, while Tornallyay undertook as internal partner to run the firm without pay while, as a minority owner, also assuming unlimited liability for its business operations. In the two years in which the firm came from nowhere to enter the world of social scientific research its performance was, like that of Eurotourism, outstandingly good. Revenue in 2001 was 23.4 million forints and 39 million in 2002 (a total of 62.4 million), while its operating profit for the two years was 25.4 million, and its profit after tax 21.2 million. Although the turnover did not drop to zero later on, the firm’s results for 2003 to 2010 were rather more modest, with average annual revenue of 10 million forints. Matolcsy used the same template to gain ownership as for the other firm: in December 2006, the 20-year-old Ádám György Matolcsy took János Tornallyay’s place as internal partner, then on new year’s day 2008, Gyöngyi Matolcsy replaced Újvári. The transfer of the stake also used a similar construction: the exiting partners settled up with the firm – and the financial reports and court documents suggest that they, too, only received the nominal value of their capital investment. Ádám György Matolcsy and Gyöngyi Matolcsy simultaneously paid in the nominal sum. The only change was that Ádám György Matolcsy, who also took on the running of the company, put 70,000 forints into the coffers, instead of the 10,000-forint capital deposit, thereby increasing his stake to 50%, so they would own the firm 50-50 with Újvári (which, however, for years they omitted to transfer). However, the value of the partnership at the time of both manoeuvres was close to 15 million forints.  Thus Matolcsy et al once again pulled off a great deal: for 140,000 forints they got hold of an asset worth a hundred times more. The transaction, irrational from an economic point of view, can only mean that the firm belonged at least in part to the Matolcsys right from the start. This is “at least in part” because Újvári and Tornallyay, unlike Harczi, took money out of the company before it was acquired by the Matolcsy family. In 2003 they took dividends of over 3 million forints, and in 2005 they took 13.5 million. The transfer of the stake for its nominal value also raises the question of who this sum went to: to Újvári and Tornallyay, or perhaps to those who only later formally took the company into their own name? The latter is made more probable by the fact that Ádám Matolcsy was able to partake of a 9.3 million-forint dividend booked in the year 2006, although up until December of that year, the owner was János Tornallyay, who let a highly prosperous business that he (?) had run for years go for just 10,000 forints.

Help from the state

But where did the revenue that so nicely poured into the firms in 2001 and 2002 come from? We have only partial data on this. György Matolcsy was economy minister in the then reigning Fidesz-FKgP-MDF government, so we asked his current successor, the Ministry of National Economy (NGM) what contracts the high authorities of the time had struck with the firms. The NGM claimed that it had absolutely no information. Luckily, the public procurement notice did. The 2001/8 and 2002/7 editions of the official publication reported the results of economy ministry tenders for economic strategy analysis. Entirely coincidentally,

the firms that would later be acquired by the Matolcsy family won contracts.

Eurotourism would write about the information society and the role of foreign capital, while Ú-T Eurocon would write about domestically owned enterprises. In both processes, the ministry signed contracts with a total value of 458 million forints (USD 2.2 million), of which the two firms got 57.6 million for themselves, or an eighth of the value of the tenders. However, according to a reporter for Magyar Hírlap at the time, GfK Hungária Piackutató challenged the result of the second tender, which the public procurement adjudication commission (KDB) cancelled: GfK’s bids of 1.48 and 2.85 million forints were below the 5.6- and 5.7-million-forint offers from Ú-T Eurocon. Magyar Hírlap quoted the then 26-year-old Újvári, who said that she would carry out the work herself, and no external help would be enlisted beyond gathering material. However, even after the KDB’s ruling, the two firms still took 10% of the commissions on offer.

These sums, of course, only explain a part of the two companies’ revenues in 2001 and 2002, but one cannot disregard the fact that in the case of Ú-T Eurocon, the revenue from the successful bids represented half of overall revenue for the two years (31.5 million forints, although in the end the two orders that fell before the public procurement adjudication commission came out of this). In the case of Eurotourism, the sums drawn down from the ministry gave a quarter of overall revenue.

