It more or less goes without saying that there is free passage between the world of top managers and the public sphere; ever since the change of system, every government has offered positions to experts - but in the case of prime ministers, they tried to make sure that the selected colleagues with "strong financial backgrounds" also had experience in public administration. The choice of placing Ferenc Gyurcsány - who had no experience in the labyrinths of officialdom - into the Medgyessy-cabinet seemed an exception to the rule, but since then, the politically inexperienced János Kóka, Gordon Bajnai, and most recently Péter Oszkó (see our table on page 16) have been appointed as ministers. What is even stranger is that while the leading powers of the world have declared war on tax havens, the majority of leading figures of the Gyurcsány-Bajnai-period have stepped out from the world of tax havens.

Deloitte gives a hand

Our paper found out that the companies of the new prime minister's family and Wallis Zrt. - of which he was the CEO until 2005 - as well as the business-circle of János Kóka, faction-leader of the Free Democrats, who support the present government, just as the companies connected to the lobbyists of Strabag, labelled as purveyor to the court of motorway-construction, all used, and still use the Deloitte Group for tax optimization, (in other words: to evade the Hungarian tax system). All this is worth mentioning because András Simor, Governor of the Central Bank, was also formerly the President-CEO of Deloitte Hungary, just as the new Finance Minister, Péter Oszkó, was, what's more, the latter was also expert number one regarding international tax planning. (While Oszkó was still head of Deloitte, the company participated at the tax planning conference of May 7th where one of the mottos  was "the activities of offshore companies are not illegal".)

Deloitte's subsidiary, the Cypriot Meritservus Ltd., ensured the above-mentioned communities of interest several locations for registration. Most often, the clients used two addresses in Limassol (partly in order to do business with the state): the building at 3, Chrysanthou Mylona Street, and the Deloitte office in Eftapaton Court. Searching in company databases, we found almost one hundred, currently operating Wallis sub-units that have registered their parent companies at one of these two addresses (under names such as Fleminghouse, Vitonas, Marivaux, Dominato, Arsida, Virini or Nord-king Ltd.). The Erdért-Group of the other billionaire, György Nagy, who started out from Wallis, is also "optimizing" in the properties above (in the forms of Jezomme, Ackroyd and Erdert Investments Ltd.), just as Gyula Lepp, known as brother-in-law and mentor of János Kóka, and the companies connected to his name (Corbeil and Del Rugercia Ltd.).

The fishy Dataplex-affair

After all this, it is hardly a surprise that a "Cypriot species" of Chrysanthou Mylona Street (Thyramond Ltd.) has appeared around the Hungarian lobbyist of the Strabag concern - who is supposedly involved in party financing, and who has attracted the attention of the investigating authorities of both Vienna and Budapest - Zoltán Aczél, and his relatives.

In the past few years, the Wallis-Kóka-Lepp community, with Cypriot ties, has been maintaining a lively and strong relationship with the Hungarian state, in the form of purchasing a few "low-priced" real estate properties, and other deals (see our writing in frame). The National Investigation Office (NNI) has now become interested in the Dataplex story - which was revealed in 2007 by Heti Válasz - and as Magyar Nemzet has found out, the subject of the proceedings was suspicion of misappropriation. In a nutshell: in a matter of three months, Cypriot offshore companies made three billion Forints on the purchase of a server hotel (a data center which provides hosting services) in 2005-2006 (the increase in value was partly due to the fact that state companies under the supervision of the economic portfolio led by Kóka started using the services of "Dataplex-hotel", which up till then had been struggling with surplus capacity). Gyula Lepp admitted on the TV channel Hír tévé that one of the winning Cypriot companies was his, but Wallis, led by Gordon Bajnai, was represented in the deal through Fleminghouse, its Limassol concern.

We have no information as to whether the aversion that Tibor Szanyi, representing the left-leaning group within MSZP, has to tax havens is due to these transactions. In any case, the politician has made it clear that "offshore-dealings are over and done with, there are proposals that such companies should not be allowed to take part in tendering procedures in Hungary for the award of public contracts", for G20 [comprising the most developed nations] has excluded offshore companies without a second thought." The expression of "exclusion" is perhaps an exaggeration, but it is a fact that the French President, Nicolas Sarkozy, and Gordon Brown, the British Prime Minister, both mention tax havens as shadow zones that must be eliminated. In an interview in Heti Válasz last year, József Papp, associate professor at Corvinus University's Institute for the Development of Enterprises, warned that although offshore companies had originally served to divest capital revenue, today they are also "a means for salvaging wages and bonuses". For example, a member of the directory board of a company that is registered in Cyprus, but the activities of which are not practiced on the island, can receive an annual fee of up to twenty thousand euros with no deductions, and need only pay ten percent tax on the sum above the given limit.

