Tarsolyʼs letter goes public

History

In a letter sent to Hungary’s Prime Minister Viktor Orbán, Csaba Tarsoly, CEO of bankrupt Quaestor investment house, asked for a state loan to buy government bonds to exchange for its own corporate bonds, in order to prevent the brokerage from going bankrupt and leaving clients without money, Hungarian online daily origo.hu reported yesterday.

In the letter, Quaestor owner Tarsoly reportedly concedes that the "panic" caused by the failure of brokerage Buda-Cash had left Quaestor insolvent. He proposed that the state provide Quaestor with a loan to be used to subscribe government bonds, which Quaestor would then offer to clients in exchange for their Quaestor corporate bonds in the framework of a bankruptcy procedure.

Doing so would avoid harming 50,000 clients, keep approximately 800 jobs and "further strengthen confidence in the government", Tarsoly reportedly argued. In the letter, Tarsoly took all responsibility for the problematic situation, and he said he “felt” he “needed to inform” the prime minister.

Quaestor went bankrupt after the letter was sent, apparently due to fraud, and Tarsoly was arrested last week and held without bail on Sunday, but the government pulled all its money out of the investment house before it became insolvent. Questions have arisen about whether the government had illegal insider information in the case, though officials deny that charge.

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