Thus the economy ministry, run by Matolcsy at the time, played a part in pumping up the revenues of the companies.

In light of this it is very touching that the firms came into the Matolcsy family’s possession between 2006 and 2008, moreover for a nominal price but along with the profits they had generated – the entire profit up to that point in the case of Eurotourism, and at least a part of it with Ú-T Eurocon. The source of a not insignificant part of the profit that accrued to the Matolcsy family were commissions from the economy ministry.

Matolcsy’s ministry financed companies that later went to the Matolcsy clan so cheaply as to defy any economic rationale.

From the date the companies were established and the inflated revenue it is possible to draw the conclusion that the two partnerships were set up specifically to rake in state funding.

“Bourgeois” values

And what happened to the family’s firm during eight lean years in opposition (2002-2010-tran.)? In May 2003, Matolcsy once again became a member of Tulajdon Foundation’s board of trustees, which was presided over by Balázs Botos, who would later become Matolcsy’s deputy state secretary, while Marianna Harczi was the secretary. At the end of the year, Matolcsy became president of the Fidesz party’s re-established Association for a Civic Hungary Foundation [Szövetség a Polgári Magyarországért Alapítvány, PMA], which was funded from the state budget. In January 2004, as we dealt with in an earlier report, he took formal possession of Növekedéskutató Intézet Kft, which was run at the time by Harczi, from his spouse as the result of the termination of matrimonial joint-ownership. According to available data, the state-owned TA and  Növekedéskutató, privately owned by Matolcsy and renamed Magyar Gazdaságfejlesztési Intézet [Hungarian Economic Development Institute, MGFI] in 2007, worked closely together between 2005 and 2010. Perhaps it would be more accurate to speak of a veritable symbiosis – it was difficult to know where one ended and the other began.

There is scant information available about Matolcsy’s Növekedéskutató during this period, but what is accessible is revealing. A considerable amount of material is available on the archived website of the periodical Polgári Szemle [Civic Review] founded by the PMA. It appears that the Matolcsys were mainly occupied with “observing trends”, and their publications often took extracts from articles in the central bank president’s favourite paper, The Economist, which Matolcsy would then comment on with his pithy thoughts and prophecies (we have collected a few of them below under the heading “The Weathervane”). Besides all this, he set up various economic working groups, such as the tax workshop, which – in Matolcsy’s own words – “wishes to help reform the tax system with its analyses”. But the MGFI also published the economic policy discussion paper Jövőkép – a renewed, liberal and social market economy in Hungary. Viktor Orbán personally presented the volume – written by 75 right-wing researchers and edited by Matolcsy – in March 2009, when he was preparing for government. He said the ideas developed in the publication were “mental preparation” for the coming new era. (And it was clearly in terms of “mental preparation” that he said at the same time, “it is not power that we want”.)

Where did the MGFI get the funds for all this? In 2015, (investigative journalism portal-tran.) Átlátszó requested information on support given since 2010, from which it emerged that the PMA contributed 24 million forints to help with the Tulajdon Foundation’s work. This newspaper requested information about the earlier years, and got hold of the contracts themselves. We learned the following:

Fidesz’s foundation subsidised the TA’s research to the tune of 180.9 million forints (USD 900,000) between 2005 and 2010.

