Zsolt Balogh: Perhaps Not the Hagyó Case Spark, Certainly the Fire’s Fuel

While Miklós’s pre-trial detention was maintained without supporting evidence by Judge Mária Szívós, Zsolt Balogh was given full-control over the Public Transport Company in Pécs, a beautiful city of around 160,000 people in southwestern Hungary. This promotion has been noted by many as peculiar considering Balogh’s upper-management roles at BKV during the severance payment scandals. Further speculation has arisen from Balogh’s skeptics since Pécs’s local government is controlled by the Fidesz party.

via Zsolt Balogh: Perhaps Not the Hagyó Case Spark, Certainly the Fire’s Fuel.

Zsolt Balogh: Perhaps Not the Hagyó Case Spark, Certainly the Fire’s Fuel

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Zsolt Balogh: Perhaps Not the Hagyó Case Spark, Certainly the Fire's Fuel

image source: origo.hu

I have written extensively about the BKV case and the severance payment scandal in addition to the current case against Miklós Hagyó. However, the two cases, though connected to the same company, involve very different alleged crimes and suspects. Since Mrs. Eleonóra Szilágyi Szalai was the original suspect for receiving misappropriated funds, how did Mr. Hagyó become involved? The answer lies within the words of one man.

Balogh entered BKV in April 2007 as an Investment Manager which required of him to oversee the preparations and executions of new projects. A short while later in October 2007, he transferred to the position of Deputy Engineer Manager and Under Secretary to the acting Director Attila Antal. After Attila had fallen seriously ill, Balogh was promoted by the BKV Board of Directors to serve as the Interim Director of the public transportation company in February 2008. According to a source familiar with the public company, there were 15 board directors: nine members from SZDSZ, another four were from MSZP, and the remaining two were appointed by the MSZP government. Mr. Balogh served as the Interim Director until September 2008 when István Kocsis was elected by the Board of Directors to act as full-time Director. At that time, Balogh worked as Kocsis’s right-hand man.

As a result of Balogh’s public accusations that Miklós was involved in bribery and misappropriation of public funds, Miklós was detained by the Budapest Police. Even though no formal investigation had been conducted, the only evidence for the alleged crimes were the public statements made by Zsolt Balogh, Miklós was subjected to pre-trial detention.

While Miklós’s pre-trial detention was maintained without supporting evidence by Judge Mária Szívós, Zsolt Balogh was given full-control over the Public Transport Company in Pécs, a beautiful city of around 160,000 people in southwestern Hungary. This promotion has been noted by many as peculiar considering Balogh’s upper-management roles at BKV during the severance payment scandals. Further speculation has arisen from Balogh’s skeptics since Pécs’s local government is controlled by the Fidesz party.

A Recap on the History of the Hagyó Case: What Happened and Who Was Involved?

Amongst all of the confusing uncertainties of the Hagyó case, one thing is profoundly true.  If the current government of Hungary is willing to manipulate a person’s life, especially the life of a regionally powerful person, then they can do that with anybody.  That is why I have chosen to write about Miklós Hagyó.

via A Recap on the History of the Hagyó Case: What Happened and Who Was Involved?.

A Recap on the History of the Hagyó Case: What Happened and Who Was Involved?

Zsolt Balogh, left, and Miklós Hagyó in Kecskemét Court in Kecskemét, Hungary on Tuesday.

Zsolt Balogh, left, and Miklós Hagyó in Kecskemét Court in Kecskemét, Hungary

On Wednesday, I said that I was going to make a summary post about my blog, The Hagyó Case.  I want to do this for a couple of reasons.  Firstly, the blog’s readership has increased about 30% over the past week, which is great! Appropriately, I’d like to recap the evolution of the story for those who have recently started following.  Secondly, the story is full of confusing details about the legality of contracts and whether or not those contracts contributed to the financial gain of an alleged criminal organization. I have described the intricacies of the contracts in previous posts, and I will continue to relay the information from subsequent court hearings.  For now, I only want to provide the back story.

In 1998, a successful and wealthy businessman by the name of Miklós Hagyó (Me-klosh Ha-djo) joined one of Hungary’s dominant political powers, MSZP (Magyar Szocialista Párt – Hungarian Socialist Party).  Over the next twelve years, he would climb the political ladder to become a deputy mayor of Hungary’s capital city, Budapest, and a member of parliament.  Within his deputy mayoral capacities, Hagyó supervised the public transportation system of Budapest which is aptly translated as Budapest Transit Company (BKV).  Although Budapest’s public transport system is well-used, the company was annually taking a financial beating.  For example, in 2007 and 2008 the company was publicly indebted over 100 billion forints.  As I type, that is almost 470 million US dollars.  How did the company stay afloat? As I said, they were indebted to the public which translates into the government repeatedly bailed out the company. As a government subsidy, BKV’s business practices were under the watchful eyes of state institutions like the State Audit Office of Hungary, who noticed an employee severance payment scandal which I wrote about here.

Miklós Hagyó was not connected to the severance payment scandal, but it was the spark which lit the fire that was to become the political downfall and eventual imprisonment of the former prominent politician and humanitarian.

In March 2010, a former CEO of BKV by the name of Zsolt Balogh gave two interviews, one to Magyar Nemzet (Hungarian Nation) and another for HírTV.  During these interviews, Balogh stated that shortly after his promotion to CEO Hagyó invited the new executive to his office for what presumably would be a quick professional introduction.  However, according to Balogh, upon entering the office Hagyó was using both of his hands to stuff himself with 40 ounces of cold meat.   Then, he allegedly proceeded to tell Balogh “things must be done around here, and those who do not do it will receive no mercy.  Their throat will be cut.”  After that, Balogh claims Hagyó demanded an upfront payment of 15 million forint (more than $70,000.00 at the time of writing [ATW]).  Furthermore, he would annually need to pay that amount to Hagyó.  According to Balogh, the next day he obliged by giving Hagyó the 15 million forints which were hidden inside of a Nokia phone box designed for packaging.  The former CEO also claimed that he passed around 70 million forint (more than $328,000.00 ATW) to Hagyó over the course of a year.

