offshore

Nearly 5% of Hungary’s GDP was saved in offshore accounts

Tax havens are causing severe losses to countries’ budgets worldwide. Corporate tax avoidance practices cost a significant amount of lost revenue, but individuals’ offshore assets also cause tremendous losses. Hungary may be a tax haven for companies, but nearly five percent of the domestic GDP was moved to offshore accounts.

Portfolio reported that the State of Tax Justice 2023 has continued the tradition of collecting data and sharing statistics on companies and individuals committing tax fraud and escaping money on offshore accounts. According to statistics, the yearly tax loss is about USD 472 billion globally. Multinational corporations shift a lot of profit to tax havens each year. It is almost unbelievable that the loss of direct tax revenue to governments is higher than Hungary’s GDP.

Serious losses in Hungarian finances due to offshore

The study made by the State of Tax Justice 2023 highlights the fact that higher-income countries are responsible for 99.3 percent of all taxes lost to corporate tax abuse worldwide, although many of them also suffer losses. Therefore, lower-income countries are responsible for only 0.7 percent of losses. You might be surprised to learn that Hungary suffers quite brutal losses too. Hungary might be a tax haven with a nominal corporate tax rate of 9 percent, but it is still a victim of aggressive tax planning and tax avoidance of companies and wealthy individuals.

The country receives about USD 1137 million in profit shifting due to the low tax rate. However, the profit shifted from the country is much higher, roughly USD 3502 million. Therefore, it is a major annual tax loss. Globally, corporate tax abuse in Hungary accounts for 0.1 percent of the total global tax loss caused by multinational companies. The percentage might not be high, but Hungary still adds to this global problem.

The wealthiest Hungarians

Offshore assets are financial assets such as bank accounts, investments, and real estate held in foreign jurisdictions with favourable tax and regulatory environments. According to the calculations, Hungarian citizens have offshore assets worth USD 7.7 billion, roughly HUF 2765 billion. It is especially alarming that offshore assets owned by Hungarian citizens account for 4.7 percent of Hungary’s gross domestic product. This indicates the significant value of offshore financial wealth relative to the country’s economic performance. If these offshore assets were to be taxed in Hungary, the government would have acquired a tax revenue of about USD 57.5 million per year.

Gentle tax system

According to the 2021 ranking list of the Corporate Tax Haven Index – CTHI, Hungary takes 24th place on the list of 37 countries. This list rates the role of countries as tax havens when it comes to companies engaging in tax avoidance practices. Hungary’s share of the CTHI 2021 was 1.35 percent, indicating a limited role, but the country is a big player compared to its size. The country is a moderately attractive destination for multinational companies. However, it cannot compete with countries such as the Netherlands, the United Kingdom or Switzerland.

July 30, 2023

These secret funds are managed by the richest in Hungary

We now know where the money is, just not where it is from and exactly whose it is. Although Fidesz promised to banish concealed forms of ownership from economic life before 2010, private equity funds in particular proliferated during the Covid period. 43 of them are clearly run by a pro-government elite, but the rest are not far from power either.

The government has set off a crazy wave of privatisation by building a system of public task-performing trusts. But at least those units are not secret. There is a form of organisation that could even be run as intended – but in Hungary, it is used more abusively, as politically motivated, “faceless” funds.

Private equity funds, which also exist internationally, were originally fundraising organisations in which business decisions were made strictly by fund managers; meanwhile, unit-holders, ie the ultimate beneficiaries, wait in silence for the results. Their identities are secured by law, and we cannot, as a general rule, know what kind of money has been “laundered” into them.

The interesting thing is that before the 2010 parliamentary elections, Fidesz in press conferences used to connect the corrupt, secretive, offshore, leading-edge left-wing with these forms of funds and fight against them through lawmaking.

Answer Online has compiled exactly how many private equity funds are currently managed by registered fund managers from the current records of the national bank. Their number increased greatly during the Covid period.

