In Hungary corruption has become a way of life

May 25, 2015

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István Jávor:  I consider this the end of the rule of law state

Translation of Ernő Kardos’ interview with István Jávor entitled “A Korrupció mar életmód” (“Corruption is already a way of life”) appearing in the 21 May 2015 edition of liberal weekly 168 Óra, pp. 22-25

In comparison to Europe Hungary is among those with the lowest proportion of those who reported experiencing corruption in their surroundings: Out of 100 citizens, 30.  The majority fears the consequences according to a report issued by Transparency International this year.  The fear is warranted, as the researcher into the nature of corruption was sued on three occasions before he could publish a summary of his findings.  Procedures were started by the tax authority because the report concludes that investigations were stopped on the orders of high ranking officials.  The Ministry for National Economy on two occasions reported the university professor after he stated that at least eight government officials belong behind bars.

(168 Óra): Are you worried about the pending verdicts?

(István Jávor): The judgements were issued.  All the charges were dismissed.  But they wanted to declare me mentally ill.

(168 Óra): It follows from your allegations that the ministry regulates the national economy in a criminal manner.

(IJ): The court decision says that I have the right to express my opinion about the work taking place, as it were, in the ministry, since it could be proved that they called over to the tax authority.  That is why the court rejected the ministry’s charge.

By the way during the court hearing the judge told the legal representative of the ministry that it is commonly known that in Hungary today it is a fact that those high up tell those below them what to do, and that for this reason my conclusions cannot be punished.  I think legal violations, among other reasons, can take place in state institutions because the regulations are not clear.  The fact that the authority can be strict or lenient when condemning certain irregularities is determined by the daily interests.  From behind, through the ministry, on an individual basis they exercise influence over the tax authority.  This appears in the written orders issued by the ministry, or occasionally during informal telephone conversations, and that includes the immediate shutting down of investigations against certain companies, and in other cases ordering the very same inspections against other companies.  Apart from this, there are concrete ministerial official positions which, in theory, anyone can request.  I have come across documents in head departments whose contents was, in my opinion, contrary to the laws in force, and at best served the interests of the client or the one issuing the decision. We are mostly talking about individual initiatives, and not interpretations of laws according to a minister’s whim.   The ones making decisions at the tax authority believe that the directors of the portfolio can overwrite the law.  I consider this the end of the rule of law.

(168 Óra): But not only were procedures initiated by the ministry ended, but also the one that the tax authority initiated against you.  Is it true that they are also suing you for allegations not made by you?

(IJ): The report that was filed against me alleges that I complained that the NAV turned a blind eye to thousands of billions of forints in VAT fraud.   The truth is that I never stated anything of the kind.  In other words, they couldn’t even properly summarize what it was they are being accused of.  By the way, according to my information, the words were approved by Ildikó Vida herself.  The documents that came into my possession contained unbelievably important information.  According to my interpretation the documents name the entire circle of state employees banned from entering the United States, which officially nobody has acknowledged to date.   Ildikó Vida approved the release of the following shocking statement:  “The significance of the names and positions of those banned can be understood to include from the bottom up:  the head director of the Special Cases department, the director of the main department for Central Official Inspections, and the president and vice president of the tax authority  What is this if not a list of banned names?

(168 Óra): Do you meant to say that by matching the names from a telephone book to the function, be can determine the appropriate names.

(IJ): Yes.

(168 Óra): Not long ago you declared that the tax authority suffocates companies to order.  Can you prove this?

(IJ): Original documents and recordings prove my accusations.  These materials attest to the fact that the tax authority “committed crimes by issuing decisions”, using the social and not legal expression, when in certain situations of having to exercise discretion, they created an incredible large room for maneuver for themselves in light of the actual interpretation of the laws.   They could decide whether a company  that operated unlawfully should simply be issued a warning or whether it should be assessed a serious fine.   If a company did not pay a certain tax in time then this could be classified as an an error, but could also be classified as tax fraud.  It could pay a small penalty, but if the authority wants to act more strictly, than it can assess a fine equal to twice the amount of the unpaid tax, even in the hundreds of millions.

(168 Óra): In other words, you are claiming that it is a matter of daily routine for the tax authority or the ministry to interfere in the economy.  But whose interest does it serve?

(IJ): This always has to be specifically investigated.  When the authority brings certain companies into a more favorable position, while putting other companies out of business, it undermines the logic of the marketplace, which can damage the entire Hungarian economy.  Tens of thousands of companies can be affected dilatorily, thereby causing thousands of billions in losses, not only in matters of VAT.

(168 Óra): Do you suspect economic or rather political reasons are behind this?

(IJ):  The two converged a long time ago. We encounter such instances when, before issuing a county public tender, the tax authority decends on one of the “non friend” companies, and “naturally’ it finds something that excludes the company from submitting a tender, because only companies keeping the requirements of the law can submit public tenders.  In other instances they do not penalize a company in order that it can participate in public tenders.  Such methods are not only used by the tax authority.

(168 Óra): The previous example shows that the unlawful interference is not always demonstrable.  Is his what they call legal corruption?