In the midst of a global campaign against tax havens, András Simor, Governor of the Central Bank, recently spoke in defence of his Cypriot company, saying it was definitely not offshore, then in last week's edition of Magyar Narancs, Péter Oszkó warned: "Many people label certain countries offshore even though they aren't in fact offshore." These explanations have a flaw, namely, that although Cyprus is a Member State of the European Union, all offshore-mediating agencies recommend the island to the rich and prosperous as a low tax haven. (Incidentally, the new finance minister was also co-owner of Deloitte's Central European company, registered in Cyprus.)

Super-egos

After such precedents, it is not yet known whether the closing of offshore back doors - which Bajnai announced last Sunday - is to refer to the "not offshore" Cyprus. Or is the new government aiming at creating a new tax system in Hungary that will be similar to the one in Cyprus, thereby rendering unnecessary the escape of entrepreneurs from a tax burden that is considered excessive.

This latter solution would be most desirable. What's more, it is also necessary.

One thing is sure: if he wants to weaken the strength of the "Limassol lobby", the people the new prime minister will have to come up against are not ordinary men. They are, for example, former executives of Wallis Investment - famous for large-scale tax optimization. Basically, the prime minister will have to deal with himself, and Gábor Ormosy, CEO of the Hungarian Centre for Economic Development, and Zoltán Gál, the "old stalwart" of MSZP, whose wife is the service agent for Wallis's Cyprus-based company, Augustian Holdings. And apart from them, there's the Deloitte task force, as well as the "super-ego" of the Free Democrats' faction leader, Gyula Lepp.  

 Where did the deloitte office of Limassol offer its help?

» Dataplex-affair (2005-2006): Two of the three Cypriot companies (owned by Gyula Lepp and Wallis) that took part in the selling of Dataplex Ltd. - which operates a server hotel - were registered at the Limassol office (3, Chrysanthou Mylona Street) of Meritservus Ltd., a subsidiary of Deloitte (Heti Válasz, February 22nd 2007).

» The purchasing of the Free Port of Budapest (Szabadkikötő) (2006): Erdért-consortium, the winner of the privatisation of the Freeport of Budapest Logistics Ltd., was also made up of the Hungarian subsidiaries of companies registered under 3, Chrysanthou Mylona Street. One of the rivals of Erdért (which has the support of one-time Wallis leaders) belonged to Wallis' sphere of interest, the other was Waberer's Holding - later, the latter joined the operators of the Free Port.

» Cardnet-affair (2006-): The owner of Cardnet Zrt. (which signed a reseller's agreement with the State Motorway Management Company Ltd.(Állami Autópálya Kezelő Rt.), Del Rugercia Investments Ltd. - and connected to Gyula Lepp - also uses the company seat provided by Deloitte-Meritservus. Cardnet is helping the motorway company of the economic portfolio by selling road-use vignettes (Heti Válasz, April 5th 2007).

» Duna Passage Investment project (2007-): The Duna Passage Investment project, on the Pest side of the Danube, south of Lágymányosi Bridge, may be the greatest investment of Wing Zrt., the property development company of Wallis. They bought the territory from a parastatal company well below market price. The owner of Wing Zrt., Virini Holdings, is also registered at Chrysanthou Mylona Street.

» Building the new headquarters of MTV (Hungary's national public service television (2007-): Wallis Group acquired the right of construction and proprietorship of MTV's new headquarters in Bojtár street without tendering. Arsida Investments Ltd., the co-owner of the project company Millenniumi Média Ltd., was also received in Cyprus by Deloitte.Kft.

» Acquisition of the Post Office Palace (Postapalota) (2008): Another member of the Wallis group (as sole applicant) swooped down on the invaluable building on Moscow Square, which is the headquarters of the state-owned Hungarian Post. The winner, WPR Primus Ltd., is also owned by Arsida Investments of Cyprus.

» Haven for the lobbyists of Strabag (2009): In 2005, Zoltán Aczél and Alexander Zach, lobbyists of Strabag in Hungary, founded a consulting company under the name of Z+A Consulting Ltd. Strabag was the main beneficiary of MSZP-SZDSZ's motorway-construction programme. The property rights of the above-mentioned company devolved to Thyramond Investments Ltd., of 3, Chrysanthou Mylona Street, while the "burden" of management went to one of Aczél's relatives.

