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Bloomberg reports on spending by MNB foundations

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The “web of patronage” revealed when spending by central bank foundations was made public in April has shocked Hungarians, according to an extensive report published by Bloomberg at noon today. “Even seasoned trackers of corruption in the former Soviet Bloc say they’re startled by the audacity the documents reveal,” the report says.

Gyorgy Matolcsy, governor of the Hungarian National Bank.

The article details connections between Gyorgy Matolcsy, governor of the Hungarian National Bank (MNB), and the major recipients of funds from foundations created by the bank.

“There’s literally a paper trail linking the central bank to questionable payments to individuals related to its chief,” Bloomberg quoted Otilia Dhand, a political risk analyst at Teneo Intelligence in Brussels, as saying. “Even by eastern European standards, this goes beyond your usual allegation of crony capitalism.”

The foundations in question were funded by the central bank, with public money. The government and the central bank sought to keep the accounts of the foundations a secret, but an opposition journalist sued to have this information revealed. After a successful legal battle, the opposition in April obtained documents that they say prove that Matolcsy, along with another board member, decided on investments of the controversial foundations. Matolcsy has said that the foundation operated independently of the MNB. According to reports, Matolcsy’s cousin Tamás Szemerey, heads Növekedési Hitelbank, which received several deposits from the MNB foundation.

The Bloomberg article details a connections between Matolcsy and the recipients of the funding, and connections between the recipients and the prosecutor who would be in a position to take action on improprieties.

“The Prosecutor’s Office, which has rejected calls to probe the central bank for possible misappropriation, agreed last week to look at alleged violations of procurement rules at the foundations, though it said the investigation wouldn’t be criminal. Hungary’s top prosecutor is the husband of the central bank’s human resources chief, who is also a foundation trustee, a paid position,” the Bloomberg article says.

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