Economy 25 April 2016, 5:02pm

Hungary cenbank foundations publish contracts

Portfolio

The six foundations established by the National Bank of Hungary (MNB) made their contracts public last Friday, i.e. they showed what they had spent public funds on. So far we have seen only summary tables that do not contain every detail. Unsurprisingly, the foundations have followed by well-oiled practice of how the government is submitting bills to Parliament. Whenever some sensitive issue comes up it does on the last day of the week and late in the evening.

The first interesting bits of information

The central bank foundations played hide and seek with the public, but after a Constitutional Court ruling they had no choice but to reveal their business contracts, the contracting parties, the subject of the agreements, the contracted amounts, the beneficiaries - the whole nine yards. Late on Friday they started to upload information to the web, local news portal index.hu reported.

The MNB founded six foundations to which it transferred some HUF 260 billion worth of public funds. The six foundations published tables, listing their contracts late on Friday.

• At first read, Index highlighted only a few interesting items:

New Wave Ltd., the publisher online news portal vs.hu and origo.hu, received HUF 72.25 million subsidies for the ‘Hungary 2015’ project (documentary films and modern multimedia content), and a total of HUF 429.166 million as subsidies under different headings from the foundations. These two items add up to HUF 501.416 million. According to industry sources and press reports not yet denied, the company is an interest - via Czech companies - of Tamás Szemerey, a cousin of MNB Governor György Matolcsy.
Olivér Lebhardt, the editor of Vs.hu resigned on Monday, along with about ten other reporters who said they had not been aware of the foundations being a source of the site’s funding. András Kósa, one of the reporters who resigned, said there was no suggestion of external editorial interference in the site but that the revelations had damaged the outlet’s reputation for independence. “The sum of money was surprisingly large and the lack of any public competition for these grants means there are serious ethical questions to answer," the Financial Times cited him as saying.
New Wave and István Péter Száraz have interests in Frank Digital Ltd., which received tens of millions of forints worth of subsidies (about HUF 80 m, according to index.hu) from several MNB foundations. We Love Budapest, which also belongs to this group, received nearly HUF 52 m. The business interests related to New Wave were subsidised by a total of HUF 630 m public funds, indirectly by the central bank.
Publisher Kairosz received in two transfers a total of HUF 20 million plus VAT for the publishing of Sakk és póker (Chess and Poker), a book presenting the works of then Economy Minister György Matolcsy. The author of the book was Helga Wiedermann, cabinet chief for Matolcsy and she managed to create quite a scandal with her book, in which she said Matolcsy spilt it to Goldman Sachs in 2011 that Hungary started talks with the IMF on a credit, and allegedly this had led to fluctuations in the forint exchange. Matolcsy and his team later denied both spilling the beans and the connection between this act and the shifts in EURHUF, practically calling the former cabinet chief a liar. Some analyst, however, later said he had heard about the leak.
Despite the scandalous debut the book started its international career. It was translated into Ukrainian, Romanian, Czech and Polish, for nearly HUF 40 million (HUF 9.7 mn plus VAT per language) and this money also ended up on the accounts of Kairosz.
‘Unortodox Különcök’ (‘Unorthodox Eccentrics’), a book by István Lovas, an anti-Semite of Jewish descendent who is close to Fidesz, was supported by HUF 7.8 million to be published, also by Kairosz.
Tamás Fricz, a former associate of the Political Science Institute of the Hungarian Academy of Sciences (who was fired a few years ago) an ardent admirer of Prime Minster Viktor Orbán, was also subsidised. More precisely, his book, a collection of 80 articles written between January 2013 and October 2014 on the Orbán cabinet. The publisher received 1.2 million forints to help defray costs.
Kairosz was subsidised by another HUF 39 million to publish ‘Nemzeti Nagyvizti’ (National Grand Round’) by Miklós Kásler, who is member of the Board of Trustees at Pallas Athéné Domus Concordiae (PADC), an MNB foundation, although the subsidy was given by another MNB foundation.
In total the MNB subsidised the small publishing firm by HUF 122 million, essentially saving it from bankruptcy. According to the company register, Kairosz had its pre-tax profit leap by 349% year on year in 2014, as more than 75% of the contracts with MNB foundation PADA were paid in 2014. This grant amounted to over half of the publisher’s annual revenues.
Lawfirm Nagy & Trócsányi, partly owned by Justice Minister László Trócsányi, won several contracts from the foundations.
The foundations have contracts worth billions of forints with construction companies Magyar Építő and Market Építő Zrt.
The programme ‘Elemző’ (‘Analyst’) on commercial television channel Echo TV received a grant of HUF 7 m from MBN foundations.
HUF 1.8 million was granted to Miskolc Television so that its analyst programmes were published ina book. The book also addresses the unorthodox economic policy, the “innovative and creative" measures of the 2nd and 3rd Orbán cabinet.
It was also published that Pallas Athéné Domus Concordiae Foundation bought from the central bank government securities in three steps, first for HUF 64 mn, then for HUF 50 mn and HUF 20 mn.
EUR 9 million worth of government securities were purchased by the foundations from the Government Debt Management Agency (ÁKK) .
The foundations regulary contracted with advertising agency Akció, owned by Flóra Borókai, daughter of Gábor Borókai, a former spokesman for the governing Fidesz party (her mother is Éva Vajdovits, deputy state secretary at the Ministry of Human Capacities). Pallas Athene Geopolitical Foundation alone had signed 11 contracts with the ad agency.

For a long time, the foundations were hiding from the public saying the grants received from the MNB were no longer public assets. The Constitutional Court thought otherwise after President János Áder, showing a rare act of defiance, referred the bill to the court, instead of Parliament which would have passed it and then he would have been out of options.

Information about the contracts were made available on the websites of the foundations.:

More to follow!