February 9th, 2011

Former ambassador, state secretary, national asset manager detained over sale of state property in Russia

The Central Investigative Prosecutor General’s Office on Tuesday detained three former state officials on suspicion of misuse of funds in the sale of the Hungarian trade office in Moscow, the Office confirmed yesterday.

Former National Asset Manager managing director Miklós Tátrai, erstwhile Foreign Ministry state secretary Márta Fekszi Horváth and one-time Hungarian ambassador to Moscow Árpád Székely were detained and questioned as suspects. Searches were also conducted at their homes and several pieces of evidence were impounded. The suspects deny having committed any crime.

The Russian state decided to whom the Moscow trade office would be sold, ex-finance minister and former government commissioner for promoting eastern economic relations János Veres told Klubrádió Tuesday evening.

The trade office, which reportedly had an estimated value of Ft 11 billion, was sold for Ft 3.5 billion to Luxembourg-registered Diamond Air, which sold it on to a Russian company for the Russian Regional Development Ministry. The building is not currently in use.

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  1. Canadian says:

    To funny, sounds like the entire Hungarian real estate market. Take away the billions and it makes more sense. 100 million dollar flat will probely only sell for 35-50 million forint if you need a cash buyer and it needs to sell today.
    Worth 11 billion forints according to whose valuation?? According to my valuation, a trabant is worth 10 million forint– does not mean its actually worth that, just a number i came up with.
    Im sure there was some graft, as there always is when state officals are selling something, but my guess is that its much smaller then what is alleged.

  2. Leto says:

    A 7.5 billion HUF damage… That’s 27.67 million Euros or 37.74 million US dollars. It should result in very long prison years for the culprits!
    The investigations have been extended to an official government meeting held in Dobogókő in June, 2008, too.

  3. Anonymous says:

    A trade office worth $55m! Just how big is this building?

  4. Leto says:

    As far as I know, it’s not a huge building. But property prices in the centre of Moscow are simply enormous.
    This is from 2006: “With prices for a modest, even shabby, bedsit in central Moscow starting at about £80,000, many Muscovites don’t even bother saving to get on to the property ladder.”

  5. spectator says:

    If we are at it, I really would like to see a prosecution regarding Hungary’s fighter-jet purchase, finally. According to Swedish, English and Austrian media (maybe more, but these I’ve been reading about the subject) there was indeed a huge size of bribe, even in Hungary, in spite the official statements.
    So far Hungary the only country which never conducted a proper investigation.
    There is a hope, mind you: the count may going to be charged, there is a pressure which make him talk – there is a lot on stake.
    Anyway, here is the article:

  6. Leto says:

    Yup, I wouldn’t mind to know how the original deal (100-120 billion HUF for 14 Gripen fighters where the price was compensated with Swedish investments in Hungary, worth of 60 billion HUF) swell to 210 billions during the MSZP government. The extra 100 billions were spent on extras like in-flight refueling.
    FYI, the longest as-the-crow flies distance Carpathian Basin is 1000 km.

  7. Szabad Ember says:


    Again, you don’t know what you’re talking about. Obviously you’ve never been in an Air Force of any kind. Just because the Carpathian Basin is too small to need refueling capacity to fly across doesn’t mean that the Hungarian Air Force has no need for refueling capacity. In order to get the maximum use out of the small number of Hungarian air defense fighters, there might be a need to keep them in the air longer than their fuel tanks would normally allow, especially if they are involved in any kind of air-to-air combat. If there is an invasion by a foreign force, it would make sense to send Hungarian bombers deep into enemy territory to attack supply lines and enemy airfields. Finally, if Hungary takes its NATO Article 5 commitments seriously, it might need to send all kinds of air assets to the far corners of NATO territory, or even to countries outside of that area.

    Please stop making baseless, politically-motivated accusations about things you don’t understand. Thank you for not trying to translate anything else, by the way.

  8. Leto says:

    Certainly, we could also bomb Borneo and Celebes if needed. 100 billions is peanuts for that capability.

