Kosik law office takes over legal affairs of burgled residency bond brokerage

July 29, 2017

Kristóf Kosik, an attorney associated with propaganda minister Antal Rogán and Fidesz advisor Árpád Habony, will now be taking over the legal affairs of Arton Capital, reports Magyar Nemzet. Arton Capital is one of the few hand-picked companies awarded the right to sell government bonds in Hungary’s controversial residency bond program – and was mysteriously burglarized in April.

According to the daily, the Budapest Business Court has amended Arton Capital’s official corporate documentation to reflect Kosik’s new role in the company.

Kosik’s name has popped up elsewhere in the story of Hungary’s residency bond program. His law office was involved in the sale of residency bonds to Chinese clients, earning his practice some EUR 5,000 per residency bond sold. Magyar Nemzet reports that these transactions could have earned Kosik’s law office around HUF 10 billion (USD 38.5 million) in total.

According to Magyar Nemzet, Kosik has also worked for Árpád Habony and Antal Rogán in the past. For example, the paper reports that Kosik authored the legislative modification which ushered in the residency bond program in 2012. Kosik’s law office also employs Balázs Kertész, an attorney rumored to be Rogán’s bagman.

A recent change in ownership and Kosik’s new role in Arton Capital are noteworthy because the highly suspicious burglary of the company’s Budapest office in April 2017. Reports claim that approximately HUF 600 million (USD 2.3 million) in cash and a server containing valuable data were looted. To date, no news has emerged regarding the suspects or the location of the missing cash and server.

Hungary’s controversial residency bond program has earned a select-few brokerages hundreds of millions of dollars since it began in 2013, when the parliament’s Economics Committee, chaired by then-Fidesz MP Antal Rogán, awarded (without tender) a handful of offshore companies the right to sell the bonds. Each company was given a monopoly to sell the bonds in specific parts of the world.

The rationale behind selling the bonds was that the state would have access to cheaper capital. However, the way in which the residency bond program was constructed made it less profitable than expected because the interest payments on the bonds were higher than the market rate.

Furthermore, the profits from their sale landed in the pockets of Rogán’s handpicked brokers. In addition to charging buyers processing fees in the tens of thousands of euros, the brokers (not the bond purchasers!) collected the interest. In other words, hundreds of millions of euros were effectively diverted from the Hungarian treasury (and the so-called Debt Management Center) to primarily offshore companies.

In 2016, Magyar Nemzet estimated that the brokers had been pocketing processing fees between EUR 45,000-60,000 (on top of the 2 percent interest payments) per permit.

The residency bonds also came under scrutiny when it was reported that foreign criminals had bought them through the program, a scandal that eventually called into question the ability of Hungary’s state security apparatus to adequately screen purchasers.

The State Debt Management Agency announced in January that it would scrap the residency bond program at the end of March 2017.