A Hungarian in FBI Witness Protection and a Scheme to Embezzle EU Funds?
Tom Szigeti 2018.03.29.
Earlier this week, Hungarian daily Magyar Nemzet published an article claiming that a Hungarian citizen currently part of the US Federal Bureau of Investigation (FBI)’s witness protection program may be a key figure involved in embezzling EU funds in Hungary.
The man, who has since been revealed to be the 37-year-old Péter András Fay (pictured above), is accused in Hungary of having committed money laundering in 2014.
According to the paper, which is owned by media oligarch Lajos Simicska, PM Viktor Orbán’s friend-turned-enemy, Faidt is of particular interest to the FBI due to his role in a larger scheme that has reportedly siphoned 3-4 billion forints of EU funding out of Hungary and into Arab and Asian bank accounts.
To briefly summarize, the FBI believes that EU money is being withdrawn from banks in Hungary, then taken to banks in the Middle East and Asia, where it is then transferred into a non-traceable form of cash, usually diamonds. These, in turn, are then used by Arab investors to purchase real estate, hotels, and palaces, which are essentially a way to funnel money back to Fidesz politicians in exchange for their help in securing EU grants for companies. The point, in all of this, is to break the line of custody over the money, and in effect to make it untraceable.
According to Magyar Nemzet, the FBI suspects that much of the money was withdrawn from the Magyar Kereskedelmi Bank (MKB), a financial institution owned by none other than Lőrinc Mészáros, Orbán’s childhood friend who has gone frompipe-fitter to one of the richest men in Hungary in the years since Fidesz’s 2010 electoral victory.
One of the main reasons why Faidt is apparently of interest to American authorities is the fact that the way in which the EU funds are reportedly being laundered (the informal ‘Hawala’ system) is also often used to finance international terrorism.
Based on the man’s custody, the US asked Hungarians to investigate the issue; in response, however, investigators in Budapest claimed that they could find no evidence of wrongdoing.
At the same time, Faidt is, himself, as has been mentioned, a wanted man in Hungary, and is on an Interpol list under suspicion of money laundering. Despite this, however, Hungarian authorities have apparently shown no interest in interviewing the man in FBI custody, and have declined US offers to this effect.
In addition, last summer, US authorities requested the deportation of a number of Hungarian citizens suspected of fraud and money laundering. While the deportations received court approval, however, they never actually took place, reportedly due to an intervention on the part of the Ministry of Justice.
Magyar Nemzet claims that, based on information the paper received from America, these were some of the same people involved in transporting the illicit EU funds on the first leg of their journey—specifically, they would deposit 5-6 million euros worth of cash in empty apartments in Vienna.
This latest report of supposed links between the smuggling of EU funds and Viktor Orbán’s ruling Fidesz-KDNP is just the latest in a series of corruption scandals that have been linked to the ruling party. Earlier this year, Orbán’s son-in-law was accused by the EU’s anti-fraud office of being involved in corruption related to contracts awarded for an EU-funded street lamp project; likewise, Transparency International and other groups have noted that Hungary has had an inordinately high percentage of EU grants being awarded with only one bidder. In particular, some critics expressed concern that
Viktor Orbán could use the EU “as a cash register.”
In addition, the government’s earlier Residency Bond system, a program that allowed wealthy foreigners to essentially purchase a permit of permanent residency from the government in exchange for a deposit of 300,000 euros. The program was suspended last year after issues came to light surrounding government-linked companies that were issuing these bonds.