Habony’s helicopter tour: Plot thickens in settlement bonds scheme

June 29, 2016

Screen Shot 2016-06-30 at 11.10.18 AM

A website error has revealed that Hungarian media mogul and Prime Minister Viktor Orbán’s closest advisor Árpád Habony took a private helicopter tour of Hong Kong last year for a price of HUF 997,000 (USD 3,400). 444.hu reports.

The tour company’s website published all of their transactions on their backpages in error, and a Google search of Habony’s name returned the record of his purchase with his girlfriend, Boglárka Nagy, of one of Heliservices’ most expensive tours, the Complete Hong Kong tour.

The purchase record also contained a contact email address and telephone number, both of which belonged to Jonathan Chan, director of the VAL Consultancy firm in Hong Kong. Chan is connected to the Hungary State Special Debt Fund (HSSDF), a Chinese-run investment fund established in the Cayman Islands and exclusively authorized to sell Hungarian government bonds in China.

Friends in high places

According to HSSDF’s website,  purchase of at least EUR 300,000 of these bonds qualifies the investor for permanent residence in Hungary under the so-called Residency Bond Program.

In 2013, then-Fidesz parliamentary faction leader Antal Rogán told Portfolio.hu that purchase of the residency bonds alone did not ensure residence for foreign nationals, and that they would all have to pass strict examinations by the Hungarian Office of Immigration and Citizenship (BAH).  When asked by the paper why the fund had been established in an offshore tax haven, he responded that it is not offshore because the owners are known. He then named the owners of the fund. Among them was Jonathan Chan, Habony’s contact for his Hong Kong helicopter tour.

What is Habony doing here? 

Sale of government residency bonds is reportedly a HUF 277 billion (USD 970 million) business. According to Interior Minister Sándor Pintér, as of December 31, 2015, 3,490 residence permits had been awarded to investors, from a total of 3,515 applications. 6,148 permits were issued to family members of investors from a total of 6,220 applications.  As the bond purchases are essentially investments in the state, the government pays interest back to the investors, reimbursing them over time. Recipients of the permits could then obtain Hungarian citizenship, and therefore do business in all of the European Union, making the scheme a profitable deal for foreign investors.

The offshore funds (in addition to the Cayman Islands fund, there is one in Cyprus and one in Malta) were awarded no-bid bond distribution rights by the Hungarian Economics Commission in 2012 under the leadership of Antal Rogán. (Rogán was recently found to have been involved in corrupt real estate deals while mayor of Budapest’s 5th district. The deals benefited, among others, Árpád Habony.)

Several links have been discovered between Habony and the offshore bond companies. According to 444.hu, he was involved in a deal in 2013 for the leaders of HSSDF to buy Hungarian station TV2 from its German owners. Additionally, Habony’s legal representative Kristóf Kosik  also represents Arton Capital Kft., which sells government bonds to Arabic countries. Another bond distributor, VolDan Investments Ltd., which sells bonds in the former Soviet countries and the Balkans, is owned by Georgian-Israeli businessman Michaeli Shabtai, and by “Princess” Budapest bakery chain businessman Michael Gagel. Gagel has been shown in photos partying with Habony and media oligarch Andy Vajna in France.

Vajna and Habony next to fundster Michael Gagel (photo: zitavass/ Instagram)
Vajna and Habony next to fundster Michael Gagel (photo: zitavass/ Instagram)

Puzzling evidence

While Habony’s precise role in the Residency Bond Program is not fully established, the mounting connections suggest that he dwells firmly in the background of a nearly billion-dollar business. The awarding of no-bid contracts by Rogán to bond companies, all of which can be connected to Habony, and his recent sightseeing adventure, organized by fund-owner Chan, point to something more than coincidence.

444.hu wrote to Jonathan Chan, asking if he was representing Habony’s business interests in the Far East. They received no response.