Quite naturally, one should wonder from what financial source did Balogh pay Hagyó.  Well, this is where the tricky contracts come into play.

The prosecution claims that Hagyó sat atop a criminal organization with BKV’s senior management serving as his loyal henchmen.  The upper management’s purpose was to organize BKV’s business with other companies that were privately or professionally connected to the deputy mayor.  Once the contracts were created and the money was paid out Hagyó allegedly extorted the contract revenues from the managers.

After Balogh made the public statements, Hagyó became the disgraceful symbol of political corruption in Hungary. As a result, the former deputy mayor and member of parliament stepped down from his respected positions. A few months later in May 2010, the general elections occurred, and due to his prior resignation   he had lost his penal immunity. The police arrested him immediately following the governmental change. On May 14, 2010, after a few days of police interrogation, the court sentenced him to pretrial detention.  The prosecutors claimed they possessed evidence which strongly suggested Hagyó intended to flee the country in an effort to avoid legal troubles.

Miklós Hagyó passed nine months in pretrial jail, but due to deteriorating health he spent many months in the prison hospital.

The prosecution spent nearly three years in an attempt to gather enough evidence to put Miklós and 14 other people in jail.  Some presume that the investigators were trying to find evidence which would have connected the allegedly embezzled money to the Hungarian Socialist Party, who just happens to be the political rival of the currently governing Fidesz party.

Regarding the pretrial detention, Miklós’ lawyer requested access to the evidence which was “substantial” enough to keep him in jail for nine months.  Neither the prosecution nor the judge ever provided the evidence, citing that it would jeopardize the “integrity” of the investigation.

The trial is currently on hold for about a month.  So far, the biggest twist has been Zsolt Balogh’s in-court testimony.  He retracted his accusations, saying that the investigators coerced him into accusing Miklós of these crimes.  If he did not oblige to their demands, he would have had significant problems.

Many people might wonder why I chose to create a blog about this case.  I find the story to be morally and socially stimulating, but apart from that I felt that Miklós’ story should be told to the world outside of Hungary. According to BKV’s financial records, much of the work from the controversial contracts benefited the company.  Financially the company was spending less money, yet it was developing the transportation system. The prosecution has also admitted this to be true.

Why, then, is Hagyó accused of running BKV as a criminal organization from which he extorted billions of Hungarian forints?  There are a few different theories to that question.  A particularly strong one suggests that the socialists’ opposition, the Fidesz party, used him as a political pawn to turn the Hungarian populace against the socialist party.  In doing so, they could regain control of the Hungarian government.  Well, they did in May 2010.

Amongst all of the confusing uncertainties of the Hagyó case, one thing is profoundly true.  If the current government of Hungary is willing to manipulate a person’s life, especially the life of a regionally powerful person, then they can do that with anybody.  That is why I have chosen to write about Miklós Hagyó.

What is Considered Unnecessary?

Another interesting twist to these accusations:  The northeastern city of Debrecen, Hungary’s second largest, spent nearly double the amount (175 million HUF) on the same technology. Their information system, however, does not work.

via What is Considered Unnecessary?.

What is Considered Unnecessary?

One of the biggest aspects in the trial of Miklós Hagyó and the other 14 associates from the Budapest Transit Company (BKV) is a contract between BKV and a company called C.C. Soft Ltd. 

C.C. Soft signed a contract with BKV on July 12th, 2007, though it was later modified on October 3rd of the same year, to build a visual passenger information system for the Szentendre surburban railway.  That specific segment runs from Batthyány Square, which sits on rivers edge in Buda facing Parliament, to the Békásmegyer stop just on the fringe of the town Szentendre.  The total distance is only 12 kilometers and about 30 minutes travel time on public transportation. 

The information system consists of overhead monitors displaying arrival and departure times for trains along the route.  Many of the public transit and/or national railway systems I’ve personally traveled on in my globetrotting have used technology like this. 

According to the prosecution the contract, totaling approximately 100 million HUF (about $455,000.00 at time of writing), was not properly fulfilled.  According to them, the system was and still is not properly functioning.  Therefore, when former BKV CEO Zsolt Balogh allegedly signed the contract completion documents around December 2007 and subsequently signed the payroll forms which transferred the 18 million forints to C.C. Soft in two separate installments by February 12, 2008, he was committing forgery which resulted in “significant financial loss” to the public transit company. 

This is seemingly very well for the prosecution.

Except that Zsolt Balogh just produced in court this Tuesday photos of the visual passenger information system and it appears to work fine. 

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Note: The overhead monitor displays the visual information system.

Another interesting twist to these accusations:  The northeastern city of Debrecen, Hungary’s second largest, spent nearly double the amount (175 million HUF) on the same technology. Their information system, however, does not work. 

Debrecen’s public transit company is not involved a trial for unnecessary contracts nor is their political supervisor facing 20 years in jail.

Xpat Opinion: Defendants Confess In BKV Trial – Xpatloop.com – Expat Life In Budapest, Hungary – Current affairs

Xpat Opinion: Defendants Confess In BKV Trial – Xpatloop.com – Expat Life In Budapest, Hungary – Current affairs.

I’m now publishing reports on the BKV hearings for XpatLoop.com in Budapest, Hungary!