Hungarian authorities not investigating the most suspicious cases of 2016, reports Átlátszó

January 8, 2017

Justin Spike’s translation of Dismissal of complaints at the highest level: This is why the authorities are not investigating the most suspicious cases of 2016 published by investigative news portal Átlátszó.hu on January 3rd, 2017.

“There has not been a more corrupt government than this one in the last 26 years in Hungary,” said István Tényi in an interview. According to the so-called “country’s informer”, people who see corruption do so in vain because they can’t do anything against it, and reports to the authorities go unanswered. It often truly seems that the police and prosecutor’s office don’t do much in the fight against abuses and unlawful behavior. They come up with ever more inventive explanations for why they can’t do anything in a given case, even if they have received complaints and the press is writing about it. We’ve collected a number of such cases from last year.

István Tényi told mno.hu that he has filed about 180 complaints and made more than 100 public interest announcements in the last three and a half years, usually on suspicion of corruption and financial abuses. Of these, only two went to trial. “Often times, the whole thing goes into the trash without any explanation,” he said. For example, two proceedings were launched because of the HUF 100 billion expenses generated by Hungarian National Bank foundations, but then the authorities found that there was no reason to do an investigation.

1. The press called the suspicion of a crime into question

The Central Investigations Prosecutor’s Office (KNYF) rejected a complaint at the end of the year on the grounds that Hungarian authorities might have made a mistake on the basis of press reports, and since articles with opposing information had also appeared, the suspicion was not enough to justify an investigation. So, the suspicion of a crime was brought into question by the press.

What case was this? It was that of Saudi billionaire Ghaith Pharaon, who does business in Hungary in the proximity of the prime minister, and meanwhile is sought by the FBI and Interpol. Pharaon has been on the FBI’s Ten Most Wanted list for more than 15 years, since he was implicated as a strawman in the scandal surrounding the collapse of the Bank of Credit and Commerce International (BCCI) in 1991. This was one of the largest cases of bank fraud in the United States, and damages totalled USD 12 billion. American authorities suspect Pharaon of electronic fraud, high-level collusion, aiding and abetting, and conspiracy. According to a 2002 French parliamentary report, the businessman is also connected to financial networks used by Islamic terrorist organizations.

István Tényi filed the complaint at the Budapest Chief Prosecutor’s Office because he suspects Hungarian authorities didn’t act legally in admitting Ghaith Pharaon into Hungary. He argues that they made a mistake when they didn’t take Pharaon’s fingerprints when he was issued a residence permit, and when they issued him a visa despite international arrest warrants. The complaint ended up in the KNYF because there was suspicion that people with legal immunity were involved, against whom only the KNYF could conduct an investigation. The KNYF, citing contradictory media reports, rejected the complaint.

2. Non-active connections, a time beyond the statute of limitations

The Special Affairs department of the National Tax and Customs Administration (NAV) did not find evidence of a crime in the case of a Fidesz politician and a middle school teacher who were suspected of committing financial fraud through offshore companies. According to head of NAV and Secretary in charge of tax affairs at the Ministry of National Economy András Tállai, “the press reports typically contain information regarding periods of time beyond the statute of limitations or on no longer active connections, therefore inspections cannot be ordered.”

Does this story ring a bell?

Direkt36 lifted the veil on this story during the leaking of the Panama Papers. The teacher, Csilla Konti, had a bank account at one of the most prestigious Swiss banks via an offshore company registered in Samoa. The company may have received a transfer of nearly HUF 80 million on the day Konti acquired it. Konti is none other than the wife of prominent Hungarian Socialist Party politician, former MP and treasurer László Boldvai. Fidesz MP László Horváth, while filling his post at parliament, also became the owner of a different offshore firm, and later another one.

3. It’s not a crime if they previously wrote a law about it

The police wrote in a decision to terminate an investigation that the sales had taken place in accordance with laws set by the district government. However, the person filing the complaint felt that the investigating authority was describing transactions that no one had objected to, and therefore the police were attempting to prove that district government real estate sales had taken place legally.

Who could guess which case this was?

