Hungarian Minister for Foreign Affairs and Trade Péter Szijjártó has a lot of explaining to do.
In addition to withdrawing HUF 3.8 billion (USD 14.2 million) worth of Hungarian treasury bills just before Quaestor collapsed, the Ministry of Foreign Affairs and Trade (KKM), led by minister Péter Szijjártó, also withdrew HUF 72 billion (USD 260 million) worth of securities on deposit with the brokerage house, according to Hungarian economic weekly HVG.hu.
The stocks in question represented capital stock for two state-owned companies, Eximbank and the Hungarian Export Finance Corporation. Hungarian police are trying to determine whether the transfer of these stocks by Quaestor executives arose from any illicit transaction.
The government of Hungary still hasn’t provided an acceptable answer for why the affected ministries and state-owned companies did not use the Hungarian State Treasury to manage the funds.
The Moral Hazard of Acting on Insider Information
The Ministry of Foreign Affairs and Trade managed to withdraw a huge amount of funds just before Quaestor’s collapse. Regardless of what played into this spectacular coincidence, the government now finds itself in the predicament of appearing to be the only Quaestor client that managed to withdraw significant funds just before its collapse on March 9.
It may come as no surprise that the Fidesz-led parliament this week speedily adopted legislation to compensate victims of the brokerage scandal by liquidating the personal and business assets of individuals and companies believed to be involved in the scandal.
Allegations of gross mismanagement and fraud on the part of Quaestor’s executives certainly appear warranted at this point in time. But the government has yet to offer a convincing explanation for its decision to drain Quaestor of its liquidity so soon before the company announced its intention to file for bankruptcy after defaulting on the payment of bonds coming due.
Referenced in this article: