Turmoil on the Transportation Front

In 2009 Mrs. Eleonóra Szalai, Human Resources manager of BKV at the time, attracted a lot of attention to the Budapest Public Transport Company.  Why?  She had received a severance package totaling 136 million HUF (just under 400 000,00 GBP at the time of writing).  A general breakdown of the severance package was listed in the Budapest Times: 96 million HUF in addition to a confidentiality compensation of 10 million HUF – strange considering BKV has no competitors in this industry – plus 20 million HUF in expected bonuses. What is the problem with that, you may ask?  Eleonóra did not actually leave her post as HR manager of the city-owned transportation company.  She continued to work and receive a gross salary of approximately $60,000.00 (1.2 million HUF).  Financially, 2008 was a good year for her considering the average Hungarian household wealth can be valued at just below $12,000.00 per year, according to the Organization for Economic Co-operation and Development.

How exactly did this happen?  Former BKV spokeswoman, Erzsébet Pásztor Székely, said Szalai’s original contract expiration was determined to occur at the end of 2008.  However, the former BKV CEO, Balogh Zsolt, had extended her contract expiration date to December 31^st, 2009.  This was first noticed when BKV’s audit reports looked a bit fishy.  After further analysis of the audit reports it was clear that BKV was still employing individuals who had already been given a severance compensation.  It was estimated that1.5 billion forints in taxes had been used as healthy compensation packages.

Following heavy public scrutiny and a police investigation into his involvement in the severance scandal, Balogh Zsolt began publicly incriminating Hagyó Miklós, who at the time was acting supervisor of BKV as part of his Budapest Deputy Mayor responsibilities.  Two of the accusatory instances were interviews in March 2010 with HírTV and the daily Magyar Nemzet (the Hungarian National).  According to the Magyar Nemzet interview, Zsolt stated that these scrutable payment packages were a small part of a series of corruptive activites which he was forced to perform.  More specifically Balogh feared for his personal and professional safety, sentimentally professing he was “weak” and “scared” because of “intimidation” from Hagyó.

After these statements in the Magyar Nemzet interview, Balogh steered the conversation away from the payment scandal to what he claimed were a series of contracts that “served no justifiable purpose.” Once again accusing Hagyó of intimidation tactics, Zsolt mentioned that he was forced to sign these questionable contracts worth hundreds of millions of Hungarian forints, but, of course, he didn’t understand why he was obliged.  Regarding one instance when Balogh feared physical violence from Hagyó, Zsolt said that Miklós put his big arm around Balogh’s neck, which caused some pain.  In the samesentence Zsolt admits that Hagyó frequently did this in a friendly manner and with many people.   Furthermore, Balogh stated that he was threatened into paying a 15 million forint “membership fee” to Hagyó during a meeting in the Budapest suburb of Gödöllő.  The “membership fee” designation for the 15 million forints is to this day quite ambiguous.  Does this sequence of past events and Balogh’s subsequent testimonies sound strange and incomprehensible?  Indeed, many others have suffered through his testimonies.

As it may already appear, Balogh’s credibility has been a hot topic.  On different occasions his testimonies have been inconsistent; it seems Mr. Balogh struggles with details.  In his first testimony, Balogh stated that he gave Hagyó the 15 million Hungarian forint, which was hidden in a Nokia phone box, while they were in a City Hall parking garage.  In this version Hagyó DID NOT look into the box to clarify that the money was, indeed, inside.  In a different testimony Zsolt said the money transfer did not occur in the parking garage, but while they were sitting in an Audi A8 outside of a downtown café.  In this version Hagyó DID look into the Nokia box to see that the box was full of money.

It is also important to note that Balogh no longer claimed the 15 million forint was an obscure “membership fee,” but instead it was part of a contract with Synergon – A Hungarian informatics and systems integration company.  Zsolt recalled in his first testimony that he was intimidated – this time he felt his job was in jeopardy - into signing a contract with Synergon.  In the other testimony, Balogh stated that the Synergon contract was one of “a lot that were signed” with BKV, mentioning nothing about job security.

But why does Mr. Balogh Zsolt cry wolf in the form of obscure contracts?  This, I will address in my next post.

Source: http://thehagyocase.wordpress.com/2012/06/24/turmoil-on-the-transportation-front/