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#Hungary #RuleOfLaw #orban
Since my account of the “cigarettes business” (
#Hungary #RuleOfLaw #orban
Since my account of the “cigarettes business” (
https://twitter.com/PeterFr89977258/status/1335320590949953537) attracted quite unforeseen level of interest, I thought maybe the other huge fidesz-“business” of the time in Orban-land might be interesting as well, especially since
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that had indeed ramifications for the entire Schengen-zone, insofar as reportedly providing Schengen-access to numerous people with affiliations to dictators, organised crime and secret services - basically as a mere side effect of stuffing some pockets.
that had indeed ramifications for the entire Schengen-zone, insofar as reportedly providing Schengen-access to numerous people with affiliations to dictators, organised crime and secret services - basically as a mere side effect of stuffing some pockets.
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Ladies and G'men, here comes the infamous „residency bonds“ scheme.
So, this scheme provided Hungarian residency (=full Schengen access) to basically anyone willing to pay, while collecting high fees from the applicants and looting the state budget in the process.
Ladies and G'men, here comes the infamous „residency bonds“ scheme.
So, this scheme provided Hungarian residency (=full Schengen access) to basically anyone willing to pay, while collecting high fees from the applicants and looting the state budget in the process.
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See, word had it that the most senior aides of Orban tended to get permission to develop their own “reward projects”, i.e. schemes designed to generate vast amounts of money, for which they could of course use all capacities of the Hungarian state, including parliament.
See, word had it that the most senior aides of Orban tended to get permission to develop their own “reward projects”, i.e. schemes designed to generate vast amounts of money, for which they could of course use all capacities of the Hungarian state, including parliament.
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While the „cigs business“ was seen as Janos Lazar’s heap (Orban’s right hand), the “residency bonds business” is usually attributed to Antal Rogan, another long-time loyal Orban-aide who served him in various senior positions and is today heading Orban’s propaganda ministry.
While the „cigs business“ was seen as Janos Lazar’s heap (Orban’s right hand), the “residency bonds business” is usually attributed to Antal Rogan, another long-time loyal Orban-aide who served him in various senior positions and is today heading Orban’s propaganda ministry.
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Certainly, the residency bonds scheme, based on a notion by MP Antal Rogan in late 2012, was voted into law by fidesz' 2/3 majority in parliament in 2013, without any substantial debate.
Certainly, the residency bonds scheme, based on a notion by MP Antal Rogan in late 2012, was voted into law by fidesz' 2/3 majority in parliament in 2013, without any substantial debate.
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It enabled individuals from outside the EU to attain lifetime Hungarian residency for themselves and their families, without having to actually move to Hungary for even a day.
It enabled individuals from outside the EU to attain lifetime Hungarian residency for themselves and their families, without having to actually move to Hungary for even a day.
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Now, while several countries in the EU maintain residency schemes, this one was a bit special, most notably for
(i) the very lax checks on applicants and
(ii) the prominent role of a small set of private intermediary companies (being the entire point of it all)
Now, while several countries in the EU maintain residency schemes, this one was a bit special, most notably for
(i) the very lax checks on applicants and
(ii) the prominent role of a small set of private intermediary companies (being the entire point of it all)
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Applicants could not deal directly with the state, only with the intermediaries.
They had to provide at least EUR 250.000 to such intermediaries, who turned around and purchased custom Hungarian sovereign bonds for (most of) it.
The intermediary made money in three ways:
Applicants could not deal directly with the state, only with the intermediaries.
They had to provide at least EUR 250.000 to such intermediaries, who turned around and purchased custom Hungarian sovereign bonds for (most of) it.
The intermediary made money in three ways:
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1. It earned a hefty fee of EUR 45-60.000 per applicant,
2. It got the EUR 250.000-worth of bonds from the Hungarian state at a discount, for only EUR 221.000
3. The bonds’ interest payments landed with the intermediary
1. It earned a hefty fee of EUR 45-60.000 per applicant,
2. It got the EUR 250.000-worth of bonds from the Hungarian state at a discount, for only EUR 221.000
3. The bonds’ interest payments landed with the intermediary
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So just to appreciate this: the intermediary firms, utilising their exclusive mandates granted by Hungarian parliament, collected high fees for administering Hungarian residency permits,
So just to appreciate this: the intermediary firms, utilising their exclusive mandates granted by Hungarian parliament, collected high fees for administering Hungarian residency permits,
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made money on a preferential purchase price provided to only them by the Hungarian state, on sovereign bonds issued by the Hungarian state; and they received all the interest on the bonds they purchased with the applicants’ money.
made money on a preferential purchase price provided to only them by the Hungarian state, on sovereign bonds issued by the Hungarian state; and they received all the interest on the bonds they purchased with the applicants’ money.
