Insider: Tax evasion case of Hungarian billionaire businessman swept under the rug by high ranking officials

An investigator formerly employed at the National Tax and Customs Administration (NTCA) claims that individuals in high political circles helped to brush aside the tax evasion case against billionaire entrepreneur György Gattyán.

Former tax investigator Lajos Tiszolczi spoke to Partizán about the HUF 19.4 billion (EUR 49 million) tax evasion case against György Gattyán, one of the largest in the country. He asserted that the tax evasion case was closed due to the intervention of three politically influential individuals.

The background: tax evasion investigation

György Gattyán, founder of the adult camming website LiveJasmin and owner of Docler Holding, is one of Hungary’s richest individuals.

In 2012, his adult website came under the scrutiny of the NTCA, leading to a tax evasion investigation. According to Telex, LiveJasmin was operated by Lalib, a company registered on the island of Madeira. Lalib paid Gattyán a licence fee, with Gattyán’s company paying corporate tax in Hungary and VAT in Portugal.

Additionally, the intellectual property rights of the business were initially registered in Liechtenstein and then in Portugal, before being transferred to Hungary in 2009 in a so-called “royalty-free asset transfer”. This presumably led the NTCA to start monitoring the company’s finances.

A criminal investigation was officially launched in May 2012, initially focusing on the free transfer of know-how rights and the subsequent loss of value. On 12 September 2012, the headquarters of the Docler Group were searched, and documents were seized by NTCA officials.

In a surprising turn of events, the NTCA found that Gattyán’s company had not paid tax in accordance with domestic accounting standards but had, in fact, overpaid its tax by HUF 6.5 billion (EUR 16 million).

However, citing secret recordings, the NTCA claimed that Lalib was merely a shell company designed to give Gattyán a tax advantage. Officials argued that Portuguese VAT was 4 percentage points lower than in Hungary, and Lalib was structured to avoid tax payments in Hungary.

The investigation continued for years, involving the European Court of Justice at one point, and was only dropped in 2021.

Inside information: the case was covered up

.In an interview with Partizán, Lajos Tiszolczi, a former financial investigator, said he had worked on the case for years until it was suddenly dropped due to the intervention of three politically well-connected individuals, two of whom are widely known to the public. Tiszolczi stated that without their involvement, the NTCA would have continued the investigation.

By 2021, the NTCA was preparing to press charges in the tax evasion allegation case. However, contrary to established protocol and without prior warning, the 2012 tax evasion case involving HUF 19.4 billion was suddenly merged with a smaller case from 2015, and the NTCA closed the investigation into both cases shortly afterwards, citing a lack of criminality.

Earlier that year, several senior figures were removed from the agency, including the president and the director of criminal investigation. According to Tiszolczi, a system of self-censorship developed soon after. For instance, it became common practice for officials to informally ask whether they should proceed with investigations when influential figures were involved in tax evasion cases.

After the personnel changes, Tiszolczi was required to submit all his reports and was asked if there was anything else he had not yet documented. “I wrote a report, it was not lengthy, and I listed three names that could be linked to the Gattyán case, if applicable, and this was also submitted. The strange thing was that when I was questioned afterwards, I didn’t have to write anything down, I just had to report or answer the questions verbally. […] I believe their help was needed to get the case closed.”

According to Tiszolczi, after the investigation of the tax evasion case was taken out of his hands, he was not given any meaningful tasks and felt that administrative difficulties were being used to persuade him to leave voluntarily. When he was offered a job at the Integrity Authority, he resigned. However, the job offer was then withdrawn without explanation, and in a phone conversation, he was told: “We received a tip that you are a national security risk, so we are not hiring you.”

The NTCA responds to the allegations

Telex asked the NTCA about the claims made by their former employee. The office responded: “[t]he National Tax and Customs Administration (NTCA) always acts in accordance with the applicable legislation. Any claim to the contrary is most emphatically rejected. In the case mentioned in the video published today on Partizán’s YouTube channel, the NTCA exhausted all legal means, but a decision in favour of the defendant was reached in both domestic and international legal forums.”

The NTCA added that it “will take appropriate legal action against any allegation that could undermine public confidence in the NTCA.”

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Source: Telex