In 2005 alone the allowance was just 12 million, but rose to 40 million between 2007 and 2009, approaching 10% of the party foundation’s annual budget. TA got this money for research programmes such as its “observing trends”, “tax workshop”, “regional workshop” and “economic policy workshop”, and for operating a website – just the kind of tasks that Matolcsy’s MGFI was doing at the time. From TA’s 2011 financial report we also learn that the website for which it received support was jovokep.hu, maintained between 2009 and 2011. Matolcsy – as we just saw – used the same title for the discussion paper he published in early 2009. Contemporary press reports confirm that the publication of the paper coincided with the launch of the website (to which a Facebook page, YouTube account and a blog where subsequently attached under the same name). Cached pages from the now defunct website retrieved from Internet Archive confirm the close cooperation between Matolcsy’s firm and the Tulajdon Foundation. Here one could read the MGFI research team’s analyses, and access its programme as well as the detailed report of the March 2009 presentation. Since TA’s pre-2010 financial reports are currently inaccessible, there is no publicly available data on revenue and expenditure that would establish precisely the connection between the two entities. However, the degree of overlap with the operations of Matolcsy’s firm more than speaks for itself: the two bodies did not simply cooperate, but developed a true symbiosis. (See the article “State private foundation” in Magyar Narancs for details of the trials and tribulations of Tulajdon Foundation.)

Thus the Fidesz party foundation run by Matolcsy supported a body in which he also had an interest as a member of the board of trustees.

Until 2007, Matolcsy as president signed the PMA’s contracts – which would later be signed by (current Minister for Human Resources-tran.) Zoltán Balog, while the Tulajdon Foundation was represented throughout by Matolcsy’s old confidante Marianna Harczi. The funding secured by the TA, or part of it, was probably then transferred to Matolcsy’s company, where the trend observance etc. was carried out. Consequently, the money sent by Matolcsy – by a roundabout route involving the interposition of the Tulajdon Foundation – finally arrived back with Matolcsy. Taking into account the fact that the Fidesz party foundation gets 98-99% of its funding from the central budget,

it was public money that migrated

– with the close cooperation of Matolcsy and his associates – to the current president of the central bank. On the basis of the accessible data, it is not possible to know exactly how much. There is a strange coincidence, however: MGFI net revenue between 2005 and 2010 was 179.9 million forints, which is a single million away from the 180.9 million that the Fidesz party foundation transferred to the Tulajdon Foundation over the same period. While precise data that would conclusively prove that all the support to TA landed in Matolcsy’s firm is not available, the coincidence – in terms of the whole amount and several years looked at separately – is quite uncanny. It also speaks volumes that MGFI’s revenues suddenly slumped when the sources provided by the PMA (the party foundation) dried up. This begs the question of how much the Fidesz and PMA leadership knew about the pattern of money transfers.

Who has the money?

MFGI’s total profits between 2005 and 2010 came to about 9 million forints, which compared to revenue of 180 million is not a lot, but of course not all that bad. The reason is that the firm’s overhead was high, which in this case means it used outside contractors. We do not know the identity of Matolcsy’s researchers and other partners – these details are not public. Fortunately, there is one exception, and this company is the same Eurotourism Bt discussed above, owned by Matolcsy’s wife and son. The firm’s asset inventory, obtained from the company registry, shows that at the end of 2009 Eurotourism had a 2-million-forint claim against MGFI (two unpaid invoices) – in other words, the Matolcsy-owned MGFI purchased some kind of services from the consultancy firm owned by his wife and son, the invoices were issues, only the transfer had not yet been made. This is the only scrap of information we have about the business and financial links between MGFI and Eurotourism, but it is perhaps not going too far to suggest that

over the years Matolcsy transferred money to his wife’s firm more than once.

A further surprise is that Gyöngyi Matolcsy’s other firm, Ú-T Eurocon, grew wings between 2005 and 2010 during the time of PMA support. Its total revenue for the period was 65 million forints (USD 325,000), and since it operated under the simplified entrepreneurial tax (EVA), the owners were able to pay themselves dividends of 50.2 million forints (USD 250,000) (“clear” – after EVA had been deducted, no other tax needed to be paid). From the financial report data one can deduce that there were neither subcontractors nor employees at the time – in other words the owners did all the work themselves, which is food for thought, since the research and consultancy activities of the earlier owners (Újvári and Tornallyay) and their successors (Gyöngyi Matolcsy and Ádám) are, unfortunately, unknown.

