In Hungary today it seems corruption has become institutionalized – Juhász

November 12, 2015

Since being elected to the Budapest District 5 general assembly last November, Péter Juhász (Együtt) has devoted himself tirelessly to exposing the systematic sell off of district-owned property at substantially below market prices to parties or individuals with close ties to prominent Fidesz politicians.

“In Hungary today it seems corruption has become institutionalized” says the politician who claims that under the previous mayor, Antal Rogán (2006-2014), a system developed whereby “public assets owned by the district government were sold to their own business circles or friends” for a fraction of their market value.

In many cases, the properties were subsequently resold at a substantial profit.

Juhász explains to the Budapest Beacon on Tuesday how the system works (see video testimony above).

“First, they arrange for an outside company to appraise the real estate in order to determine whether or not it should be sold” says Juhász, pointing out that characteristic of these transactions is the fact that “the same justifications and formulas on paper” were used in every case where the property was sold.

“They manufactured paper that had no real content.  The prosecutor’s office even concluded that even a cleaning woman would have been capable of preparing these documents, and that it was not necessary to be a real estate appraiser given that the local government itself provided and supplied the data which the real estate appraisers then systematically regurgitated to the local government as supporting arguments for selling the real estate” says Juhász.

The second step was for a buyer to show up.  “It never happened that the local government first decided to sell a property” says Juhász.  In every case the property was first rented to a party which then declared its intention to purchase the real estate.  “In this way they were able to offer the buyer a 30 percent discount, because the real estate was always rented out first, and whoever rents real estate in the District 5 is entitled to purchase it at a 30 percent discount” says the anti-corruption crusader.

Juhász claims that when he became an assemblyman, the district stopped selling district property and even changed the relevant district ordinance.  “Now somebody must rent a property in the 5th district for six months in order to be entitled to the discount”.   Juhász says Rogan’s hand-picked successor, Péter Szentgyörgyvölgyi, needed the six months for his “buddies” to rent the property prior to buying them.

Former Budapest District 5 mayor Antal Rogán (left) seen here with his hand-picked successor Péter Szentvölgyi (and two bicycles).
Former Budapest District 5 mayor Antal Rogán (left) seen here with his hand-picked successor Péter Szentgyörgyvölgyi (and two bicycles).

Juhász says the best example of this is the corner building at 3 Deák square where the government is preparing to sell a 240 sqm flat for substantially less than fair market value to the very same law firm that handles all of the district’s public tenders and real estate transactions.  Juhász points out that the 240 sqm property the district’s own law firm is about to purchase for HUF 330,000 (USD 1,160) per sqm is situated in the the very heart of the downtown.

The price represents a 30 percent discount from the HUF 115 million (USD 400,000) appraised value which, according to Juhász, is unrealistically low to begin with.  “The same property was appraised three years ago for HUF 154 million (USD 540,000)” says Juhász, who claims that, once renovated, the property would be worth almost HUF 200 million (USD 700,000).

He further points out that the week after the local government decided to sell the property, a private owner sold a 95 sqm flat in the same building for HUF 82 million, that is for HUF 863,000 (USD 3,050) per sqm, or three times the sqm price of the 240 sqm property in question.  “You don’t need to be a real estate appraiser . . . to realize that the local government is selling off district property for a fraction of its true value” says Juhász.

But there has been a new development.  Juhász says that in the meantime a potential buyer has offered in writing to purchase the very same property from the local government for HUF 145 million (USD 510,000).   “The general assembly has to decide whether it wants to sell the property for HUF 78 million to its own law firm or to another party for HUF 145 million”.  The district assemblyman says that in the event the local government decides to sell the property for HUF 66 million less than the higher of the two offers, he will report the mayor and the district city council to the authorities.

“I’m only talking about one property.  It seems as though the sale of downtown real estate has started up again.  I intend to follow all of them” says Juhász.

Postscript:  At today’s (Thursday’s) district city council meeting, it was announced that law firm in question had withdraw its HUF 78 million offer to purchase the property.