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 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.


Source: http://thehagyocase.wordpress.com