Moreover, the drying up of Ú-T Eurocon‘s revenue stream coincided precisely with the end of the PMA source, to the extent that they wound up the company in early 2013. To summarise: our supposition is that Ú-T Eurocon‘s revenue came from MGFI, which had become inextricably intertwined with the Tulajdon Foundation, which was in turn supported by the Association for a Civic Hungary Foundation (PMA) – while

the ultimate source of the money was the central budget.

According to this theory, Ú-T Eurocon‘s function could have been to channel a not inconsiderable portion of this money to the Matolcsy family under favourable taxation conditions. It is indisputable that the tens of millions taken out in dividends can be linked to the Matolcsys – but there is no irrefutable evidence about the source of the money. Both György Matolcsy and Gyöngyi Matolcsy declined to answer our questions about the companies’ operations and links.

If we place all the pieces we have of the mosaic of the network of foundations and companies around Matolcsy next to one another, a system unfolds. It involves a party foundation, a second, closely held, state-owned foundation, a privately owned firm, and front companies. It is operated by a close circle of confidantes, and is mainly kept alive by public money. Documents from the Tulajdon Foundation that have so far proved inaccessible could bring to light further parts, levers and beneficiaries of this finely tuned system. Nor is this well-established system of foundations and companies, however, the last model of its kind.

It cannot be ruled out that Matolcsy had precisely this well-oiled system, developed and run over many years, in mind when the MNB [Hungarian National Bank] set up the now infamous Pallas Athena [Athéné in Hungarian] Foundation using hundreds of millions – the stakes in this game are several orders of magnitude higher – earned from maintaining a weak forint.

Matolcsy’s relations, cousins and confidantes regularly turn up among the business partners – how many of these might be front men, and which ones? Why should something that went so well on a small scale not work on a large scale, too?

The president’s men

The factotum. A central figure in the business affairs of György Matolcsy and his family is Marianna Harczi. We traced their connection back to the last third of the 1990s, and practically everything that is known about Harczi is linked to György Matolcsy. One thing is certain: she is one of Matolcsy’s closest confidantes, who knows a lot about the present central bank president and his company and financial affairs. Harczi, who graduated in metallurgical engineering , was the latest member of the Tulajdon Foundation’s (TA) board of trustees, then its secretary – that is, the chief administrator and organiser. Following the change of government in 2010 she became the president of the foundation, and in this capacity she oversaw its depletion, too. But from its establishment in 1997 she was a part owner of  Privatizációs Kutató Kft, a firm set up by TA: she had an equal share of a 10% stake in the firm with György Matolcsy and Sándor Kopátsy, and she acted on behalf of the trio, representing their joint investment in the firm, thus only she – generously hiding the identity of the other two private owners – had her name entered in the company registry. Four years later, right after the Matolcsys bought a majority stake in Privatizációs Kutató Kft, renamed as Növekedéskutató, Harczi became the managing director of the firm. At about the same time Harczi set up her own firm, dealing with social science research, which in 2006 she let Matolcsy have for a fraction, approximately 0.2%, of its real value. Not much later she left Növekedéskutató, too, and Matolcsy succeeded her as director. However, her connection with György Matolcsy did not end there: from 2004 until her resignation in 2014, Harczi was a trustee of the Polgári Szemle Foundation, the organization that published the similarly named periodical was the Szövetség a Polgári Magyarországért Alapítvány [Association for a Civic Hungary Foundation (PMA)], led by György Matolcsy and set up by the Fidesz party foundation. In 2010 Harczi became president of the Családi Ház Alapítvány [Family House Foundation], taking over the post from György Matolcsy. But Matolcsy’s confidante, according to initial plans (and court documents) would have moved into the Pallas Athena Domus Animae Foundation, set up by the central bank and run personally by the bank’s president.

