State Audit Office slams MFB over Transelektro deal
The state-owned Hungarian Development Bank Rt (MFB) violated its own investment policies when it bought a 42% stake in troubled holding company Ganz Transelektro Villamossági Rt (GTV) for Ft 4.9 billion in 2004, according to a report by the State Audit Office (ÁSZ), the daily Népszabadság reported on Wednesday.
MFB's investment strategy stipulated at the time that it could invest only in companies that had a good chance of operating profitably. GTV, however, had been loss-making for two years before MFB purchased the stake and many of its assets were being used as collateral for loans, the ÁSZ noted in its report. At the time, GTV's net assets were only about 87% of its registered capital, it failed to pay on time nearly three-fourths of its liabilities to suppliers and its debt-to-equity ratio was 88%. The ÁSZ noted as well that MFB's Ft 4.9 billion cash injection into the company was almost the same size as the company's Ft 4.7 billion principal due on loans in 2004.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.