Péter Juhász: Local governments violated Fundamental Law

February 5, 2015

Juhász Péter

Budapest District 5 assemblyman Péter Juhász (of opposition party Together) is of the opinion that all transactions involving the sale of district-owned real estate since April 2011 have been in violation of Hungary’s Fundamental Law.

The politician believes all such transactions in which the buyer was given a discount or purchased the real estate outside of auction should be declared null and void because, in his opinion, they violate the Fundamental Law. “This applies practically to all of the real estate transactions I’ve seen,” says Juhász.

Why do the transactions violate the Fundamental Law?

According to him, Hungary’s Fundamental Law says national assets can only be sold for the fair value of the asset (unless a law provides otherwise).  Property owned by the local government counts as national assets.  He believes the reason ruling party Fidesz included this passage in the Fundamental Law is because it was convinced its predecessor had improperly sold off the country’s assets.  The Together politician says Fidesz is now selling asssets for one-third their fair market value in violation of their own Fundamental Law.

Juhász says this practice does not only apply to downtown Budapest but in towns and cities throughout Hungary where local ordinances regulate the sale of real estate even though the Fundamental Law does not permit this.

For this reason he has formally requested the government office examine this practice.  He believes that on the basis of the documents he submitted to the government office on Wednesday, the office should order local governments to immediately desist from breaking the law and to modify local ordinances accordingly.  Juhász says prosecutors should then be tasked with rectifying the current unlawful situation.  The assemblyman believes this can result in two possible conclusions: either the local govenrment sues for the return of the property, or (and he thinks this would be easier) the buyer agrees to pay the amount of the unlawful discount.

At the last meeting of Together’s presidium, the party resolved to examine every such transaction and the ordinances regulating them, regardless of whether or not Together had assemblymen on the city assembly.

According to Juhász the law on national assets and the budget law do not permit the sale of real estate over HUF 25 million (USD 90,000) without holding an auction or soliciting competitive bids, and that local ordinances providing otherwise are unlawful.

Fraudulant public procurement in the Heart of Budapest

The European Anti-Fraud Office (OLAF) has indicated that not all is in order with the ambitious downtown refurbishment project, sending a letter to the attorney general’s office at the beginning of December which, according to an official spokesman, is still be translated into Hungarian.  Juhász believes chief prosecutor Péter Polt should declare his intentions in this matter publicly.   Juhász  says that while for the time being very little information is available about the matter, he suspects the tender for the “Heart of Budapest” project was written in such a way that only certain companies could qualify.

“It would be good to know what OLAF objected to and how many billions of forints the (city and district) local governments will have to repay,” he says.  After notifying the attorney general’s office OLAF also made recommendations to the European Commission’s Regional and City Policy Head Directorate.   He says that if OLAF possesses proof to support their suspicions, then in the end the European Union may demand repayment of part of the support.

Juhász says the refurbished area must frequently be repaired because the decorative pavers used are incapable of supporting the volume of foot traffic.   The assemblymen says the contractor has disappeared, having long been wound up, and for this reason the repairs are not being made free of charge within the framework of a guarantee, but that the local government must pay another company to make the repairs, adding that the EU is not funding the repairs.

What real estate transactions have taken place to date?

According to Juhász several dozen real estates were sold annually from 2007 to tenants who were given a 30 percent discount.  He believes this resulted in the loss of tens of billions of forints and has reported the district to authorities for fraud, malfeasance and organized crime.   Juhász believes they “continuously committed abuse of power, document forgery, malfeasance with the result that the District 5 suffered many billions in damage”.

Juhász believes former District 5 mayor Antal Rogán, who is the head of the Fidesz parliamentary delegation, will end up in prison.  While Juhász cannot say this for a fact, he says it is certain that the threads lead closer and closer to Rogán.

The Together assemblyman has reported District 5 mayor Péter Szentgyörgyvölgyi who, while vice-mayor, was able to purchase a flat from the district government in the Szerb street at a significant discount.  The landmark building was renovated several times by the local government.  Prosecutors rejected the case at the end of January for reasons Juhász says are totally impossible and with findings that go against both the documents and logic.  In the meantime Szentgyörgyvölgyi promised to move out of the flat and to return it to the local government.  However, there is no indication that he has done so.

In the meantime, the District 5 local government has reported Juhász for defamation on several occasions.

According to atlatszo.hu’s investigation into the sale of downtown real estate, the threads lead to people directly connected to Minister for the Interior Sándor Pintér whose former business partner László Rack has also been a beneficiary of the sale of downtown district real estate practices.