Here is the list of private equity funds close to power:

Mészáros Lőrinc fund managers: Opus Global Befektetési Alapkezelő Zrt.; Status Capital Venture Capital Fund Management Ltd.
Other fund managers of the Mészáros group: Nukleus Venture Capital Fund Management Ltd.; Primefund Befektetési Alapkezelő Zrt.; Minerva Befektetési Alapkezelő Zrt.; DBH Investment Venture Capital Fund Management Ltd.; Singulium Befektetési Alapkezelő Zrt.; Diófa Alapkezelő Zrt.; Indotek-Investments Alapkezelő Zrt.;
Fund managers around István Tiborcz: Central European Venture and Private Equity Fund Management Ltd.; Equilor Alapkezelő Zrt
The ones “related” to the Matolcsy family: Quartz Befektetési Alapkezelő Zrt.
The fund manager of the Habony’s: TripleHill Capital Venture Capital Fund Management Ltd.
Fund manager of Zsolt Hernádi: Gran Private Equity Zrt.
Gellért Jászai fund manager: iKON Befektetési Alapkezelő Zrt.

In addition to the ones mentioned above, there are also more transparent private funds seeking to fulfil the original function of investment funds, where the origin of the capital can be at least guessed. For example, the state-owned Hiventures Venture Capital Fund Management Ltd. also manages a private equity fund, while PortfoLion Venture Capital Management Ltd., part of the OTP Group, manages five, and Optima Befektetési Alapkezelő Zrt. manages two. There are a few other fund managers, one of GB & Partners Venture Capital Fund Management Ltd. with its three private equity funds, and the other, Carion Investment Fund Management Ltd., with one private equity fund.

Read alsoHungarian workplaces in chaos – what comes next?

May 21, 2021

Opposition Párbeszéd, LMP demand hearings on govt residency bond scheme

The opposition Párbeszéd and LMP parties on Monday called for convening parliament’s national security committee in connection with recent reports on the government’s residency bond scheme.

Speaking to reporters, Richárd Barabás, a spokesman for Párbeszéd, cited a report by news portal 444.hu which said that influential Russian citizens, including politicians and the heads of state companies, had been granted permanent residence status in Hungary under the bond scheme.

Párbeszéd also demands that bond holders residing in Hungary should be banned from the country, Barabás said.

LMP called for convening parliament’s defence and law enforcement committee and hear officials of the national security services, the immigration office and the government.

The Democratic Coalition said it would turn to the European Commission over the bond scheme citing security concerns.

“It constitutes a national security risk that the government had allowed terrorists, criminals and spies to enter into Hungary’s and the EU’s territory,” Zsolt Greczy, the party’s group leader, told a press conference.

He said that “the Fidesz government’s scheme had benefitted the chief of Russian intelligence and his family members and one of the key figures of the Russian mafia”.

The Hungarian Liberal Party also called for convening the national security committee. Lawmaker Anett Bősz told a press conference that the bond scheme had allowed some 20,000 individuals to enter Europe including Russian intelligence officials and business people “of dubious background”.

The threshold for the residency bond purchase was set at 250,000 euros early in the scheme and raised to 300,000 euros later on.

Featured image: MTI/EPA

September 10, 2018

Opposition initiates 90 pc tax on ‘off-shore’ residency bond sellers

The opposition Párbeszéd party will initiate levying a 90 percent special tax on revenues generated by “off-shore” companies on the sales of the government’s residency bonds, the party’s spokesman said on Saturday.

The five agents licensed to sell residency bonds under the government’s scheme have “robbed the state” of 17.5 billion forints (EUR 53.8m) they had generated in unpaid taxes on their off-shore businesses, Richárd Barabás told a press conference, adding that those involved in these businesses should be identified and brought to justice.

Under the scheme running from the summer of 2013 until March 2017, foreign nationals who bought securities from a licensed agent backed by the residency bonds could apply in an accelerated procedure for permanent residency in Hungary. The threshold for the residency bond purchase was set at 250,000 euros early in the scheme and raised to 300,000 euros later on.

An economy ministry official said in October last year that the state of Hungary had raised 517 billion forints through the scheme.

Barabás said Parbeszéd had been the first party to expose that the residency bond scheme had served “nothing but the accumulation of hefty fortunes by business owners linked to then cabinet office chief Antal Rogán’s friends”. Running the scheme at that time had completely contradicted the migration policy the government represented in public, the spokesman said.

He welcomed the termination of the scheme, but insisted that by operating the scheme it was in fact the Fidesz-led government that “had organised the settlement of foreigners” in Hungary, for which reason the recently announced new levy for supporting immigration should be imposed on them.