(IJ): Yes, because the ministry or tax authority employees can work for their own pocket on a wide scale without oversight when it comes to exercising their discretion.  The situation is similar with local governments and every other institution in which deciding certain matters involves the exercise of discretion.  Let’s take the example of real estate appraisals around which circulate political groups.  There is little point to the prosecutor saying that the market value of the shop was HUF 200 million if those participating in the business of selling the real estate say that by their calculations it was only worth HUF 61 million.  There are as many different prices as there are experts, depending on “what the dear client wishes.”  This is the basic situation.  Politics gets mixed up in this.  It matters whose hands the local government is in, who controls the prosecutors office, and how independent the court is.  In reality, nobody can achieve justice when a building acquired inexpensively is resold at a much higher price.  At the same time, who is to say how much profit is lawful, and when the law is violated?  All of this gives a wide field for legal corruption, which the experts and government officials can legalize with false public documents and decisions.  Politics always exploits this.

(168 Óra): Procedures similar to the ones initiated against you have been brought against opposition politicians and journalists and publications not close to local governments.  What is the objective, restoring the trustworthiness of state institutions or intimidation?

(IJ): It is only possible to threaten and intimidate with lawsuits.  It would have been easy for the ministry to deny my allegations, for example, with a list of outgoing telephone conversions from the ministry.  If they could just once prove that on one occasion the ministry did not instruct the tax authority, then all my allegations would amount to nothing.  Or if the State Auditors would examine the contents of all the official opinions issued by the department heads, and determine that in every case these satisfied the laws in force, they could defeat me with arguments rather than threats.   As it is, the penalty in the case of the charge leveled against me is HUF 3 million (USD 11,000) plus legal costs.  My net salary at the social studies faculty of the ELTE, the faculty the education government has proposed to eliminate, is only HUF 200,000 (USD 750) a month.   I calculate that I would have lost two years of wages had I lost the lawsuit.  And if they had found me guilty of a crime, they could have kicked me out of my work place.  In comparison, in the case of a recent HUF 500 million (USD 1.8 million) broker scandal in the countryside, the perpetrator only receive a reprimand from the court.  Of course, the price for this is also appropriate!

(168 Óra): You claim that the government tries to use the justice service to defend corruption?

(IJ): Absolutely.  My goal is not to put anyone in jail. I would merely like to achieve that the prosecutors examine the suspicious matters using state auditors or independent bodies.  Today’s practice, however, is really to defend and legalize corruption.

(168 Óra): The State Auditors Office, which is run by a former Fidesz politician, has already strongly critized the tax authority, especially for the thousands of billions in taxes not collected.  In fact, not long ago the prosecutors office led by (former Fidesz politician) Péter Polt was forced to open András Horváth’s green dossier.  Why does none of this seem to have any effect?

(IJ):  Doubtless today that is the result, and state auditors are only allowed to examine the legality of matters.  It is necessary to go beyond that to determine whether behind the deficiencies enumerated on the part of the inspectors is a defective system or corruption.

(168 Óra): In response to criticism on the part of the state auditors, Ildiko Vida’s states the tax authority has already taken the necessary steps.  Is it possible that the criticism is conceived:

(IJ): I don’t think this solves the problems that I encountered.

(168 Óra): When the parliamentary committee wanted to hear what changes were implemented within the the authorities organization, the NAV president did not attend the hearing  What do you think about this?

(IJ): In a normal country they would receive her resignation that same night, not only hers, but (central bank governor) György Matolcsy’s as well, who also failed to accept the invitation of the parliamentary committee.  In a democracy, appointed leaders should not be able to ignore the requests of representatives selected by the people.  I consider this practice shocking.

(168 Óra): Does it sometimes happen that the various organizations follow the example of behavior set by public figures?

(IJ): Yes, but in every case it is necessary to distinguish between criminal corruption and “organization sociology” corruption:  I am a researcher of the latter, and this is what I am talking about.  A well-known judge explained the difference between the two areas as following:  Nobody should assume that if a judge violates the material or procedural law by interpreting it in a unique way, that behind that is not an intended abuse.  It is enough not to allow a single expert to speak.  This falls into the category of unfair procedures and can alter the outcome of the case.  Such mistakes that appear to be formal mistakes can be found more often in the prosecutors office.  I have also heard of documents at the police that existed at the time of being posted but which never arrived to the detectives.  I only recently encounter an example of this.

(168 Óra): Perhaps this also indicates that Hungary needs a anti-corruption prosecutor.  Do you think such a body could ever be created here?

(IJ): If there would be political interest, then maybe, but I doubt that the system would work well.  In today’s Hungary the Lex Quaestor was passed in an unlawful manner.  Behind such laws, incalculable interests are at work. So if there would be an anti-corruption office, it could become a means by which various interest groups settle scores with one another.  My feeling is that the independent systems here are in the hands of interest groups.   Anyway, abstract justice systems do not exist.  There are only individuals, interests, and organizations, and a unique network connections function in the justice system, the economy, and in politics.  In my opinion, this system has become so corrupt, that the participants do not even understand the point of laws and the rule of law.  The system of today is a feudalistic system of dependence based on raw interests, in which the orders of ones superiors must be filled in with expressions called laws.  Corruption at best is a way of life, a lifestyle, daily routine.