NAV investigators knew details of systemic tax fraud in Hungary

May 28, 2014

horvath

Details emerge showing investigators knew details of systemic tax fraud in Hungary

Hungarian news website HVG.hu has obtained and published the statement made by Andras Horvath (pictured) to Hungarian enforcement officials when he blew the whistle on the country’s tax authority NAV.

HVG.hu published Horvath’s statement but first removed the names of individuals and companies Horvath accuses of perpetrating mass fraud and tax evasion.

Based on Horvath’s statement to police it is clear that he went to great lengths to document details surrounding what many believe to be the largest case of tax evasion in Hungary’s history. In his statement Horvath, formerly a NAV employee specializing in risk assessment and tax fraud, explains how systemic tax fraud was taking place and how senior management at NAV had reassigned key tax investigators before official findings could be made regarding a számlagyár – a company incorporated for the purpose of issuing fraudulent invoices – during the autumn of 2011 (the company’s primary business activity was to engage in the grain trade).

Government failed to address this issue

In late 2013, Horvath went public with his story alleging that systemic tax fraud was taking place in Hungary. He had approached senior management at NAV, several government officials and even members of parliament, in hopes of shedding light on what he deemed to be a sort of institutionalized tax agency-assisted system of tax fraud. According to Horvath, several large Hungarian companies were engaged in the fraud to the tune of trillions of Hungarian  forints per year. He claimed that senior tax authority management were not only aware of this but also complicit in assisting the fraudulent activities of the companies in question.

Horvath’s claims largely fell on deaf ears.  Except for investigative journalism site Atlatszo.hu and former LMP parliamentary representative Gabor Vago, little progress was made to shine light on the matter through official channels, despite Horvath claiming to possess evidence supporting his allegations.

Prime Minister Viktor Orban dismissed Horvath’s allegations on grounds that they lacked sufficient facts. Hungary’s prosecutors and law enforcement agencies responded by initiating two investigations against Horvath, raiding his residence and seizing his belongings, including the evidence in question.

In January 2014, the Special Affairs division of the National Investigation Office took Horvath’s statement, the transcript of which HVG.hu made public today (albeit with redacted names of individuals and companies involved).

So what does the statement show?

HVG.hu writes that the specificity and detail of Horvath’s statement to investigators clearly shows that he offered concrete examples to support his assertions. It is also clear that Horvath names several dozen companies involved in tax fraud. He provided investigators with examples of abuse of power by senior management at NAV, along with names and dates.

The statement shows that Horvath had provided these specific details when he first informed prosecutors in early November 2013. These details were held in the “green dossier” seized by law enforcement officials during a raid on his home in December 2013. The release of Horvath’s statement to investigators in January shows serious inconsistencies on behalf of the government regarding their version of his allegations.

To read Horvath’s statements to investigators in January as reported by HVG.hu, click here.

Referenced in this article:

Horváth András rendőrségi vallomásában megnevezte az áfacsaló cégeket, 444.hu; 28 May 2014.

Résnyire kinyílt az áfacsalási botrány titkos dossziéja, HVG.hu; 28 May 2014.

Orbán a NAV-botrányról: “Mi nem tudunk dokumentumokról”, HVG.hu; 6 December 2013.

Orbán reagált a NAV-botrányra, HVG.hu; 20 December 2013.