Hungary Detains Two Former Orbán Ministers As Anti-Corruption Drive Widens

by Stefan J. Bos, Worthy News Europe Bureau Chief

BUDAPEST (Worthy News) – Two former ministers who served under Hungary’s longtime Prime Minister Viktor Orbán remained in custody Wednesday as authorities intensified investigations into alleged corruption involving billions of forints, while the new government prepared a wealth tax targeting some of the country’s richest people.

Ex-Culture and Innovation Minister Balázs Hankó and former National Development Minister Miklós Seszták were detained Monday, September 28, after parliament suspended their immunity earlier that day, clearing the way for criminal proceedings.

Seszták, who served as national development minister from 2014 to 2018, voluntarily appeared at the Central Chief Prosecutor’s Office of Investigation in Budapest and was detained later Monday.

His case centers partly on Volánbusz, Hungary’s state-owned intercity and regional bus operator. Prosecutors allege that between 2015 and 2018, Seszták and the then-head of the Hungarian National Asset Management Company received more than 11 billion forints ($34 million) in unlawful payments through an intermediary from representatives of companies doing business with Volánbusz. Seszták denies wrongdoing.

Hankó’s detention came later Monday. He remained inside parliament for much of the day after lawmakers suspended his immunity before receiving a summons at 7:14 p.m. local time, Worthy News learned. He voluntarily left the building and arrived shortly after 8 p.m. at the Budapest headquarters of Hungary’s National Tax and Customs Administration, known as NAV.

QUESTIONED FOR HOURS

Hankó was detained there and subsequently taken in handcuffs to the central city of Kecskemét, where investigators questioned him for nearly five hours until about 3 a.m. Tuesday.

He is suspected of involvement in alleged mismanagement of some 17.3 billion forints ($54 million) through Hungary’s National Cultural Fund.

Prosecutors allege money was distributed for purposes differing from those authorized by law and the fund’s founding rules.

Hankó denies wrongdoing and has challenged both his status as a suspect and his detention.

The cases represent some of the most dramatic developments yet in Prime Minister Péter Magyar’s promised crackdown on alleged corruption following his landslide election victory in April, which ended Orbán’s nearly 16 consecutive years in power.

CORRUPTION DRIVE WIDENS

Magyar’s government created the National Asset Recovery and Protection Office, known by its Hungarian abbreviation NVVH, with powers to investigate suspected corruption and recover public assets.

The office began with four investigations into alleged abuses during the Orbán era, while authorities are pursuing other cases involving former officials and prominent businessmen.

Businessman Dániel Jellinek and former Hungarian National Asset Management chief Norbert Szivek were taken into custody in mid-September in the Volánbusz corruption investigation. A Budapest court subsequently ordered them held in pretrial detention for one month.

The wider Volánbusz investigation involves alleged corruption and financial losses connected to contracts involving Hungary’s state bus sector. Investigators accelerated the case in September, questioning several suspects and seizing documents, electronic devices and other evidence.

Magyar campaigned partly on promises to recover public money that he says flowed to politically connected individuals and businesses during Orbán’s rule. Orbán and his Fidesz party deny allegations that his governments institutionalized corruption and have portrayed the new investigations as politically motivated retaliation.

TAXING HUNGARY’S WEALTHY

The investigations come as Magyar prepares another potentially far-reaching change: an annual wealth tax targeting Hungary’s richest residents.

His Tisza Party initially proposed a 1 percent annual levy on fortunes exceeding 1 billion forints, about $3.1 million, beginning in January.

But Magyar suggested at a rally in the central Hungarian city of Szolnok that those with extraordinary fortunes could face an even higher rate.

“It’s possible that above 500 billion forints the tax payable won’t be 1 percent — it could be more,” Magyar said.

Very few of Hungary’s nearly 10 million residents possess fortunes approaching that level.

ASSETS HOME AND ABROAD

Hungarian newspaper Blikk reported that the proposed tax could cover bank accounts, securities, company holdings and real estate in Hungary and abroad, although final legislation has yet to be approved.

Foreign citizens would reportedly not be taxed on assets they hold outside Hungary.

The government is seeking additional revenue as it attempts to reduce a budget deficit that could reach about 7.5 percent of gross domestic product this year to the 3 percent level needed to meet a key fiscal requirement for adopting the euro.

Magyar has said Hungary remains committed to meeting the requirements for euro adoption by 2030 while preserving many social benefits introduced before April’s election.

The proposed wealth tax also carries considerable political significance because some of Hungary’s richest businessmen accumulated enormous fortunes during the Orbán era, often through companies benefiting from state and European Union-funded contracts.

ORBÁN-ERA FORTUNES TARGETED

Critics of Orbán have long alleged that his governments helped enrich politically connected businessmen and relatives. Orbán has denied running a corrupt system.

As investigations intensify, Magyar has replaced Orbán-era appointees at major state institutions as his government seeks to overhaul institutions dominated for years by Fidesz nominees.

The changes extend beyond domestic politics and into Hungary’s relationship with Russia.

Magyar’s government this month expelled 10 suspected Russian spies from Budapest, marking one of the sharpest breaks with Moscow after years in which Orbán maintained unusually close relations with Russian President Vladimir Putin despite Russia’s full-scale invasion of Ukraine.

The government has also pledged to reduce Hungary’s dependence on Russian natural gas and strengthen relations with its European Union and NATO military alliance partners.

RUSSIA RELATIONS SHIFT

Under Orbán, Hungary repeatedly criticized or sought exemptions from European sanctions against Moscow and held up some European Union decisions involving assistance to Ukraine.

The changing political environment is also affecting Hungary’s largest financial institution.

Amid mounting pressure, OTP Bank says it is exploring the possibility of withdrawing completely from Russia as it reviews its operations there and pursues the acquisition of Baltic lender Luminor Bank.

Documents showed OTP’s Russian clients included companies controlled by Russian energy giant Gazprom and businesses providing services to organizations affiliated with Russia’s foreign intelligence agency.

OTP said it had reduced its Russian operations and found no instances of violations of international sanctions.

OTP EYES EXIT

The bank’s Russian presence has drawn scrutiny from Baltic regulators as the Budapest-based lender pursues the Luminor acquisition, which would be OTP’s largest takeover to date and further expand its footprint inside the euro area.

OTP was Hungary’s main savings bank during the Communist era before being privatized in the 1990s and developing into an international banking group with operations across Eastern Europe and Central Asia.

The corruption investigations, proposed wealth tax and changing relationship with Moscow underscore the scale of Hungary’s political transformation less than six months after voters ended Orbán’s long rule.

For ex-ministers Hankó and Seszták and other former officials under investigation, the immediate question is how the criminal cases against them will proceed as prosecutors pursue some of the highest-profile investigations involving associates of the former government.