Featured image: Balázs Béli

June 24, 2018

MN: Hungarian secretary of state has 5M dollars in a secret bank account in Belize

According to Magyar Nemzet, Secretary of State for Development, Climate Policy and Priority Public Services in the Ministry of National Development, Zsolt Szabó and his wife own an offshore company registered in Belize. MN acquired some papers regarding this company. According to these, Mr Szabó is the director of the firm which has more than 1.2 bn HUF in its bank account.

More skeletons from the closet

As we already reported, government members are under attack lately regarding their spending and luxurious travels. We wrote about deputy PM Zsolt Semjén’s luxurious hunting in Sweden HERE paid by a Hungarian businessman. Furthermore, one can reach our articles HERE on minister Lajos Kósa’s strange case. According to Magyar Nemzet, Gáborné Szabó

entrusted the minister to buy government bonds for 4.3 bn EUR.

Moreover, Mrs Szabó wanted to transfer 2.63M EUR to the bank account of Kósa’s mother which the minister thought about as his success fee.

Friday’s Magyar Nemzet wrote about Joy World Enterprise Limited, a company registered in Belize in 2013. According to the documents MN acquired

secretary of state Zsolt Szabó is the director of the company and he owns it with his wife.

Furthermore, the firm has more than 1.2 bn HUF (3.86M EUR) in its bank account. A local notary public, Aldo G. Reyes even proved that the documents acquired by MN are real. One of the family businesses of Szabó Exact-Cont Kft. is registered to the same address in Hatvan as the one that can be found in the papers – added MN.

The annual account service fee for Joy World Enterprise Limited is 300 dollars. However, this sum was not paid in 2018, so the almost 5M dollars in the account have been frozen.

MN tried to reach Szabó, but he reacted only after the Friday’s issue appeared. He posted a press release that day on his Facebook page in which

he denied that he either directs or owns the offshore company, which has such big sums on its account.

Mayor, PM and secretary of state

Szabó highlighted that the story is nothing else than former government oligarch Lajos Simicska’s and Jobbik’s organised attack to discredit him. He added that he or his wife do not own the offshore company registered in Hatvan. Finally, he announced that he would report the issue and accuse all media that accused him with such charges.

In fact,

Zsolt Szabó is one of the most influential people of Heves county.

He has many companies and became a representative of Hatvan’s local council and an MP with Fidesz-support in 2006. Because of that, he had to resign as a mayor in 2014 to keep his seat in the parliament. Then he became a member of the government as Secretary of State for Development, Climate Policy and Priority Public Services.

His friend, Richárd Horváth was elected as mayor of Hatvan after that. However, Szabó did not entirely trust him, so his former Head of Cabinet, Csaba Tóth remained in position. Later Horváth fired Tóth. Thus, the local Fidesz-group got divided, but the majority of them continued to support Horváth.

Since Szabó lost his support in Hatvan,

he did not allow the city to get any money

from the Territorial and Settlement Development Operative Program which he controlled as secretary of state. In contrast, the mayors of the neighbouring villages loyal to him got billions from the program. Even János Lázár, Minister of the Prime Minister’s Office condemned this conduct in a Governmentinfo. In fact, he tried to appease them in February, but he did not manage to do so.

Featured image: mti.hu

March 26, 2018

Head of Cabinet Rogán’s residency bond business is full of irregularities

As we already reported, 19,885 people received a national permanent residence permit in Hungary since 2013 with the help of the residency bond program. Most of them are Chinese, but many came from Muslim countries like Iraq, Afghanistan or Iran. Compared to that, the government chose the protection of Hungary from immigrants to be their leading message in the 2018 electoral campaign. In fact, Hungary has lost billions because of the residency bond business while offshore companies connected to cabinet minister Rogán and organising the program gained fortunes. G7.24.hu won a lawsuit against the organisers, and as a consequence, it could read the documents connected to the program. According to them, it is full of irregularities. Thus, even a trial is imaginable.

Strange from the beginning: the decision maker is not responsible

Clearly, it was weird from the beginning that the authorisation for the companies taking part in the residency bond program came from the Parliament’s Committee on Economics instead of a state institution. In fact,

parliament’s committees are not responsible for their decisions

from a legal point of view. To put it in another way, nobody can sue a representative because of their decision in the parliament or a committee. Meanwhile, a state institution would have been accountable for its decisions.

Parliamentary committees can only be taken to court if they deny granting access to information of public interest. This is why G7.24.hu got the documents connected to the program only after the decision of the Budapest-Capital Regional Court.