  9. Viking says:

    swell to 210 billions during the MSZP government. The extra 100 billions were spent on extras like in-flight refueling.
    Leto at February 9, 2011 7:59 PM

    Yes and other things that make them compatible with NATO’s systems
    Admit it – Fidesz leased 14 Gripen planes that could not work together with NATO forces
    That is the simple truth
    Because the same “organisation” sold the upgrade, it is most likely to have bribes there also, but Fidesz always blocked that kind of investigation
    If you open up the 2nd part, the 1st part will most likely come out also, so better to forget it – Fidesz/MSZP in a nice union
    Like the 2010 Radio License Scandal

  10. spectator says:

    Dear Leto, the originally purchased Gripens was manufactured to the Swedish defense, the have been built with no friend/enemy recognizing systems, no NATO compatible weapons an Swedish instruments and communication systems, for Heavens sake!
    Ask the Viking, how suitable could be to fly a “Swede” combat-aircraft by a Hungarian pilot, while the commanding language English…!
    Based of similar logic we may be better off buying Chinese books, they are certainly cheaper…So, why don’t we?
    One more thing: The initial purchase happened right before Hungary was about to join to the NATO. I would mean, that whoever bought the aircraft, must have been aware of this, don’t you think? If so, membership of NATO means, Hungary supposed to participate in joint NATO actions, in AND out of Hungary.
    So, you see, the size of the country rather irrelevant, when it comes to the refueling, wouldn’t you agree?
    Add to this, that prior to the Hungarian purchase the Gripens hasn’t had any real-world combat experience, not to mention the sad fact, that they just crashed, and crashed all over the place.
    You see, this was the basis upon someone decided, this is the right fighter aircraft to Hungary.
    The later government couldn’t get out of the deal, so, at least they been forced to buy the extras, in order to have a good aircraft.
    Because, finally it is good, as much I know.

  11. spectator says:

    – One more addition, regarding the offset investments:
    At the time, when it happened, the investors were swarming toward Hungary, among them many Swedish. A close friend of mine has got a business-proposition from a well placed Hungarian entrepreneur to make some business in Hungary. “What kind of business” – he asked. “Doesn’t matter, as long as it comes through Sweden. You know, now everything gets approved, because of the Gripen-deal”… So, everything went into the “compensation”, regardless of the initial intentions.
    You may make your ow conclusion.
    Keep in mind, whatsoever: I have no interest to mislead you, as opposed to some politicians.

  12. spectator says:

    A helluva lot spelling mistake – I am a lousy typist – sorry about it..!

  13. Leto says:

    As far as I know the only thing those jets were not NATO-compatible was their friend-or-foe system. Which is understandable. I doubt very much anything is written in Swedish on a modern war aircraft. (I’ve got a bit of insight in aerospace engineering.)
    The alternative to buying these new, modern fighters was buying second-hand F-16 jets which were rotting in a US desert. Mr. Bush and his buddies certainly didn’t like the deal… so they simply backed MSZP in the 2002 elections. That’s why already the original Gripen deal was very expensive for Hungary indeed.

  14. Leto says:

    No idea where you get that “the Gripen crashed all over the place”.
    A bit of a discussion on an aviation forum: http://forum.keypublishing.co.uk/archive/index.php?t-35956.html

  15. spectator says:

    Even if I didn’t formulated quite so, see yourself here:
    – And there is a few more on record, not on film though. These two certainly happened before the Hungarian deal.

  16. Leto says:

    This adds more weight to the indispensability of aerial refueling, doesn’t it?
    “Gripen is easier and cheaper to operate, AFAIK. That’s about it. A friend participated during his national service in a ranger group protecting an airbase (could it have been in a PFP – exercise?).
    Some Gripens and some F-16 was operating from the same base. The Gripens landed, got refuelled and rearmed and took of in less than 10 minutes.
    The F-16s needed to be checked for 30-40 minutes before they could take of.
    That’s one advantage for the Gripen, I guess. How important that is can be discussed, though…”

  17. spectator says:

    Some more completing to Leto:
    These aircraft was originally ordered and bought by the Swedish defense. Unfortunately to them, during the time they waited to the delivery the reason of the purchase disappeared, (read:the Soviet Union disintegrated) so they found something 60-70 aircraft too much in their possession, hence the urge to sell, that’s why the agents – or sales-representatives if you will, and the high commission to them.
    There is quite an extensive source regarding the subject. So far it looks like there was a huge kickback in accord of the deal, they paid to Hungarian counterparts, but there was no one who received payment in Hungary…
    Or else…

  18. spectator says:

    Just to make it clear: I have no problem with the Gripens today, not at all!
    Another question that in 2002 why would someone buy them in Hungary. I mean the local-versions of them…

  19. Leto says:

    I suppose one could find even more spectacular crashes for F-16’s.
    Every machine is more prone to accidents early in the life-cycle than later. Gripen was mature enough by 2001 and it’s a modern design, as opposed to the older, much higher maintenance (but more proved) F-16’s. Gripen had much a better price/value if you take only the military aspects. However the political price was too high like I wrote before.

  20. spectator says:

    Well, its too late today to decide, anyway, isn’t it? As I said, nothing (not much, in any event) wrong with the Gripens.
    The question still open though: Who got paid, when the payoff came..?
    I hope, the count’s memory serves him well…

  21. Leto says:

    It’d be good to know (and to take action accordingly) indeed.

