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MNB revelations spur calls to oust Matolcsy

Central bank governor criticized over foundation set up with public funds.

The April 30 demonstration outside the National Bank. (Photo MTI/Bea Kallos)

Opposition politicians were demanding the resignation of National Bank of Hungary (MNB) Governor György Matolcsy in early May, amid continued revelations of apparently inappropriate spending by the central bank’s foundations, according to reports.

Socialist deputy faction leader Bertalan Tóth charged on May 2 that Matolcsy had the authority to personally decide on spending by a central bank foundation and said it is possible that the bank chief, or other officials, engaged in illegitimate activities, MTI reported.

On April 30, Tóth told journalists outside the MNB that he had called for a parliamentary committee to investigate how the MNB and its affiliated foundations, and specifically Matolcsy, were involved in the spending of public funds, and how billions of forints wound up in the bank account of Matolcsyʼs cousin Tamás Szemerey, according to reports.

After a successful legal battle, the opposition in April obtained documents that indicate Matolcsy, along with another board member, decided on investments of the controversial Pallas Athéné foundation (PADA). Matolcsy has said that the foundation operated independently of the MNB.

According to reports, Szemereyʼs Növekedési Hitelbank received several deposits from PADA, as did Sándor Demjánʼs Gránit Bank and OTP Bank.

The documents also reportedly reveal that Matolcsy was responsible for the foundation’s purchase of several billion forints worth of Hungarian and Italian state bonds, a purchase that could not have been permitted by the MNB.

School of ‘unorthodox economics’ planned

According to reports, the 18th-century mansion gifted to the PADA by the MNB is valued at HUF 2.4 billion and will be transformed into an economics school, complete with luxurious furnishings and a wine-and-cheese shop. Matolcsy has said he wants the school to teach his own brand of “unorthodox economics”.

Other foundation activities include awarding grants to right-wing publishers to publish pro-government books, including a six-volume history written by an oncologist, The Economist reported on May 2. The activities of foundations affiliated with the MNB have also come under the scrutiny of the European Central Bank as evidenced in an annual report issued last month, in which the ECB highlights the lavish spending of these foundations, The Economist added.

Legislation to classify central bank spending was pushed through Parliament in an expedited procedure on March 1, after a journalist sued to gain access to details of the spending by the MNBʼs PADA foundation.

In a rare break with the wishes of the government that appointed him, Hungarian President János Áder on March 9 declined to sign that legislation, and asked the Constitutional Court to decide whether the measure was permitted by Hungary’s Constitution.

The court ruled on March 30 that the MNB must release data on all tenders managed by PADA, up to the date of the data request by journalist Károly Csabai.