District 5 representative and Együtt (Together) co-chair Péter Juhász filed a complaint at the National Investigator’s Office, alleging that Antal Rogán, during his time as mayor of the district, had sold off district property at below market value. Juhász claimed the district sold flats without a bidding process and at prices that already seemed low with the addition of tenant discounts. It also occurred that a buyer would almost immediately sell the property for a profit. However, the police found nothing objectionable, stating that the sales had complied with rules set out by the district government, and they terminated the investigation.

The police procedure was actually quite interesting. When Rogán filed a defamation suit against Juhász in response to Juhász’s complaint, and the court asked the police to provide a list of the sold district real estate properties, the CD that contained the data was destroyed. It also happened that the police conducted such a vigorous investigation that they sent their investigation materials to Rogán’s legal representation.

It is worth mentioning in the case that a final high court decision found that the district had indeed sold real estate for under market values when Rogán was mayor.

4. The witness is not credible, the interviewee is lying

The prosecutor found that there was nothing to investigate because the witness testifying against a leading Fidesz politician for bribery was not credible, and made allegations which were unclear. The prosecutor also found that another accusation made during a television interview that the same politician received bribes was not credible either, because the interviewee was a defendant in another case and did not mention any bribery involving officials in their testimony, and therefore was obviously lying in the interview.

And the case:

Tamás Portik, who was previously convicted in the Energolo-Prisztás case, testified during the defamation suit filed by Antal Rogán against Péter Juhász that he had once delivered HUF 10 million in euros to Rogán while he was mayor. The money was delivered on behalf of Portik’s mistress Marianne Pápa, who had done business with the District 5 government. Pápa is Árpád Habony’s aunt.

A former confidante and business administrator for nightclub mogul László Vizoviczki told N1 TV about another bribery story. She claimed her former boss had personally delivered HUF 4 million to Rogán when he was mayor. However, the prosecutor’s office declined to investigate the case, declaring that the woman hadn’t made such claims as a defendant in another case, and had therefore lied in the interview.

5. The presence of strongmen doesn’t violate the rules of the referendum

“Since the rules of the referendum weren’t violated, there is nothing to investigate,” declared the police, and according to the Budapest Investigating Prosecutor’s Office, the head of the organization wasn’t an accessory by sending away the police. However, the Curia ruled in the case that the opposition politician had been obstructed by a group exhibiting unlawful behavior.

Surely you recognize this case!

This was about the initiation of a referendum on Sunday store closures. A crowd appeared at the National Elections Office on Alkotmány street on the morning of February 23, 2016, hoping to submit questions for a new referendum. First, a private citizen, Mrs. László Erdősi, was able to do so, after which a group of bald men prevented Hungarian Socialist Party MP István Nyakó from submitting his question. The office of the Budapest Chief of Police ordered an investigation against unknown perpetrators on suspicion of violating election laws, referendum laws, and European civil codes. The proceeding was suspended shortly thereafter. The politician could not file a complaint because there was no victim in the case. The National Elections Committee did not wish to oppose the police’s decision.

The Curia decided in April, however, that István Nyakó’s referendum question could proceed. (Mrs. Erdősi’s question could not.) In response, the government submitted a bill to the National Assembly, based on which the law ordering mandatory Sunday closures was revoked by parliamentary decision without a referendum.

6. The tender-issuing state company destroyed the evidence

After three years, on March 21, 2016, the KNYF closed an investigation for lack of a crime committed. The case involved abuse of personal data, and the possibility of corruption. However, the KNYF argued that no one had abused personal data. They agreed with the defense of the mayor who claimed that the list which he read aloud had been compiled from data he’d received from the applicants themselves. The prosecution’s conclusion was also daring because they introduced testimony that contradicted the mayor’s statements.

Do you have a suspicion which case this is?

Fidesz government representative from Szekszárd Ákos Hadházy blew up the tobacco shop corruption scandal in 2013. He told hvg.hu that he made a mobile phone recording that showed the Szekszárd mayor going through a list of applicants to decide who was close enough to Fidesz to receive rights to vend tobacco. Hadházy, who at the time became co-chair of Politics Can Be Different (LMP), said that the authorities were able to smooth things over in the case because by the time the investigation had started, the state company that issued the tenders had already returned application materials to the losing bidders, and so the prosecutor’s office didn’t look over the documents of the winners and didn’t compare them with those of the losers. Such a comparison would have been valuable to conduct, since it would have been revealed that “many times certain very particular business plans received maximum scores, and certain ones received minimum scores.”