  22. lol says:

    The thing is, that in Russia you don’t estimate
    official price as the price (and that’s what those
    guys actually did). For example, an official price in
    Moscow Suburbs city for 100 m2 is about ~$10k,
    unofficial but real market price is $400k+. In Moscow
    the price is the same (because the state office does
    not care about the market price). SO in part they are
    right. If you can estimate it for that price it
    doesn’t mean you can actually sell it for that price.
    And actually that should not be a big building in
    Moscow. A small flat in the center might cost millions
    of dollars (on the market), but the documentary price
    in ZHEK (dunno how to call it, local household
    office?) will be like $10 grand…

  23. Leto says:

    This was insider job, a prearranged deal with cheating and document forgeries. They tried to keep a very low profile for good reasons. That’s what the police is investigating and that’s why the arrests were made. It’s the court which will decide what the actual damage to the Hungarian state was.

  24. Viking says:

    Mr. Bush and his buddies certainly didn’t like the deal… so they simply backed MSZP in the 2002 elections. That’s why already the original Gripen deal was very expensive for Hungary indeed
    Leto at February 9, 2011 9:49 PM

    An astounding statement!
    * ‘The US Government supported MSZP against Fidesz in the elections 2002′
    Where are the proofs?
    How did normal Hungarian voters notice this?
    Of course it did not please the US Government that Hungary did not buy/lease F16s, but supporting one party (MSZP) that then went on buying even more from the terrible Swedes, instead of throwing out the Gripen planes and replace them with Good Ol’ F16? So what did the US Government win with supporting MSZP?
    That Hungary will never buy US planes?
    Next planes will probably be the EuroFighter
    So if you can prove that the US supported the MSZP, then you must also admit that the US lost double doing that
    Your logic, as always is lacking in substance and actually logic…

  25. lol says:

    And Hungarian estimation for Moscow realestates will
    be better then Russian? Do you really think that the
    court will rule out it adequately? The thing is
    these guys can backup themselves either by using old
    Russian friend’s contacts and get a “price quote”,
    or just getting the official pages from local
    authorities, and the thing is that the court will
    have to say that they actually done MORE than they
    could (because the papers will be official).
    If it’s going to be a Hungarian estimation – than it
    is probably a forgery, because how would you
    estimate a price on property, when the local market
    price is overhyped and local government prices are
    deep lower than expected?

  26. Leto says:

    I don’t think it would be impossible, even in Moscow, to determine how undervalued the property was at that price. But there’s more than that: document forgeries (e.g, backdating) and malfeasance. That’s why those three persons are arrested. And if we are lucky then the crimes can be traced back to the inner circles of MSZP, i.e. the Gyurcsány-government..

  27. Viking says:

    The Russian state decided to whom the Moscow trade office would be sold, ex-finance minister and former government commissioner for promoting eastern economic relations János Veres told Klubrádió Tuesday evening

    This is a key statement and if true it is hard to see how the Hungarian authorities can do anything at the time and now about it
    That it was bribes and cheating can easily be assumed, but that is more on the Russian side, which is hardly an Hungarian matter
    If the decision was on the Russian side, why should any pay off any Hungarians?
    No logic there
    The question is if it were some special terms regulating the sale of this Office, like it had been given to Hungary after 1990 as part of system-change and break-up of the Soviet union, or the Russians have this rules on Diplomatic missions in general?

  28. lol says:

    Leto, you’ve never been to Moscow, it’s nearly
    impossible for a Russian to get his documents –
    the one HE owns like a sole owner and you ask if
    Russian authorities will help some outlander? I’m
    a Russian citizen, I know what I’m talking about,
    either you would be asked for some bribe, but you
    wouldn’t understand that as an abroad citizen and
    will be send off somewhere for some kind of paper
    you wouldn’t really need at all, or you’ll be
    framed/cheated somehow (there are billion of ways
    to do that “na Rusi”). And beleive me, for the
    money Moscow apartments cost (and some of them
    cost few billions of roubles (well cost a year
    ago, dunno nowadays, but I see only rise in prices
    there)) they could cheat on a small banana-like
    country (no offence)…

  29. Anti-Leto says:

    A bit of Fidesz history from early in the last decade forgotten by their fan club member. “Two of Orbán’s state secretaries in the prime minister’s office had to resign in May because of their implication in a bribery scandal involving the U.S. military manufacturer Lockheed Martin Corp. In advance of bids on a major jet-fighter contract, the two secretaries, along with 32 other deputies of Mr. Orban’s party, had sent a letter to two U.S. senators to lobby for the appointment of a Budapest-based Lockheed manager to be the U.S. ambassador to Hungary.”

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