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Budapest’s Investigative Committee Suspects Corruption in Former Fidesz Leadership Estate Dealings

Hungary Today 2022.04.22.

More than 1,200 municipality-owned apartments were privatized at a significantly discounted price in downtown Budapest between 2014 and 2018 during ruling Fidesz leadership, as concluded in the final report of the Budapest Assembly committee investigating potential corruption in real estate sales in the capital. The group examined the dealings of György Schadl, the key figure in the corruption case of former deputy justice minister Pál Völner (Fidesz) as case studies, and found that he may have used bribe money.

The corruption charges against Pál Völner hit headlines in early December. According to the prosecutor’s office, Völner had regularly received 2-5 million forints (EUR 5,400-13,500) from György Schadl, the president of the Hungarian Chamber of Bailiffs, who was arrested in early November. In total, the former deputy minister and state secretary is said to have been paid HUF 83 million, among other perks in order to appoint certain persons as baillifs, all supported by Schadl.

This investigative committee was set up by the opposition-led Budapest Assembly in order to review “suspicious” property sales of the various Fidesz-backed leaderships in the Budapest City Center. In particular, they paid special attention to Schadl’s local property dealings, who is known to have bought several properties in Budapest. Fidesz has boycotted the committee, while in the 5th district, still led by Fidesz, the ruling forces’ representatives voted down an inquiry committee.

Corruption in Budapest property sell-offs during Fidesz leadership?

According to the panel, a striking number of apartments in the 5th, 6th, 7th, 8th, and 9th districts, all led by Fidesz in the previous cycle, were resold at market value, just a few months after they had been bought at a discounted price from the municipality. As a result of the discounted rental house sales, suspected strawmen may have bought the flats instead of tenants.

In the 7th district (Erzsébetváros), for example, between 2015 and 2019, nearly half of the apartments bought from the municipality were sold within a year, and in 2017 and 2018, 27-30% of the properties were sold within 30 days, while it fell to 0 by 2020 (the year after the opposition’s take-over), according to the report of the committee chaired by Péter Niedermüller, Democratic Coalition (DK) mayor of the district.

In addition, there has not been a comprehensive real estate management concept either in the 5th district, or the 7th district (before 2019), and it is not clear on what basis the properties to be sold were chosen.

The committee therefore concluded that real estate sales were not determined by needs of the districts, but rather by the purchasing intentions of individual buyers close to the governing party and its holdings. On top of that, tender information was mainly available only through connections, as calls were published in local papers and in the pro-government media for only a few days, with little information.

Schadl case: Eight suspicious purchases from bribe money?

The committee also looked at Schadl’s property dealings as a case study.

According to their findings, Schadl bought eight apartments in Erzsébetváros from the municipality for a total of HUF 225 million (EUR 606,000), while he was the only bidder in seven of them, and even paid before the municipality had actually made the decision on the sales. He then quickly sold two of the eight apartments and the others are under renovation. The group also suspects that Schadl may have paid this amount out of his bribe money, amounting to a total of HUF 800-900 million, as the crime investigation now stands.

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The panel now recommends Mayor Gergely Karácsony to involve the State Audit Office in the investigation, and they are calling for a general city-wide investigation covering all district councils.

The report is expected to be put on the agenda of the Municipal Assembly at the end of April.

featured image illustration via Tibor Oláh/MTVA

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