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Panama Papers in Hungary: Two officials so far

The journalist heading the local aspects of the worldwide probe says that more names are likely to come to light as investigations continue. 

Following the explosive “Panama Papers” leak in early April, investigations were launched by Hungary’s National Tax and Customs Authority (NAV) of two Hungarian politicians and a number of other individuals and firms that are located in Hungary or have Hungarian affiliations.

But NAV was not the first to get a hold of the information that triggered the investigation. Independent Hungarian investigative journalism organization Direkt36 was in fact the first in Hungary to expose the leak, thanks to its membership in the original group of investigative journalists looking into the “Panama Papers”. Local journalist András Pethő, who handled the probe for Direkt36, described his work on the Panama Papers during an April 13 press briefing in Budapest.

The 11.5 million files that comprise the “Panama Papers” originated from the database of offshore investment consultant firm Mossack Fonseca based in Panama and were leaked to two staffers from the Süddeutsche Zeitung in early 2015 under mysterious circumstances. Overwhelmed by its find, the German newspaper called on the help of the International Consortium of Investigative Journalists (ICIJ), to help comb through the documents.

The ICIJ’s contact in Hungary was Pethő, a seasoned investigator who met with his German colleagues and 100 other journalists in September to find out more about the leaks. Through the efforts of the ICIJ, more than 370 journalists from 76 countries have been working diligently to decode information contained in the documents.

What began as a casual involvement for Pethő nine months ago has evolved into an all-encompassing project that he said has demanded much of his attention.

“There are about 100-plus companies or persons connected to Hungary in the database,” Pethő said, adding that there is still a great deal of work needed to correlate the data. “In this investigation, the longest time was spent on the research because we had to find the potential stories. I started to focus on this about two months ago. That was when I identified the first two stories.”

Two officials identified

Pethő said he was most interested in politicians at the start and soon enough he identified a couple of names. “Zsolt Horváth kept a pretty low profile. He was an MP in Parliament for 16 years, but I had no idea who he was,” Pethő explained. Horváth was named as the director of a company based in the Seychelles Islands in 2013, while he was still a Fidesz MP, but this was never mentioned in his declaration of assets, according to Pethő. Just four months after retiring from politics, Horváth acquired ownership in another company based in the Seychelles, Direkt36 claims.

“The second individual is László Bodvai, although he was not directly implicated in this. Actually his name doesn’t even appear in the documents,” Pethő said. He said he discovered Boldvai – who has since resigned as an MP for the opposition Socialist party – inadvertently in the course of his research. “As I was going through the list, this name Csilla Konti came up, but it didn’t ring any bells. On my second search I found an obscure website and among the comments was one that László Boldvai’s wife was Csilla Konti,” Pethő explained.

As a rural secondary school teacher, Konti had acquired an offshore company registered in Samoa, and on the day of the acquisition, measures were taken to facilitate the transfer of €255,000 to that company from a Swiss bank account, according to an earlier report from Direkt36. “Boldvai became relatively well-known in connection with the greatest corruption scandal of the ’90s, the so called Tocsik-case. He was even charged with blackmailing, but he was acquitted and his political career continued seamlessly,” the report from the portal said.

In the case of Konti, Pethő was able to follow some of the money flowing through her companies. “Actually that wasn’t coming from the leak but from the Hungarian company registry because Konti’s Samoan company had a firm in Hungary,” he said.

While he is investigating only those Hungarian names that have surfaced in connection with the “Panama Papers” investigation, Pethő said there are probably many other high profile Hungarians who bank offshore but were not caught up by this leak, and may never be exposed.

“It is a matter of perspective,” said Pethő. Mossack Fonseca is only one of the many offshore providers, they also don’t have an office in Budapest, he adds. “We know that there are certain law firms and companies that brought clients to Mossack Fonseca but I know of other offshore providers present in Budapest, so some Hungarian politicians would more likely go to these directly,” Pethő says.

Offshore companies: a legal quagmire

“Owning and using offshore companies in itself is not illegal; actually it makes sense in some regards, but if you are a politician and you have offshore interests or your wife is a math teacher at a rural high school and she drives a BMW and has a secret Swiss bank account with lots of assets, then that raises questions,” explained Pethő. “But we need to be really careful about how we present this information.”

What turns it into a criminal offense is when those companies are used for tax evasion or money laundering, he said. It’s the job of one’s lawyer to ensure that all the cracks are sealed and everything is essentially business as usual.

The ruling Fidesz party has criticized the former Socialist government for its “offshore knights” and Hungary’s Prime Minister Viktor Orbán said in 2010 that during his governance the era of “offshore knights” would come to an end.

Nonetheless, Pethő said, his investigation, and those of the ICIJ are continuing, and more Hungarian names are likely to turn up.