Hungarian opposition tries to pin blame for brokerage scandal on Fidesz

By bne IntelliNews March 30, 2015

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The Hungarian LMP party announced on March 29 that it will submit a motion seeking a freeze of the assets of senior government officials who knew of the impeding bankruptcy of broker Quaestor but failed to act, as the ruling Fidesz party desperately tried to shake off blame for the country's brokerage scandal.

The green party's bill will be submitted as an amendment to a proposal by the ruling Fidesz government to be discussed by parliament on March 30 under which assets of business leaders will be frozen when economic crimes are suspected, according to MTI. The assets seized would be used to compensate the clients of Quaestor - one of three brokerages shuttered in recent weeks.

The Hungarian government denied on March 25 accusations of acting on insider information about the ongoing brokerage scandal when the foreign ministry withdrew state funds from Quaestor just days before it filed for bankruptcy protection and had its licence taken by the Magyar Nemzeti Bank (MNB).

Quaestor was the third brokerage whose licence has been revoked in the past few weeks. The MNB also suspended the licences of Buda-Cash and Hungaria Ertekpapir. The trio is suspected of fraud involving €1bn.

Prime Minister Viktor Orban said he had ordered all ministries to withdraw funds kept at brokerages following the collapse of Buda-Cash because of fears of a domino effect. Leftist opposition parties held talks last week to discuss a vote of no-confidence in Orban following the insider trading claims.

Andras Schiffer, co-leader of LMP, said that if Orban had known Quaestor was about to collapse and failed to pass that information onto the financial watchdog and the police, then he should be held responsible via his personal assets. Meanwhile, a Budapest court placed Csaba Tarsoly, erstewhile head of Quaestor who was detained on March 26, in pre-trial detention. 

The ongoing scandal has  become a political hot potato. After the Fidesz government took effective control over the central bank in 2012, the MNB took over the role of financial markets regulator. Now it is being held to blame for failing to supervise the brokerage sector properly.  However, the government and MNB claim that the Buda-Cash scandal developed under the previous Socialist administration, even though Fidesz has been in power for the past five years.

In a statement on March 29, the Fidesz accused the opposition of attempting to avoid responsibility for what it called the “Socialist brokerage scandal”. “Socialist politicians allowed financial corruption to strive untroubled for decades,” it claimed.

The Socialists, meanwhile, demanded the release of a letter sent by Tarsoly to Orban, as well as the minutes and recording of the February 25 cabinet session. That would shed light on whether a crime had been committed and prove the charge of insider dealing, they claim. 

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