According to these papers, G7.24.hu states that there is a remarkable chance that – with one exception –

all the decisions of the committee connected to the program violated the laws.

Residency bond business: government’s majority voted for everything

In fact, the companies organising the program were all but one offshore ones, strongly connected to cabinet minister Antal Rogán. Interestingly, he was the chairman of the committee at the beginning of the program. After he became a minister, Erik Bánki followed him in position. Of course, supportive government majority remained all the time.

As we reported, those who wanted to receive a permanent residence permit had to register state bonds worth of 300 thousand EUR and pay further 45-60 thousand EUR service charge. However, the Hungarian state guaranteed a 29 thousand EUR yield to all investors after 5 years. Thus, companies organising the program could gain marvellous profit. They’re

altogether income was 155 billion HUF (approx. 0.5 billion EUR)

in the program. Meanwhile, according to the calculations of a shadow committee examining the program

the state lost at least 20 billion forints.

This is because Hungarian taxpayers bear the burden of paying back the money with interest.

According to G7.24.hu, Rogán and Bánki themselves decided which companies can organise the program. In fact, the companies submitted their application via e-mail to take part in the program. However, the chairmen – according to the supposition – brought only those requests to the meetings which they chose. Besides, opposition members of the committee did not know anything about what happened in the background. This can be malfeasance since the law says that the committee has to decide, not its chairman.

Irregularities everywhere – yet no consequences

To make matters worse,

some applications were not even brought to the sittings of the committee.

For example, the committee allowed Euro-Asia Investment Management Ltd. to sell bonds to Singaporean citizens, but not to Thai people. Similarly, the company started to sell bonds to Indonesians, Iranians, Armenians etc. without the decision of the committee.

It also happened that even though a company applied they did not appear in the agenda of any sittings. This happened in case of Migrat Immigration Asia Ltd., a company registered in Cyprus. According to the supposition, their Erik Bánki did not bring their application to any of the sittings. This happened again in case of Voldan Investments Limited registered in Lichtenstein or Arton Capital Hungary Kft. Of course, members of the committee did not know about these applications.

In some cases the

original documents vanished

like in the case of Innozone Holding Limited registered in Cyprus. Even so, they received permission to sell bonds.

According to the legal director of Transparency International Hungary Miklós Ligeti, it can happen that the committee made its decisions based on incomplete information and documents. Clearly, the officers of the committee are public officials – he added. Therefore, irregular procedures violating administrative responsibilities or malfeasance could happen.

Photo: Balázs Béli

February 11, 2018

Jobbik lawmaker denies claims that the party stigmatises Roma and gays

The deputy leader of the radical nationalist Jobbik party has rejected charges that the party stigmatises Roma and gays.

Tamás Sneider at a news conference on Monday was asked about Jobbik’s attitudes to gays, Roma and Jews. He said the party counted on everyone’s vote, and in the 2014 general election all sorts of people made up the Jobbik vote, including “lots and lots of Gypsies and other groups”.

He insisted that the party did not preoccupy itself with the sexual identity of people who turned up at voting booths.

Asked about the Pride march and whether it should be banned, he said that if a public scandal arose, then certain restrictions may be considered, but otherwise the law on public assembly allowed the march to go ahead.

Sneider said that no kind of disparaging statement had been made by Jobbik concerning Roma and gays. “The fact that

Jobbik talks about certain social groups in other ways is a normal part of the policy of a people’s party;

but our programme has not changed,” he said.

Asked about a decision by parliament’s national security committee to hear László Toroczkai, Jobbik’s deputy chairman and the founder of the controversial Sixty-Four Counties Youth Movement, he said the approaching election campaign was the real reason for the decision to hold the hearing.

The Jobbik politician was also asked about press reports that two Jobbik sports entrepreneurs maintained an offshore company in Malta. He said that as far as he knew, only a small amount of money flowed into the company’s coffers, and

the company had only been established there because it had been impossible to set it up in Hungary.

He added that not all offshore companies were engaged in theft.

November 13, 2017

Dialogue party seeks to ban officials from offshore deals

The opposition Dialogue for Hungary party has proposed that government officials and civil servants should be banned from participating in offshore businesses, a board member of the party said on Wednesday.

