Hungarian settlement bond program a “serious corruption story,” says Magyar Nemzet

April 20, 2017

“These companies have realized revenues of HUF 115-130 billion, of which HUF 42 billion (USD 145 million) is public funds.” – Magyar Nemzet

Compelled by a court decision to release information about companies brokering the sale of so-called settlement bonds, the parliamentary committee on economics finally did so on Wednesday. Magyar Nemzet reports that committee chairman Erik Bánki (former Fidesz MP Antal Rogán’s hand-chosen successor-ed.) released information about a Cyprus company by the name of Migrat Immigration Asia Ltd. just one day after the conservative print daily filed a criminal complaint at the head prosecutor’s office for failing to release the data.

Magyar Nemzet reports that the owner of the company, János Bodó, also owns Trafikbrand Zrt., a wholesaler dealing in tobacco products, and operates a gallery in Budapest District 5’s Falk Miksa street.

The conservative daily reports that Bodó applied in November 2014 to sell state securities (the so-called settlement bonds) on behalf of a Hungarian company named Migrat Bevándorlási Szakértő és Tanácsadó Zrt. in connection with Malaysia, Mongolia and the Republic of Korea (South Korea), but that three weeks later a similar application was submitted on behalf of the Cyprus company, without withdrawing the earlier application.

The newspaper reports that Bodó acquired an existing Cyprus company by the name of Neamosa Investments Ltd. and changed its name for the purpose of selling Hungarian settlement bonds, presumably for the sake of expediency.  Although the Cyprus company was issued a permit to sell settlement bonds on December 2015, it appears that the Hungarian company became the final owner of the bonds issued by the Hungarian treasury,

Magyar Nemzet reports that the Cyprus company has no website, and a search of the internet yielded no website promoting settlement bonds in Mongolian or English. The only trace of any activity the paper encountered online was a test version of the Migrat Immigration website that contains a non-operational telephone number and refers to the legal offices Hirka & Pazár.  Magyar Nemzet reports that the law firm did not return its calls despite promising to do so.

Migrat Immigration came to the newspaper’s attention at the end of last year when it submitted an application to the economics committee to extend its services to the Seychelles.  After issuing the permit, the committee rescinded it the following week.

Magyar Nemzet says Hungarian taxpayers have paid HUF 700 million (USD 2.2 million) completely unnecessarily to brokerage companies owned by offshore companies.  However, the actual figure appears to be much higher.

“These companies have realized revenues of HUF 115-130 billion, of which HUF 42 billion (USD 145 million) is public funds,” it reports, referring to the above-market interest rate paid the companies by the Hungarian treasury after the settlement bonds they purchase.  The companies, in turn, issue their own bonds to the individuals at a significantly lower rate of interest.

For a detailed explanation of the entire business, click here.

Magyar Nemzet writes that the transfer of public funds to offshore companies whose ownership structure is opaque “raises the suspicion that the Hungarian settlement program is the most serious corruption story of recent decades.”