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Opposition Demands Compensation And More Information On Queastor Scandal

Tamás Székely 2015.03.25.

The opposition Együtt (Together) party said that the victims of the Quaestor brokerage scandal should be compensated up to 6 million forints (EUR 19.770) per capita from the funds of the central bank. Deputy party leader Levente Pápa responded to central bank deputy governor László Windisch’s announcement that the bank would initiate compensating investors who subscribed “fictitious bonds” issued by a member of the Quaestor group from the Investment Protection Fund (Beva). Levente Pápa said the announcement demonstrated that central bank governor György Matolcsy shifted responsibility for his mistakes and Quaestor CEO Csaba Tarsoly’s crimes to decent, law-abiding and well-functioning businesses in the capital market while spending 300 billion forints (EU 988m) on his foundations and “other fairy tales”.

The green opposition LMP said the government and ruling Fidesz were only pretending that they were tough on those who commit financial fraud and in reality “they are cleaning up Quaestor in front of our eyes”. Party lawmaker Erzsébet Schmuck and economic policy expert László Heltai said that money was still being rescued from Quaestor despite the fact that two weeks have passed since the scandal broke out. According to LMP, the Quaestor group had many links with the Orbán government and it was central bank governor György Matolcsy’s responsibility that the financial supervisory authority allowed the issuance of uncovered bonds for years.

The National Bank of Hungary (MNB) said it would initiate with the Investment Protection Fund (BEVA) the compensation of investors who subscribed “fictitious bonds” issued by a member of the Quaestor group, László Windisch, the bank’s deputy governor, said. In an investigation conducted earlier in March, the MNB, in its capacity as financial market watchdog, found that Quaestor had sold 150 billion forints (EUR 455m) worth of securities over the approved limit in a 70 billion forint bond issue programme. In the course of a legal analysis, the central bank found that because client money was transferred in the framework of an investment service, it “qualifies as an activity insured by Beva”, Windisch said. Central bank governor György Matolcsy said that recent scandals at brokerages Quaestor and Buda-Cash were not on a scale that would present systemic risk to Hungary’s financial sector.

Meanwhile the opposition Socialists (MSZP) have called on the Foreign Ministry to make public its assessment reports made in preparation for a decision to withdraw the investments of the National Trading House from Quaestor. In a letter written to Foreign Minister Péter Szijjártó, Attila Mesterházy, a Socialist member of Parliament’s foreign affairs committee, said that the ministry could this way demonstrate that “their money was not rescued on the basis of insider information from friends”. He added that it was important to know whether the ministry was hiding vital information from the public when the National Trading House had cancelled its account at Quaestor just four days before the company announced bankruptcy.

The Foreign Ministry said that neither the ministry nor institutions linked to it had been in possession of insider information on Quaestor’s financial situation and they were not hiding any such information. The Ministry could not see in advance that Quaestor would file for bankruptcy but the management of the National Trading House noted that clients’ confidence was shaken in brokerages after the bankruptcy of Buda-Cash and Hungária Securities and a significant part of Quaestor’s clients were withdrawing their money. In reaction, the trading house’s management decided that it was safest to withdraw the trading house’s funds from Quaestor.

via photo: Tamás Kovács – MTI