Gábor Erőss also suggested that a 30-percent withholding tax should be levied on offshore deals, while offshore firms and their business partners should be excluded from any state or European Union tenders. Such companies should also be excluded from any state subsidies, he said.

Erőss referred to information recently published on the base of confidential e-documents known as Paradise Papers, and said those showed

“how the world’s and the Hungarian political elite evade paying taxes”.

November 8, 2017

Opposition parties warn of residency bond ‘national security risks’

Budapest, September 6 (MTI) – Opposition parties on Tuesday said the country’s residency bond scheme carried risks after a newspaper report suggesting a foreign criminal had purchased a bond allowing residency in Hungary.

The opposition Jobbik party has called on the government to suspend the sale of residency bonds, citing risks to national security.

In addition, foreigners who have already received residency permits should have to pass stricter security clearance than previously, Jobbik lawmaker Gábor Staudt told a news conference on Tuesday.

Commenting on a report in Tuesday’s edition of Magyar Nemzet claiming that a Russian national, a convicted criminal, had bought residency bonds, Staudt said the bonds are not only linked with graft suspects but there is also a risk that foreign criminals are accessing Hungary and other member states of the European Union.

Much of the 100 billion forints (EUR 323m) that has accrued via the sale of residency bonds has gone off-shore, Staudt insisted, adding that the Hungarian economy has not benefited from the scheme.

The Jobbik politician claimed that the scheme was a “bonanza” for “everyone who’s in it”. “It is only the Hungarian state and the taxpayer who aren’t …”

The Socialists will propose a bill to parliament on abandoning the residency bonds scheme and obliging the firms marketing such bonds to give an account of their dealings before parliament’s economy committee. Parliamentary group leader Bertalan Tóth also at a news conference on Tuesday that the bill will contain a 75 percent tax on related revenues of such firms.

The Democratic Coalition also called for the scheme to be suspended. Party spokesman Zsolt Gréczy told a news conference that “there’s no need for criminals or terrorist groups”.

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“Whoever has money, whether a criminal or even a terrorist, can easily get hold of the necessary documentation to enter Hungary unchecked, and from here into other EU member states,” he insisted, saying there is no constraint that the applicant must obtain proof they have no criminal record in their own country.

The Dialogue for Hungary party called on Sándor Pintér, the interior minister, to brief parliament’s national security committee about how it was possible that a convicted criminal had managed to game the system. Party politician Richárd Barabás told the press on Tuesday that an account must be given about how the person in question managed to evade the screenings of the counter-terrorism centre and the immigration office.

A government official on Tuesday dismissed the allegations contained in Magyar Nemzet’s article as “unserious”. Csaba Dömötör, cabinet parliamentary state secretary, said the article’s claims were based on slander. He added that the paper had neglected to name of the individual in question.

Dömötör said the ministry of the interior had reported several cases of security prescriptions, and all purchasers of residency bonds are screened several times by the police, national security organisations and the counter-terrorism centre.

September 6, 2016

Authorities probe almost 900 companies with ties to Hungary revealed in Panama Papers

Budapest, June 27 (MTI) – Hungary’s National Investigation Office has scrutinised almost 900 offshore companies with ties to Hungary revealed in the leaked Panama Papers, daily Magyar Idők said on Monday.

The office is working with national tax authority NAV as well as with the public procurement authority and the secret services on the matter, the national police headquarters told the paper.

The authorities are working on an investigation of the Alstom affair at the same time, the paper said.

Britain’s Serious Fraud Office recently charged the UK head of Alstom with corruption and conspiracy in connection with train contracts for the Budapest metro.

Alstom signed a contract to deliver 44 trains for two of the capital’s metro lines ten years ago, after winning a tender with a bid of 247 million euros.

June 27, 2016

Parliament holds debate on offshore business

Budapest, May 30 (MTI) – Hungary’s parliament held a debate on offshore business on the initiative of the opposition LMP party on Monday.

In the debate, Csaba Dömötör, state secretary at the Prime Minister’s Office, insisted that cooperation with the opposition on the matter was not possible because “the opposition is mired in such affairs itself”. Referring to previous governments between 2002 and 2010, Dömötör said that offshore businesses were “in bloom”. The current government, however, has made public procurements more transparent and scaled back the black economy, he said.

Ruling Fidesz MP Erik Bánki said that government’s measures against offshore business were “outstanding” in Europe and insisted that offshore companies were now excluded from using public funds.

