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Non-partisan corruption, meta-corruption

by DoDo Sun Feb 19th, 2006 at 07:09:24 AM EST

Who has the upper hand in corruption? The private payer who finds the weakest link and has enough money to roll over laws and law-abiding competitors, or the public official who can erect stumbling blocks if his personal black tax isn't paid?

Sometimes either, sometimes there is symbiotic entanglement between politics and business, sometimes it gets more complex. Here is an example for the latter from Hungary.

Non-partisan corruption...

In the USA, business lobbies are usually closely aligned with one of the big parties, but pay some dues as insurance policy to the other party, too. In much of the formerly communist countries, a more strict party-businessmen alignment is typical.

However, at least in Hungary, there is a distinct line among the scandals of the democratic 16 years, which concern reckless businessmen with no party alignment, who in their hubris thought that tainting all with 'generosities' will make them immune from prosecution. Well that didn't exactly work out for either of them, the parties may have washed each others' hands but let these guys fall.

The worst (in money terms) of these was one Gábor Princz, boss of the then half-state Postabank. He dished out large sums of money as credits to various companies not fit to re-pay them, or as sponsorship for various events. His beneficiaries included various parties or party-aligned businessmen, and his good relations went as far as stopping the publication of sensitive material by newspapers he owned at the request of party heads.

This didn't save him after the elections in 1998, when the then formed government led by right-populist Fidesz booted him and took over the shop (I mean bank). And here begins a second story.

...to meta-corruption

Two independent accountants put the bank's loss from bad credits at 90-95 billion Forint (c. 380-390 million ECU(€) in then prices). But then the new bank bosses requested a third audit, whose final report the accounting firm curiously didn't want to own, which pushed up losses to 154 billion Ft (640 million ECU(€)).

And then it gets interesting. To consolidate the bank, a state-owned firm was supposed to buy the dead credits from the bank, and attempt to collect the dues - e.g. take over indebted limited companies and sell them. Except, about one-fifth went somewhere else: a small firm (founding capital was the ten-thousandth of the wealth received) established by the bank's bosses, thus outside direct public oversight.

Due to the over-consolidation, a lot of not-so-bad companies were involved. But, according to purported internal documents published last week, this workout firm worked with a great deficit - and that because it sold companies well below market value. Sold them to businessmen close to the then new government. Who in turn - this was known before - got large orders from the government without competing, while often working at deficit themselves. And some of which today pay campaign contributions for Fidesz's election campaign.

The main players deny the authenticity of the documents (especially of another, purportedly an order by the head of the PM's office for the governmental audit office to stop further investigations), but the 'real' internal report has been classified for 20 years, while some claim they read the currently published version before.

If the story is true, then we have a party with a grand program to establish its own corrupting business circle, to compete with that of the Socialists. Down the road towards an ugly two-party system.

What you find in my older posts on Hungarian politics (oldest first):

  1. After a bizarre press vs. politicians court case, an introduction of parties & history since 1989.
  2. The workings of non-issue-based politics: the tragicomic double referendum on barring hospital privatisations and giving neighbouring countries' ethnic Hungarians double citizenship.
  3. Bush and Hungary: why the nominal centre-left (now governing) is pro-Bush and the nominal centre-right opposition anti-Bush.
  4. Campaign season opens - half a year early.
  5. Further in the campaign, October polls and nonsensical rhetoric (how can you give preferential treatment to both the elites and the poor?)
  6. The juiciest of the many storm-in-the-bathtub scandals: Mata Hari in Budapest
  7. A foray into history (not much to do with recent Hungarian politics, but some further perspective for the debate on Turkey's accession to the EU).
  8. European Dream: where would Hungarians like to live?
  9. Hungarian Orange (no relation to the Ukrainian version): on a clever opposition poster campaign and its contrast with reality.
  10. On another poster campaign by the same party - how to outsource negative campaign, and how it can be made to backfire.
  11. Of Socialists and Presidents.
  12. On the Oscar-winning film director who was The Mephisto Behind Mephisto.
  13. The Inverted Example of Spinning Jobless Statistics: doing the exact opposite of what the Bushites did.
  14. Mephisto And Informants Update.

Thanks, DoDo. We now have an impressive series of excellent diaries on Hungary. And they're all available on ET Wiki! (I definitely think we should promote ET Wiki to make more people aware of the richness of this blog).

By the way, I have answered your post in the "Polish elite lays out wares in British shops" diary. You will find data sources for the Polish employment and unemployment statistics (and more).

I have also added data sources in the ET Wiki "Tools for action" section.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Sun Feb 19th, 2006 at 12:53:51 PM EST
In the USA, business lobbies are usually closely aligned with one of the big parties, but pay some dues as insurance policy to the other party, too.

I may well be wrong, but I think this has become less the case since the 1994 Republican takeover of Congress.  Traditionally, the Dems were able to capture all of the money from business, back when they were dominant, because businesses didn't want to be locked out.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Feb 19th, 2006 at 06:52:36 PM EST

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