Although only an estimated 32,000 people lost out, it seems nearly everyone in Budapest knows someone who was touched by the scandal. The memory of this loss may not go away.

The Hungarian National Bank and the Investor Protection Fund (Beva) are working to cover the savings lost, and an April 7 proposal may see the amount of compensation raised, but as of this writing, most investors were only covered for €20,000 each.

Investors take risks, and they even have to be aware of the risk of fraud – which is apparently what caused the recent collapse of three brokerages. But what really stings about the Quaestor case is the way that officials apparently knew about the problem. It’s also kind of troubling to find out that the foreign ministry is playing the market with taxpayers’ funds.

Magyar Nemzeti Kereskedőház Zrt. (MNKH), a state company overseen by the foreign ministry, had signed an agreement with the brokerage arm of the Quaestor group in March 2013 and had assets amounting to HUF 3.9 billion at the troubled brokerage house. Apparently MNKH was also involved in a joint venture with Quaestor CEO Csaba Tarsoly, who is now in custody awaiting trial on fraud charges.

MNKH managed to pull all its assets out of Quaestor, reportedly on March 9, just hours before the brokerageʼs license was suspended, preventing others from withdrawing their deposits.

Given this timing, it’s hard to avoid the impression that the government was aware of the situation, and that officials saved state investments instead of warning ordinary Hungarians who had invested in the firm. And yet, officials deny having obtained and acted upon illegal insider information.

Tarsoly has said he wrote to both Minister of Foreign Affairs and Trade Péter Szijjártó and Prime Minister Viktor Orbán to ask them to help prevent his firm’s insolvency. When it became clear that the government had pulled out of Quaestor just before it went under, Orbán claimed that he had decided to get out because of the problems at Buda−Cash brokerage, which went under shortly before Quaestor.

As more questions arose, and even cabinet chief János Lázár could not spin the story, Orbán promised to explain everything on April 2. But he happened to be in Kazakhstan on April 2, and we’ve yet to receive the promised explanation.

Aside from asking what officials knew when, it is also worth asking why the foreign ministry, which is supposed to be operated out of the regular state budget, has extra money that it can use to play the market. This is a risky, and perhaps legally questionable, way to handle taxpayers’ money.

There seems to be an attitude in the government that officials have a lot of leeway as to how they use state funds. This approach was demonstrated when the government declared that the Győr ETO football team, which was owned by Quaestor, would be spared liquidation because it is of “national importance”.

The government and the football team were protected, but a lot of hard−working people – middle−income voting people – suffered a big loss. If the government cannot show that it acted appropriately in the matter, it may find that its losses were only delayed, until election day.

Source: BBJ.hu

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