Transparency International: National Bank of Hungary lacks internal checks and balances

July 29, 2015


Transparency International (TI) is deeply concerned about the apparent lack of internal checks and balances at the National Bank of Hungary.  “Especially worrying is the fact that the central bank governor himself gets to decide what the central bank spends money on,” according to TI’s Miklós Ligeti (pictured).  Chaired by central bank governor György Matolcsy, the bank’s executive committee has authorized the purchase of hundreds of billions of forints worth of real estate and works of art Ligeti says it has no business buying.

“There is nothing either in the law regulating the central bank nor in practice that gives the bank the right to spend billions of forints of taxpayer money on luxuries,” says the former public prosecutor-turned-anti-corruption crusader.

“The fact that the central bank acts independently means that the decisions undertaken by its executive committee are not transparent.  Nor can the bank’s directors be held accountable for their decisions,” says Ligeti, who cannot imagine that any of the bank’s directors would dare say “no” to Matolcsy.  “There is no system of checks and balances that would prevent the executive committee from deciding to acquire a given real estate for a given price, or that would render the decision transparent.”

Ligeti says that while the central bank’s social responsibility program supports the purchase of instruments for talented musicians, it does not authorize the bank to spend hundreds of billions acquiring real estate, endowing foundations or purchasing objets d’art.  “Even the study that the central bank ordered for itself did not recommend spending HUF 100 billion (EUR 300 million) acquiring works of art. Nor does it support the acquisition of real estate, or using HUF 200 billion (USD 720 million) to endow the central bank’s five so-called Pallasz Athéné foundations.”