7. Professional debate within the organization

“It is a professional debate within the organization, so you cannot speak about abuse,” the police said about a case shut down by NAV leadership. However, when the administrator writes into a statistical report “don’t do anything” instead of “impose a penalty,” it’s just a mistake, and “the mistake-laden statistical report alone is not suitable for establishing responsibility for a crime, and in the absence of criminal intent is to be considered an administrative error, which is examinable in the context of disciplinary proceedings.” The Special Affairs department of the Anti-Corruption and Financial Crimes division of the National Investigations Office, citing lack of specifics, did not manage such cases in which the accuser complained that stopping the investigations deprived the budget of tens of billions of forints. Suspicion of official abuses was not raised.

Do you recognize this case?

Former tax office analyst András Horváth published in November 2013 that in VAT fraud cases the NAV was tolerant of large companies, especially multinationals, and withdrew tax inspectors from investigations. Horváth detailed several dozen specific cases in his 2013 complaint, of which the police only brought one, involving Delta Feed Kft., to the level of indictment. But even this case wasn’t detailed during the closing of investigations, and nothing became of the rest of them. The strangeness of this absurd procedure was highlighted on Korrupcióinfó.

8. Criminal seizure would impede the liquidation

The Budapest Prosecutor’s Office didn’t bring part of the company’s property under criminal seizure because it would have hindered the liquidation process and “would have pushed the satisfaction of the victim’s needs to the end of the criminal proceedings and to a presently uncertain time.”

You might have read something we wrote on this not too long ago, but what was it?

The Quaestor story. Several of those defendants in the case already under criminal proceedings asked the authorities to put those real estate properties owned by Duna City Budapest Real Estate Developer Kft., which is undergoing voluntary liquidation, under criminal seizure. They feared that the company would sell properties, which could be worth tens of billions of forints, at below market prices. However, according to the Budapest Prosecutor’s Office, the requests of Csaba Tarsoly and others are pointless because they don’t see signs of illegal activity concerning the company’s liquidation.

9. Everyone knows what the story was about

“There was no kind of fraud, because the study was complete, the author of the study, Törökszentmiklosi Mezőgazdasági Zrt., didn’t make a mistake and didn’t deceive anyone,” concluded the Budapest district 5 and 13 prosecutor’s offices in a case involving substantial fraud.

And the story the authorities found acceptable:

Several studies were conducted on Kazakh agriculture on behalf of the Ministry of Agriculture, including on development opportunities in Kazakh sheep farming, agricultural logistics, and on the Kazakh beef industry. 444.hu showed in detail how useless the studies were, and how nonsensical it was to spend HUF 30 million for them. According to the ministry, however, ordering the studies was essential. Róbert Benedek Sallai (LMP) and Péter Juhász (Együtt) filed a complaint in the case, alleging substantial damage arising from fraud, but the prosecutor’s office didn’t find cause for an investigation.

Hadházy: Only one Hungarian politician has ever been convicted of corruption

“This loser was János Zuschlag,” said LMP corruption issues spokesman and party co-chair Ákos Hadházy during remarks addressed to chief prosecutor Péter Polt in Parliament at the beginning of December. The opposition politician also outlined the specific techniques that he thinks the prosecutor’s office uses to skirt around investigations.

“Either we have a particular country that is lost, or the prosecutor is unable to or deliberately doesn’t want to catch politicians. In the latter case it is understandable that his wife gets five million a month as the chief of staff at the National Bank.”

And if Hadházy, a veterinarian from Szekszárd, can dig up these kind of abuse cases in his spare time, some of which NAV is also investigating, then it is strange that the prosecutor’s office simply throws out half of the complaints he files. “There will only be a case if the prosecutor brings it to court,” he said, adding that investigations are often rejected on ridiculous pretexts. “When a submission can’t be avoided or rejected because of a scandal, then the prosecutor simply stalls.”