Bánki noted that the term offshore was not defined in Hungary’s legislation and stipulations to restrict such companies were lacking. He added, however, that in terms of passing new legislation, Hungary is “at the forefront” of Europe.

András Schiffer, LMP’s co-leader, asked the ruling parties for cooperation in efforts to prevent offshore companies from being registered in Hungary and to eliminate ways for such companies to obtain public contracts.

Ágnes Vadai, a lawmaker of leftist opposition Democratic Coalition (DK), said earlier on Monday that DK would submit a proposal for a parliamentary decree banning lawmakers and their family members from owning offshore business. The parliamentary debate on offshore businesses is “completely unnecessary”, as it is only by legislation that such activities can be prevented, she told a press conference.

Photo: MTI

May 30, 2016

Opposition slams central bank for deals with offshore businesses

Budapest (MTI) – The central bank and its foundations are doing business with offshore companies including property purchases and the bank has become a “five-star hotel for offshore knights”, the green opposition LMP said on Saturday.

LMP has proposed in parliament that the central bank should transfer its profits to the central budget but the ruling majority has rejected this, deputy group leader Erzsébet Schmuck told the press in front of the bank’s headquarters.

She cited as an example the bank’s purchase of Eiffel Palace at an excessive price from an offshore company. It has also been revealed that one of the bank’s foundations has purchased a villa from an offshore company for 1.6 billion forints (EUR 5.1m), she added.

Schmuck said all of this was made possible by the government and ruling Fidesz’s rejection of regulations that would ban offshore companies from participating in public procurements and make them ineligible for state support.

She also accused central bank governor György Matolcsy of “unrestrained wasteful spending”, stating that large amounts of money have been transferred to companies with offshore affiliations.

Matolcsy’s actions constitute criminal activity and Prime Minister Viktor Orban should have initiated his replacement with the president, she said.

LMP proposed that all central bank foundations should be wound up.

During the press conference, LMP activists were holding a banner showing “Offshore hotel” with five stars under it.

Photo: MTI

May 29, 2016

Panama files: the richest Hungarians included

Origo.hu reports that further Hungarians were involved in the offshore scandal as more names on the Panama lists became revealed. Sándor Csányi, CEO of OTP had a yacht through a Maltese company, while Zoltán Spéder, president of FHB appeared to be involved in the operations of two offshore companies. But it also turned out that Tamás Szemerey, cousin of György Matolcsy (Governor of the Hungarian National Bank) had joined an offshore company in 2009-2010, operating on the British Virgin Islands.

New details and names have become known regarding the participants of the Panama offshore scandal. Earlier, it was published that Zsolt Horváth, former FIDESZ politician was involved in an offshore company, just like the wife of László Boldvai, MSZP politician, for she had an offshore company with a Swiss bank account.

Szemerey, cousin of Matolcsy was the owner of Sunjoy Development, a company on the British Virgin Islands between 2009 and 2010, in order to participate in developing technologies outside Europe, writes origo. Later though, due to being too busy in Hungary, he left the company. According to him, Matolcsy did not know about his firm, as they do not really talk about his business.

Csányi, CEO of OTP Bank stated that the offshore company was needed for maintaining a sailing catamaran, as the staff of the ship came from different countries and the ship itself also left the EU occasionally. He said that it is rather common, on an international scale, to let the maintenance of a ship done by an offshore company, preferably one related to a British authority, because of their naval tradition.

Spéder, from FHB Bank, was an appointed commissioner for two companies. One of them was the Whitestone International on the Seychelles, which company was the owner of CEMP for years, which, by the way, owns the Hungarian site, Index.hu. Spéder, however, said that he was not the owner of Whitestone nor of the other firm, Novum Asset Management, in which he was said to have been involved, too.

György Gattyán is also mentioned: he established a trust in Nevada, according to the Panama papers, in order to be able to settle down in the US. Furthermore, it turned out that he had a house in Los Angeles which was worth about 6.5 billion HUF.

Copy editor: bm

May 7, 2016

LMP initiates parliamentary debate about offshore businesses

Budapest, April 16 (MTI) – The opposition LMP party has initiated a debate in parliament about measures that could eliminate offshore businesses in Hungary and proposals Hungary could put forward to Brussels on more effective measures against such businesses, the co-chair of the party said on Saturday.