Businessmen and top managers in government cabinets after the change of system

Without experience in state administration and heading public companies

Antall-Boross-government:
-

Horn-government:
-

Orbán-government:
-

Medgyessy-government:
- Ferenc Gyurcsány  minister of youth (2003-2004); owner and CEO of Altus Investment and Assets Management Inc. until 2002

Gyurcsány-Bajnai-governments:
- Gordon Bajnai government commissioner for development policy (2006-2007), minister for local government and regional development, then minister for national development (2007-2009), prime minister (2009-); CEO of Wallis Investment, Consulting and Asset Management Ltd. until 2005

- János Kóka  minister of economy (2004-2007); owner and CEO of Elender Inc. until 2004

- Péter Oszkó minister of finance (2009-); until his appointment as minister, he was president-CEO of Deloitte Hungary

With experience in state administration and heading public companies

Antall-Boross-government
- Mihály Kupa minister of finance (1990-1993); before the change of system, he headed the tax-reform secretariat of the Finance Ministry, in 1990, he was the head of DRT, the financial consulting firm known as the predecssor of Deloitte Auditing and Consulting Ltd.

Horn-government
- László Békesi minister of finance (1994-1995); minister of finance in 1989-90, later, he was president of the advisory board of Girozentrale Rt. and member of the board of directors of Fotex, headed by Gábor Várszegi.

- Lajos Bokros minister of finance (1995-1996); from 1980, he worked for institutes of the Finance Ministry, then he became managing director of the Central Bank, president of the Budapest Stock Exchange, then president and CEO of Budapest Bank

- Imre Dunai  minister of industry (1995-1996); from 1990 he was under-secretary of commerce, then deputy-CEO of the national K&H Bank (Kereskedelmi és Hitelbank)

- Szabolcs Fazakas  minister of industry (1996-1998); In 1989-90, he was head of the Secretariat for International Economic Relations and government commissioner, then CEO of the Austrian Industries' headquarters in Hungary, in 1995-96 he was Administrative State Secretary at the Ministry of Industry and Trade

- Péter Medgyessy minister of finance (1996-1998); Before the change of system, he was deputy prime minister, then chairman and CEO of Paribas Bank Ltd. (member of the French Paribas Group), from 1994 he was Chairman and CEO of the Hungarian Investment and Development Bank

Orbán-government
- Imre Boros Phare minister (1998-2002), acting minister of agriculture (2001);
 international deputy-CEO of the Hungarian Credit Bank (MHB) up to 1990, later, deputy-chairman of the Moscow-based East-West International Bank and president of Interbanka in Prague, then CEO of Banque Indosuez Public Company

- Zsigmond Járai minister of finance (1998-2000); deputy-minister of finance in 1989-90, leader of the Hungarian Banking Supervision (Állami Bankfelügyelet), then director of a stockbroker company in London, CEO of the Hungarian Credit Bank up till 1997, later CEO of ABN Amro, Chairman of the Budapest Stock Exchange

Medgyessy-government
- István Csillag  Economic minister (2002-2004); head of department of the Ministry of Finance until 1986, managing director and deputy-CEO of Financial Research Plc. (Pénzügykutató Rt.) until 2002

- Tibor Draskovics minister of finance (2004); employee of the Ministry of Finance until 1994, then under-secretary of public administration, deputy-CEO of K&H Bank until 2001, later, cabinet chief of Péter Medgyessy

- Csaba László minister of finance (2002-2004); employee of the Ministry of Finance until 1998, then under-secretary of public administration, deputy-CEO of K&H Bank (Kereskedelmi és Hitelbank) until 2002

- Péter Medgyessy Prime Minister (2002-2004); see above

Gyurcsány-Bajnai-governments
- Etele Baráth  minister without portfolio (2004-2006); deputy under-secretary of the environmental portfolio from 1990, later, president of Ingatlanpiac Rt. and founder of Geo-holding Rt., under-secretary in charge of supervising development funds until 2004

- Tibor Draskovics minister of finance(2005), without portfolio (2007-2008), later minister of law enforcement (2008-); See above

- Ferenc Gyurcsány Prime Minister (2004-2009); See above

- Péter Hónig  minister of transport (2009-); deputy under-secretary of the economic portfolio until 2000, later, leader of several state companies, previously deputy-CEO of Budapesti Erőmű (power plant operator)

- Csaba Kákosy  minister of the economy (2007-2008); legal expert of the Central Bank (MNB) until 2004, also the owner of a real estate company, ministerial cabinet chief of János Kóka until 2007

- Pál Szabó  minister of transport(2008); CEO of the Hungarian Privatisation and State Holding Company (ÁPV Rt.) until 1998, later CEO of Ápisz Rt., then of the Hungarian Post

- György Szilvásy minister of the chancellery (2006-2007), secret services minister (2007-2009); executive of Altus-Perfekt company network until 2002, later under-secreatry of state of several portfolios

- Erika Szűcs minister of labour (2008-2009);, CEO of Rákóczi Regional Development Bank until 1999, later area director of Perfekt Rt., deputy-chairman of Miskolc until 2008