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Furthermore, such interest rates were not only higher than what Hungary had to pay on the capital markets most of the time, but additionally carried an interest floor, ensuring that interest income could not fall below a certain level irrespective of market events.
Furthermore, such interest rates were not only higher than what Hungary had to pay on the capital markets most of the time, but additionally carried an interest floor, ensuring that interest income could not fall below a certain level irrespective of market events.
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All in all, such intermediaries earned up to estimated 89.000 EUR per applicant, and Transparency International estimated that in the ca. 5 years of the scheme’s operation, such intermediaries earned in total ca. HUF 162bn (EUR 540m) through the various channels.
All in all, such intermediaries earned up to estimated 89.000 EUR per applicant, and Transparency International estimated that in the ca. 5 years of the scheme’s operation, such intermediaries earned in total ca. HUF 162bn (EUR 540m) through the various channels.
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Now let's see, who owned these firms? Well, we don't know. They had been mostly founded in jurisdictions like Cayman Islands, Liechtenstein, Cyprus or Malta & their shareholders were also mostly off-shore companies, thus hiding the identity of the natural persons behind them
Now let's see, who owned these firms? Well, we don't know. They had been mostly founded in jurisdictions like Cayman Islands, Liechtenstein, Cyprus or Malta & their shareholders were also mostly off-shore companies, thus hiding the identity of the natural persons behind them
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However, the splinters of information that could be collected often showed a certain connection to Antal Rogan.
Kristof Kosik, know to be a lawyer who repeatedly represented Rogan, reportedly earned more than HUF 7,2bn / EUR 24m on legal mandates related to the scheme.
However, the splinters of information that could be collected often showed a certain connection to Antal Rogan.
Kristof Kosik, know to be a lawyer who repeatedly represented Rogan, reportedly earned more than HUF 7,2bn / EUR 24m on legal mandates related to the scheme.
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One owner whose name did come to light, Radosztina Balogh, turned out to be a former university groupmate and still a friend of Antal Rogan.
This intermediary's HQ was in 2017 "broken into", and documentation on their busienss with residency schemes were "stolen".
One owner whose name did come to light, Radosztina Balogh, turned out to be a former university groupmate and still a friend of Antal Rogan.
This intermediary's HQ was in 2017 "broken into", and documentation on their busienss with residency schemes were "stolen".
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Rogan’s close confidant Arpad Habony, a key campaign mastermind of Fidesz (think of an Eastern European Dom Cummings) turned out to have registered his PR firm in Hong Kong at the same address where the intermediary selling the residency scheme in the Asian sphere resided.
Rogan’s close confidant Arpad Habony, a key campaign mastermind of Fidesz (think of an Eastern European Dom Cummings) turned out to have registered his PR firm in Hong Kong at the same address where the intermediary selling the residency scheme in the Asian sphere resided.
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In terms of public framing, the program was marketed by Fidesz from start with the need to draw in new resources for funding the state budget; they also claimed the businessmen receiving the permits would surely do a lot of investments in Hungary, create jobs etc.
In terms of public framing, the program was marketed by Fidesz from start with the need to draw in new resources for funding the state budget; they also claimed the businessmen receiving the permits would surely do a lot of investments in Hungary, create jobs etc.
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Although demonstrably wrong, the Ministry of Finance and the entire state apparatus never stopped insisting that the residency scheme was a clever move in a time of difficult refinancing situation of Hungary, and that such refinancing was cheaper than usual market sources.
Although demonstrably wrong, the Ministry of Finance and the entire state apparatus never stopped insisting that the residency scheme was a clever move in a time of difficult refinancing situation of Hungary, and that such refinancing was cheaper than usual market sources.
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Of course the entire scheme was treated secretively, with state bodies refusing to provide any information, citing the confidential nature of the matter. Nevertheless, media managed to force some disclosure via years of legal battle, so a few things did come to light.
Of course the entire scheme was treated secretively, with state bodies refusing to provide any information, citing the confidential nature of the matter. Nevertheless, media managed to force some disclosure via years of legal battle, so a few things did come to light.
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Regarding the end users: 444.hu and @direkt36 reported that the scheme was apparently used inter alia by organised crime groups (e.g. from Russia), secret services, and dictators to attain Schengen access for their people.
Regarding the end users: 444.hu and @direkt36 reported that the scheme was apparently used inter alia by organised crime groups (e.g. from Russia), secret services, and dictators to attain Schengen access for their people.