Following the change of government in 2010, Harczi got a state position, naturally in the immediate vicinity of Matolcsy. First she became Matolcsy’s political advisor in the Ministry for National Economy – for a monthly 730,000 forints, according to the atlatszo.hu website’s KiMitTud [“who knows what”] system. With this salary, she was among the two dozen best paid of the ministry’s 900 staff. In March 2013 Harczi moved together with her boss to the Hungarian National Bank (MNB), where she worked in the presidential cabinet, first as a department head, then as an analyst, for a monthly 1.2 million forints – this also put her among the best paid employees. It appears from the information we have that 2014 marked a turning point in Harczi’s career: during the year, she not only left the MNB, but also essentially walked away from all “enterprises” that could be connected to Matolcsy. Apart from her being one of the 75 authors listed in the 2009 Fidesz programme manifesto with the title Jövőkép – published by MGFI and edited by Matolcsy, but funded by the Fidesz party foundation – nothing is known about Harczi’s professional consultancy work.

The lawyer

Dóra Újvári also belongs to Matolcsy’s circle of confidantes. In 2008, she pulled out of a firm she had earlier set up, as Harczi had done earlier amid similar circumstances. Matolcsy’s economy ministry had provided Újvári’s partnership with commissions before 2002, though he did not forget about her even after the government fell: the Matolcsy-led PMA gave a half-million-forint secretarial contract to Újvári’s firm, and signed a 2.4-million-forint contract for research into the harmonisation of tax law directly with Újvári. After setting up her own legal practice, she handled between 2008 and 2010 the legal affairs of several of the Matolcsys’ companies: the MGFI, and Újvári’s name regularly appears on company papers pertaining to the firm Eurotourism that his wife acquired and ran. Also, as the “family lawyer”, Újvári handled the trademark registration for the younger Matolcsy son’s company (Glamorous). And her name also appears on documents from 2010 related to the Tulajdon Foundation: she helped to arrange the restructuring of the board of trustees at the court. Újvári’s mother, Mária Tornallyay became, at the same time, a member of the foundation’s supervisory board. Following the change in 2010, Újvári turned up close to the government: with relatively fresh lawyers’ papers she became the legal director (from 2010 to 2013) of MFB Invest Befektetési és Vagyonkezelő Zrt. [MFB Investment and Asset Management Company], which manages assets worth tens of billions of forints. She joined the supervisory board of the similarly state-owned Magyar Gáz Tranzit Zrt. (2012 to 2013), and (also 2010 to 2013) the supervisory board of Start Garancia Zrt. Although she disappears from view in 2013, she reappeared close to Matolcsy in 2016, representing the six Pallas Athena foundations in front of the public procurement adjudication commission (KDB), and although the KDB ruled that the rules on public procurements had been broken, it only issued a minimal fine of 200,000 forints per foundation. According to a statement from the Pallas empire, Újvári worked for them from May to June for a total of 195,000 forints (Matolcsy signed the contract), and it has no current legal connection with her. According to her LinkedIn profile, however, she is currently the foundations’ joint real estate investment and asset management company’s legal director, most probably working remotely since, according to LinkedIn and her Facebook profile, she currently lives 5,000 kilometres from Budapest in the capital of the UAE, Abu Dhabi.