The issue cannot be ignored since the amount of money “siphoned off from central funds” combined with “illegal gains” made by decision-makers on offshore businesses over the past 25 years would be enough to make up for the lacking funds in the welfare, education, and health care budgets, András Schiffer told a press conference.

Schiffer noted the recent case of the second politician of ruling Fidesz in Bács-Kiskun county to be implicated in offshore deals, János Kerényi, whose wife, son and business partner have all been revealed to have ties to offshore businesses.

LMP wants strict regulations that prohibit involvement of any state or local government operated companies in offshore businesses and ban any individual with involvement in such businesses from filling any state or local government post, he said.

The party submitted to parliament a relevant bill which the economic affairs committee will discuss next week, Schiffer said.

A lawmaker of Jobbik said in response that the party will take part in the discussion.

György Szilágyi said in response to the issue of Janos Kerenyi that the number of Fidesz politicians “with interests in offshore businesses” had increased considerably in the recent past despite pledges by the party leader earlier of putting an end to the era of “offshore knights.”

He noted recent press reports exposing the case besides Kerényi of Péter Hartmann, board member of state-owned energy company MVM.

Szilágyi said earlier that former Fidesz lawmaker Zsolt Horváth, as well as former Socialist MP László Boldvai, were implicated as Hungarian suspects in the so-called “Panama Papers” revelations about the improper use of offshore companies.

Gergely Gulyás, deputy group leader of Fidesz, told a press conference that they are waiting to hear Kerenyi’s response to press reports. He called it inappropriate in general to own an offshore business.

April 16, 2016

Investigator teams to seek Hungarian implications of Panama Papers

Budapest (MTI) – Police and the tax and excise office will set up special teams to investigate exclusively Hungarian involvement in the international offshore “Panama Papers” scandal, Prime Minister Viktor Orbán said after a meeting of the national security committee on Monday.

Responding to a question by radical nationalist Jobbik lawmaker György Szilágyi, Orbán said that the prosecutor’s office will hopefully cooperate in the effort.

Investigations are under way and will continue, and will probably yield results, especially if the international investigation authorities are willing to cooperate, Orbán said. He noted that in a case involving the opposition Socialists’ former deputy leader, the Austrian authorities are unwilling to reveal how funds ended up in Austrian accounts.

Even without international cooperation, the Hungarian investigators will not give up their efforts, he added.

Photo: MTI

April 12, 2016

Panama’s offshore scandal: Hungarians are also involved

Index.hu reports that 11.5 million documents about offshore companies was leaked on Sunday from a law firm in Panama. The documents were acquired by a German daily newspaper, Süddeutsche Zeitung. In processing them 370 journalists of the International Consortium of Investigative Journalists from 76 countries were involved. Direkt36 participated in the work from Hungary. Among others, Vladimir Putin, Lionel Messi and dozens of Hungarian or Hungary-related companies and individuals are affected.

The investigation lasted for a year during which the journalists interviewed experts, investigators, searched for information in company documents, databases and title deeds until the files became revealed. It were offshore bank accounts from 1977 to 2015 that were indicated in them, and they showed how illegal money moves through the global financial system. Furthermore, the files show that the banks, law firms and other participants of the offshore businesses do not care about their clients avoiding taxpaying, using them for money-laundering, or being simply criminals, even though they are supposed to investigate these things out by law.

The law firm, Mossack Fonseca has branch offices in several different countries around the world and has been one of the biggest companies providing offshore services. The documents leaked contain information about 215 thousand offshore companies. The Guardian wrote that, although Putin’s name is not included in the documents companies related to his family and friends have benefited from the offshore actions and gained about 2 billion dollars. The Kremlin declared that these are deceiving information that only serve the purpose to attack Putin and his friends. The files, however, also showed how Sergey Roldugin, cello player and one of Putin’s best friends, or Yuri Kovalcsuk of Rossiya Bank, made their wealth. Kovalcsuk, for instance, invested at least 1 billion dollars in a company called Sandalwood, through which many offshore businesses were financed, writes Index.