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Some individuals cited as beneficiaries of Rogan's residency scheme:
- Atiya Khoury, a Syrian, present on US sanctions lists and accused of human rights violations, understood to be one of the key money-men of Bashar al-Assad
Some individuals cited as beneficiaries of Rogan's residency scheme:
- Atiya Khoury, a Syrian, present on US sanctions lists and accused of human rights violations, understood to be one of the key money-men of Bashar al-Assad
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- Salmo Bazkka; a Syrian, accused by Italian authorities of running an intl. money laundering scheme
- the family of Sergei Nariskin, Russia's chief foreign intelligence chief
- Vladimir Blockij, a member of the lower house of the Russian legislature and his family
- Salmo Bazkka; a Syrian, accused by Italian authorities of running an intl. money laundering scheme
- the family of Sergei Nariskin, Russia's chief foreign intelligence chief
- Vladimir Blockij, a member of the lower house of the Russian legislature and his family
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- Ilias Muslimov, former member of the Russian Parliament,
- Alexey Yankevich, deputy CEO of Gazprom Neft
- Andrei Kalmikov, head of a subsidiary of the state-owned Russian airline Aeroflot.
- Ilias Muslimov, former member of the Russian Parliament,
- Alexey Yankevich, deputy CEO of Gazprom Neft
- Andrei Kalmikov, head of a subsidiary of the state-owned Russian airline Aeroflot.
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Such names thus turned media’s attention towards the security aspect of the scheme. It came out that while in theory a host of Hungarian state actors (police, various secret services etc) scrutinised the applicants, they had only 8 days (later 30 days) to do so,
Such names thus turned media’s attention towards the security aspect of the scheme. It came out that while in theory a host of Hungarian state actors (police, various secret services etc) scrutinised the applicants, they had only 8 days (later 30 days) to do so,
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which was seen as too little time to do any serious checks (considering also that 20.000 people in 5 years means some 4.000 checks per annum). Transparency Intl., based on information they sued for, calculated that 99,7% of applications were accepted and only 0,3% declined.
which was seen as too little time to do any serious checks (considering also that 20.000 people in 5 years means some 4.000 checks per annum). Transparency Intl., based on information they sued for, calculated that 99,7% of applications were accepted and only 0,3% declined.
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Besides the scarce time for scrutiny, it might have helped that Hungarian authorities accepted certificates of good conduct also from tax havens like Saint Kitts and Nevis, Belize or Grenada.
Besides the scarce time for scrutiny, it might have helped that Hungarian authorities accepted certificates of good conduct also from tax havens like Saint Kitts and Nevis, Belize or Grenada.
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Last but not least, a nice rule of law aspect: most decisions on the scheme (e.g. on choosing the intermediary firms) were delegated by the law to the parliament’s Economic Committee - chaired by Antal Rogan.
Last but not least, a nice rule of law aspect: most decisions on the scheme (e.g. on choosing the intermediary firms) were delegated by the law to the parliament’s Economic Committee - chaired by Antal Rogan.
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Media found out, after fighting lengthy legal battles to attain the Committee’s minutes, that a good number of Committee decisions was not even actually voted upon; these were then said to be decided by committee chair Antal Rogan alone.
Media found out, after fighting lengthy legal battles to attain the Committee’s minutes, that a good number of Committee decisions was not even actually voted upon; these were then said to be decided by committee chair Antal Rogan alone.
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Given the obvious legality problems, @TI_EU et al filed requests to the State Prosecutor, led by former Fidesz MP Peter Polt, for an investigation.
They replied that they see no wrongdoing: no committee rules were breached, since such rules don’t even exist.
Given the obvious legality problems, @TI_EU et al filed requests to the State Prosecutor, led by former Fidesz MP Peter Polt, for an investigation.
They replied that they see no wrongdoing: no committee rules were breached, since such rules don’t even exist.
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So, that was the story of a scheme by which the clubhouse’s keys were sold to 20.000 people, with some highly dubious ones among them, raiding the state budget in the process, and earning an estimated EUR 540m.
END
@rdanielkelemen @radosveta_vass @luca_badini @MwiWind
So, that was the story of a scheme by which the clubhouse’s keys were sold to 20.000 people, with some highly dubious ones among them, raiding the state budget in the process, and earning an estimated EUR 540m.
END
@rdanielkelemen @radosveta_vass @luca_badini @MwiWind
Some sources in English:
politico.eu/article/hungar…
direkt36.hu/en/sulyos-nemz…
occrp.org/en/goldforvisa…
direkt36.hu/en/putyin-gepe…
voices.transparency.org/hungarys-contr…
politico.eu/article/hungar…
direkt36.hu/en/sulyos-nemz…
occrp.org/en/goldforvisa…
direkt36.hu/en/putyin-gepe…
voices.transparency.org/hungarys-contr…
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