“I simply do not feel safe any more. The state is supposed to be responsible for each and every citizen. It should protect them. It seems like we cannot count on this any more these days. The country’s greatest problem these days is that there are no people who could run the system in a fair way.” – Judith, Quaestor victim
“I wish that the government would not fall with this scandal. They are the only ones who I think are powerful enough to get our money back somehow. There is no alternative. If I get my money back, it assures that I will vote Fidesz next time as well. If I don’t, then only Jobbik remains. But that would only be a protest vote.” – Péter, Quaestor victim and Fidesz supporter (at last for the time being)
Translation of an article “The misery of the robbed – The Quaestor-scandal from below” (A meglopottak nyomorúsága. A Quaestor-botrány alulnézetből) by Ákos Keller-Alánt, appearing in weekly print Magyar Narancs on2. April 2015. pp. 13-14.
Quaestor-victims, who are organizing themselves on the internet and in localities, are both helpless and upset. They feel that they have more chance in getting their money back if they stand united. Many did not want to tell us their story at all, and nobody offered us a story on the record. We also enquired from attornies about the issues of responsibility and consequences.
Judit has been living off her disability pension for the past ten years after being diagnosed with a grave illness. Together with her husband, they entrusted their household savings to Quaestor five years ago. They were aware of taking a bit larger risk by choosing this way. However, the company assured them that theirs is a good place to invest their money. Judit told us that when she heard what happened to the company, her first feelings were anger and helplessness. That later was replaced with pure sorrow.
“I simply do not feel safe any more. The state is supposed to be responsible for each and every citizen. It should protect them. It seems like we cannot count on this any more these days. The country’s greatest problem these days is that there are no people who could run the system in a fair way.”
Similarly to most people losing savings in the fraud, she was hoping that Quaestor, a nationwide private investment and brokerage network is properly regulated by the state. That offered enough guarantee.
“Well the company was in fact regulated the question really is by who, how and why in this way? In a system where the average taxpayer has to face rigid control, if I forget to pay a bill, the fine immediately arrives. In a state with a working legal system, rules have to work both ways.”
Judit still hopes that the majority of their savings will be reimbursed as it was below the retribution threshold of HUF 6 million. But even if they get it back, they remain unsure how to safely invest it, as their confidence is now shaken in the whole financial system. This means that she would not prefer to open a savings account at any bank now.
For now, only their pension remains. They still are able to make ends meet with her husband, although very narrowly. However, exactly because of Judit’s health condition, unexpected medical expenses can occur any time. Despite the public healthcare system, she has no illusions: You need the extra cash for proper care. Her children would help them out, but she is reluctant to accept any financial assistance from them. “They are busy building their own future. We cannot expect them to sacrifice this just because somebody simply robbed us.”
She tries to stay optimistic despite the circumstances.
“A lot of people got it worse than us, at least we have no debts. We would have liked to live a few more years, travel a bit during our retirement age, but now we have to give up all this. We live in a house. If we will unable to sustain it, we will sell it and buy a smaller apartment or go to an old age home.”
Péter’s situation is somewhat better, as he still is in active age and is able to rely on multiple incomes. For decades he worked as a farmer in eastern Hungary, but “overregulation” and rising prices made his business impossible in the past years. So he sold all his farmland and is working as an employee since then. He tried not to lose the cash he received from the transaction so he sought a low-risk yet high-interest option – this is how part of the money ended up at Quaestor. “I have seen their ads everywhere, the fact that at the time they even ran television commercials was really reassuring.” When he was briefed as to the risks of buying bonds, they also told him that the Investor Protection Fund (Beva) ensured savings up until HUF 6 million, so that was the exact amount he put in the account to meet the threshold. Consequently, when he heard about the company crashing, he was not even nervous at first. Today, he is not that tranquil any more. A few years ago he switched to a so-called “Long Term Investor Account” and his new contract clearly stated that he bought a “financial product.” He is not sure what kind of regulation applies to this form of investment, but Péter thinks that he was paying attention to the details at every move. He discussed his financial issues with independent expert advisors, and none of them ever alerted him about potential problems at Quaestor. He is considering asking a legal advisor as well. However, for now he stands by as the situation changes from day to day.
Péter blames Quaestor management before everyone else, but thinks that the regulators’ conduct was not appropriate either, as it must have occurred to them years ago that this is pyramid scheme. “And we haven’t even talk about the state intervention. The fact that they extracted almost four billion forints on inside information surely contributed to the crash itself.”
Regardless of what happened, Péter still trusts the government. He is a fervent Fidesz-voter.
“I wish that the government would not fall with this scandal. They are the only ones who I think are powerful enough to get our money back somehow. There is no alternative. If I get my money back, it assures that I will vote Fidesz next time as well. If I don’t, then only Jobbik remains. But that would only be a protest vote.”
Katalin has quite different sentiments. Not only has she been a Fidesz supporter in the past. She also helped the party in the rural town in where she is a college professor. Now, however, she is bitterly disappointed in the government and its method of handling the situation.
“I think that the government had a huge role in how things turned out with Quaestor. The Foreign Ministry kept its assets at the company but they were somehow able to save them just in time.”
According to Katalin, party communications further emphasize how Fidesz was involved in the fraud, as well as the fact that they still do not condemn Quaestor owner Csaba Tarsoly, who has an excellent relationship with Fidesz.