Furthermore, offshore activities of dozens of companies and individuals from Hungary or related to Hungary were revealed by the files as well. Direkt36 found the name of Zsolt Horváth, former member of Fidesz, who used to represent Kecskemét in the Parliament for 16 years. Index says that Horváth’s wealth declaration does not report about big savings, but back in 2013 – during his political career – he became the director of the company Excelle Media International, on the Seychelles. This information, though, is not indicated in his declaration either. Later, when he left politics he became involved in another company on the Seychelles, the Mayer & Collins Trading Company. The leaking of such information was especially unpleasant for Fidesz, as earlier they have criticized people linked to offshore companies and promised to “end the world of the offshore-knights” (term introduced by the PM).

Shockingly, it also turned out that the Mossack Fonseca helped companies and people in the US who had previously made deals with Mexican drug lords, terrorist organizations and North-Korea, hiding their money as well. Aside Putin, companies related to the family of the President of China, Hszi Csin-ping, are included in the documents as well. Also, the leak showed that the President of Ukraine, Petro Poroshenko had interests in offshore businesses, too. Even, the late father of David Cameron British PM is said to have had been involved. Index made the point that, interestingly, all three of the aforementioned politicians are leaders of the fight against corruption in their countries.

Moreover, it was revealed that Petro Damiani, member of the ethics committee of FIFA was in business with three men, who were earlier accused of corruption. Lionel Messi, Argentinian footballer and his father became now also regarded as owners of the offshore company Mega Star Enterprise Inc. Another celebrity displayed by the files is Jackie Chan, who is claimed to be related to six companies. In addition, 29 billionaires off Forbes’ list of the 500 richest people are in the documents as well.

The offshore bank accounts were used to hide money by the law firm’s clients who were also interested in the African diamond trade, art treasures and further mysterious businesses. The firm provided help for Mohamed VI, king of Morocco, Salman, king of Saud and the current PM of Iceland, Sigmundur David Gunnlaugsson and his wife, who kept millions of dollars in Icelandic state bonds through offshore companies, while the bank system of Iceland was said to have played a significant role in the crash of the world economy.

Ramón Fonseca, co-founder of Mossack Fonseca claimed in an interview that their firm does not support committing crimes, and such assumptions are groundless. Furthermore, he said that the firm holds no responsibility for what its clients do through the companies established with their help.

Copy editor: bm

April 5, 2016

Fidesz and leftist opposition demand transparency of politicians’ offshore implication – UPDATE

Budapest, April 5 (MTI) – The leftist opposition Democratic Coalition has urged that all politicians should make a public declaration if they are involved in any offshore businesses. The Jobbik party has filed charges with the public prosecutor in connection with Hungarian suspects in light of the recent “Panama Papers” revelations.

Referring to press reports, DK spokesman Zsolt Gréczy told a press conference on Tuesday that two Hungarian politicians have been named in connection with the recent offshore scandal.

Gréczy suggested that the asset declarations of spouses or partners of parliamentarians should be made public, to reveal if they are implicated. He also noted that all DK’s leaders and deputies have signed declarations stating that neither them nor their partners have any such business.

The Dialogue for Hungary (PM) party demanded that all parties should expel members implicated in the offshore scandal or involved in any economic crimes.

Bence Tordai proposed that revenues from offshore businesses should be burdened with a 30 percent withholding tax, while private individuals should pay a tax on such revenues even if those amounts are not paid out.

Jobbik to file charges tied to offshore scandal

Jobbik lawmaker Gyorgy Szilagyi told a news conference on Tuesday that former Fidesz lawmaker Zsolt Horváth and former Socialist MP Laszlo Boldvai were implicated in the allegations concerning the improper use of offshore companies. He said Jobbik demands an investigation.

Szilagyi insisted that the ruling Fidesz party and the opposition Socialists had “equally robbed the country” over the past 26 years, lavishing gifts to their “pals” using taxpayer money.

Fidesz

The ruling Fidesz-Christian Democrats said the opposition Socialists have been “caught once again” in the international offshore scandal. “This is not the first time: ever since the case of Gábor Simon, we have been aware that they were involved in such activities”, Christian Democrat lawmaker István Hollik said. The offshore scandal has revealed that former Socialist treasurer László Boldvai had a company registered in Samoa in his wife’s name with the purpose of hiding funds, he added. This also shows that the opposition is “full of corruption cases” and “the Socialists cannot give account of this up to this day”, he said.

Socialists

Socialist leader József Tóbiás said Boldvai had suspended his Socialist party membership, stating that press reports about his company were true and he did not wish to be a burden on the party.

April 5, 2016