The auditor

Matolcsy has relied extensively on the services and bookkeeping expertise of Gábor Matukovics, who became the accountant for Növekedéskutató in 2001, immediately after Matolcsy became the majority owner. Towards the end of the same year, the firm K & M Consulting Tanácsadó Kft, of which Matukovics was part owner received several orders worth some 12 million forints from the economy ministry led by Matolcsy. He set up the firm with Gábor Kalina (hence the name K & M), whom Matolcsy, as central bank president, entrusted with the running of the MNB’s accounting directorate. This unconditional trust is also discernible in other ways: Matolcsy charged their firm – renamed as Magyar Szakértői Holding with overseeing the accounts of the PMA, the Fidesz party foundation that he ran at the time. According to data from the PMA the fee for this frequently renewed commission which is currently valid until 2018 is not bad at all: Matolcsy wrote a contract for a monthly 66,000 forints, which has since risen to 90,000. By sheer luck, since 2014 Matukovics’s company (Kalina having by then departed) received commissions from the Pallas Athena empire born out of the head of Matolcsy, each worth between 50,000 and 525,000 forints, which brought in over 3 million a month through 2016 (in November, the firm BDO took over the empire’s accounts). His former business partner Kalina is an indispensable member of the supervisory board of the self same foundations and companies. This circle of internal connections closes with the Tulajdon Foundation: Matukovics has for nearly two decades been president of the foundation’s supervisory board. If we consider that the same person not only does the books of Matolcsy’s firm and the Fidesz party foundation, but also oversees the operations of the Tulajdon Foundation, which moves money between the two, one may suspect that Matukovics also knows many interesting details about the Matolcsys’ money movements and business affairs.

The Weather vane: Matolcsy’s forgotten thoughts

Here is a summary of the central bank president’s commentary in the  2007 edition of the Global Trend Observer [Globális trendfigyelő]:

On the work-based economy: “This success [the rise of Asia] is also about how today one can create wealth with an economy built on leisure time, whereas in the past a work-based economy brought success.”

On migration: “The present world power of the USA is built on migration, naturally from the very beginning. The economic success of the past decade and a half is clearly built on this foundation. Nor can the USA be a leader in globalisation if it does not open its market and society to the world. Now a conservative freeze has set into this successful policy, of which the causes are understandable, but the consequences for America could be very serious.”

On energy dependency: “Hungary is the European country most dependent on natural gas, including foreign-run gas suppliers. This needs an energy policy that makes gas imports unnecessary: this demands an evaluation of alternative sources of energy and energy efficiency.”

Franklin Templeton and Audi

Where did Matolcsy’s firms invest the money they collected? Primarily in real estate and treasury bonds. We have already mentioned the properties channelled through the Tulajdon Foundation in an earlier edition: Matolcsy’s Növekedéskutató acquired an apartment, while Mrs. Matolcsy’s Eurotourism Bt acquired a retail premises (the third property went to Ádám Matolcsy). But a significant part of the money parked in these companies sat for years in various shares and investment funds. For example, at the end of 2001, Növekedéskutató held 32 million forints worth of shares in Danubius, Egis, Pick, and Richter shares. Even more interesting, however, is Eurotourism‘s asset inventory from 2009: the partnership held more than 17 million in securities, of which 4.1 million worth (Mutual Beacon, US OPP, Mutual European) were from Franklin Templeton, noted for being the single biggest holder of Hungarian state debt. It also invested 2.7 in Croatian treasury bonds, and 1.2 million in Activision Blizzard, the firm behind the World of Warcraft and Call of Duty shoot-’em-up video games, as well as BNP Paribas’s Russian portfolio-based Parvest Russia, etc.

Besides all this, there was a car lurking on the books of Növekedéskutató, which might explain why no private car ever appeared in Matolcsy declarations of wealth. Particularly interesting is a contract signed by Matolcsy when he was president of the PMA and Harczi as the majority then sole owner and managing director of Növekedéskutató. In this, the PMA rented Növekedéskutató‘s Audi A4 for an unlimited period, for the personal use of György Matolcsy. As president of the foundation, Matolcsy was essentially renting the car from himself – no doubt this was the most obvious and practical solution. Nor did the state-funded party foundation pay peanuts for the car hire: data from the PMA shows the president was hit for 5 forints for every kilometre. Matolcsy used the car throughout his presidential mandate, thus between November 2004 and February 2007 the Fidesz party foundation paid almost 5 million forints to Matolcsy’s company. From this amount of money, he appears to have driven some 100,000 kilometres in about two years, or 830 kilometres a month – he clearly must have travelled the length and breadth of the country down to the last village.