“When Viktor Orbán talks about how ‘commons sense’ helped the government to withdraw all their funds from the broker company in time, then he at the same time suggests that we are nothing else but simple idiots who never could have anticipated such an event. I was not working for the party and helping the mayor to be treated like this.”
Katalin kept her small assets at Quaestor for years without any problem. So when the family inherited a larger sum of money, the investment method was not a question for them. “I received an email from Quaestor less than a week before the crash thanking me for my confidence in them. They also sent a special offer of a weekend in a four-star hotel resort in Mártaháza. I think this is gone now as well.” When she inquired at Quaestor in person a few days after the beginning of the scandal, they said that the company is not bankrupt. Later it was revealed that this is not true.
“We wanted to buy a larger apartment as the present one just got really small for all the children. To be able to move, we now have to sell our present apartment, but we are unable to find somebody who could buy it due to the crisis. Now, however, selling it is not enough, as the price would not cover a new flat. Presently, we only live off our monthly wages, as my husband is a teacher, too.”
But it was not only the money allocated to buy a new flat that has been stuck in the company, but also all the savings of Katalin’s retired mother. The elderly lady was using the funds to complement her modest pension from month to month. Now she is left with nothing at all.
“When I first heard about what happened, first I did not even realized the meaning of it. Then I was shocked, and started to cry rivers. Two weeks later I managed to calm myself down and started to get hopeful again. Life goes on, I will not starve. This does not mean that I will accept losing my money. This is our money, it has to be somewhere!”
Together with other victims, they started to organize themselves, and are planning a protest, as well as looking into legal possibilities together, asking for help from EU forums. Katalin is confident that in the end they will be compensated, even if only partially. As she said, she was a good taxpayer her whole life. This taxpayer money was used to help others. But now she is the one who needs help.
“I did not lend my money to usurers. I invested my money in a company that operated for 25 years under state supervision. Everyone kept telling us to save because state pensions will not cover all of our costs in our old age. Now I am even afraid to put my money in the banks. But this cannot be done with impunity. Without banks and confidence a country cannot function.”
A larger part of the many tens of thousands of victims are small-scale investors, entrusting Quaestor with a few million forints per person, attorney György Magyar told Magyar Narancs. According to him, there is no need to launch a class action in this phase of the lawsuit. Testing legal opportunities by creating precedent cases, however, seems a viable initial strategy. Class action however is much easier to bring about once a criminal court case commences.
However, it is not clear who is to compensate the customers. Illegality is the basis of all responsibility for compensation. If the National Bank or the state’s responsibility is being brought up, then it could raise certain obstacles, György Magyar explained. The inappropriate transposition of EU legislative framework is also a possibility, and that could form the basis of establishing state responsibility in itself. The bond issuer, Quaestor Financial Hrurira, can also be sued for bonds non-payable, as well as bond distributor Quaestor Securities for insufficient customer information service. However, Magyar says at this stage it is not even clear if these bonds actually ever existed in a legal sense, and if not, what happened to the money paid in to buy them. He was calling our attention to the fact that initiating a liquidation procedure in this case is necessary in order to establish the responsibility of the management as well as to liquidate the company’s assets as soon as possible, yet this has not yet happened.
Quaestor routinely designated arbitration courts to settle its legal debates, but according to Magyar it is not sure if these designations were correct. Arbitration could be faster, as lawsuits involving bond demands usually are not complicated. Compensation lawsuits, however, could last for years. However, the attorney is confident that court cases could be won either based on the criminal method of bond issuance, or on the responsibility for the damage inflicted. The real question is whether the debtors have enough assets to compensate their victims.
Another lawyer, representing multiple victims, who prefers not to be named, talked to Magyar Narancs about the many strange circumstances of the Quaestor scandal. For example, it is interesting that neither a liquidation nor a bankruptcy procedure has been initiated. Such a procedure could have initiated either by the attorney general’s office or by the financial oversight authorities. Instead, all that happened is that the National Bank suspended the operation license of Quaestor Securities. The significance of this lies in the fact that a bankruptcy supervisor could take full control of the company and violating a bankruptcy procedure is seriously penalized by the Criminal Code, the attorney explained.
The fact that Tarsoly dismissed his whole family from the management amid the scandal to appoint a convicted criminal public worker without qualification to manage his multi-billion forint businesses is a forgery of official documents in itself, the attorney further concludes. “Ever since Josip Tot, (a foreign national who acquired a number of companies close to Fidesz with tax arrears-ed.), Hungarian judicial and attorney general practices are already on a level that they can identify such a blatant kind of appointment. But for some reason, the attorney general’s office is not concerned about all this.”
The responsibility of subsequent oversight bodies and the state itself could not be avoided either. Financial institutions are theoretically subject to strict state supervision, and this is not a coincidence. This is partly due to the fact that a badly working financial system causes serious damage to the economy, and partly to the fact that financial institutions have became so complicated that cannot be expected from citizens to have a full insight, which is why the state takes it upon itself to go with this responsibility. Consequently, if there is no control, or of it is superficial, that violates fundamental citizen rights. This is how it was explained to us by the demands of Quaestor’s victims are founded.
“This is an excellent opportunity to test at the EU court in Luxembourg what kind of responsibility financial oversight authorities and the state itself bear in the case of such a damage by failing to handle issues appropriately.”