HUF 6.5 billion pulled out of Quaestor the day of its collapse

October 21, 2016

quaestor

Insider trading enabled certain individuals to withdraw some HUF 6.5 billion (USD 23.1 million) from Hungarian brokerage firm Quaestor just before it collapsed on March 9, 2015, reports internet television site N1TV.

The company’s failure resulted in some 30,000 of its clients losing their investments.

Over half of the amount (HUF 3.8 billion) was withdrawn by the Hungarian National Trading House (MNKH), a company owned by the Ministry for Foreign Affairs and Foreign Trade headed by Péter Szijjartó, former spokesman for Prime Minister Viktor Orbán, Fidesz MP and a close acquaintance of Quaestor CEO Csaba Tarsoly, who has spent a year and a half in custody awaiting trial.

N1TV, which has close ties to radical right-wing party Jobbik, published a list last week of 333 customer names who withdrew money the day Quaestor collapsed. Only the names of people who withdrew more than HUF 10 million (USD 37,000) were published.

One such withdrawal came from a Kecskemét-based ball-bearing manufacturer, Gördülő Kft., which N1TV claims withdrew nearly HUF 34 million (USD 126,000) on the fatal day. The television site traveled to Kecskemét and asked the company’s owner how she got word of Quaestor’s pending demise ahead of time.

“Must I answer?” she asked the reporter. “I’m saying that I won’t answer. Either I did or I didn’t, I can put it that way, too.” The company owner also withdrew HUF 30 million (USD 110,000) of her own funds the day of the collapse.

The right-wing media outlet claims that former water polo champion Csaba Mádéfalvy withdrew HUF 14.6 million (USD 54,000) on March 9. Mádéfalvy wasn’t at home when N1TV went to his house but his wife, named by the report as former Fidesz advisor Gyöngyi Bende, was home. The woman, who reportedly “worked as Quaestor’s communications director from 2007”, denied having advance knowledge of the collapse but thought that only four or five of “the truly big dogs knew ahead of time.”

N1TV also reported that “a former chauffeur in the Attorney General’s office” by the name of Gábor Richárd Bolya withdrew some HUF 192 million on March 9, noting that it was suspicious that a chauffeur was able to “raise nearly HUF 200 million from his salary as a driver.”

This is not the only thread connecting Hungarian attorney general Péter Polt to Quaestor. His daughter reportedly worked as secretary for Quaestor CEO Tarsoly.

Anti-corruption politician and Politics Can Be Different (LMP) co-chair Ákos Hadházy recently criticized Polt for allegedly failing to investigate what happened to some HUF 1.2 billion of assets under Quaestor management, and for failing to investigate members of Quaestor’s financial supervisory board.

Dialogue for Hungary (PM) co-chair and Zugló mayor Gergely Karácsony had another reaction to the story of Bolya on his Facebook page: “The chauffeur working at the Attorney General’s office took 200 million out of Quaestor before the collapse. Really now, is this some kind of film? Or are we really living in this country?”

Puzzling evidence

On March 9, 2015 Quaestor bond-selling unit Quaestor Financial Hrurira Kft. announced that it had defaulted on a payment of HUF 3-4 billion of bonds. The default appeared to have been triggered by a cash pay-out of HUF 3.8 billion (USD 13.6 million) to MNKH.

At the time it announced it was filing for bankruptcy, Quaestor reportedly owed investors a total of HUF 210 billion (USD 753 million) — equal to 0.7 percent of GDP.  Inexplicably, ten days passed between the time of the announcement and the actual bankruptcy filing, the original filing having been rejected for “technical reasons.” During this period, government ministries were able to withdraw any remaining funds from Quaestor that they hadn’t managed to in the weeks leading up to its collapse.

Reacting to news of Quaestor’s collapse, Orbán reassured the public that he had instructed government ministries to withdraw funds after the collapse of financial brokerage house Buda Cash just two weeks earlier. His comments caused legal experts and opposition politicians alike to accuse the government of insider trading and asset stripping, especially in light of subsequent revelations that even as smaller investors were told they could not withdraw their investments, the company wired huge amounts to various government entities. Orbán claimed that only his finance-savvy foresight had tipped him off to the risks of keeping money in Quaestor, but László Kéri, a political science professor who has known Orbán and his friends ever since college days, expressed his total disgust that “in three weeks he could only come up with such an infantile, obvious and slapdash story.”

The government has never offered a satisfactory explanation for why securities held by ministry-owned companies were kept on deposit at Quaestor rather than the Hungarian treasury where they are handled free of charge, or, for that matter, why they had purchased them in the first place. One answer is that Orbán wanted to generate profits for brokerage companies that were close to him.

Read more about our earlier coverage of Quaestor here.