More details surface about the malfeasance scandal of the Hungarian National Bank foundation – UPDATE

Hungary’s State Audit Office has flagged potential malfeasance in the management of the National Bank’s foundation assets, citing opaque dealings and major financial risks involving public funds.

Potential malfeasance

Telex reported that the Hungarian State Audit Office (SAO) has uncovered severe financial mismanagement in the handling of the Hungarian National Bank’s (MNB) foundation assets, highlighting potential malfeasance. According to a draft report obtained by Direkt36, the Pallas Athéné Domus Meriti Foundation, established under former MNB Governor György Matolcsy, and its asset management company, Optima Investment Ltd., engaged in high-risk and opaque financial dealings.

The SAO found that nearly HUF 500 billion (approximately EUR 1.25 billion), largely sourced from taxpayers, was channelled through an intricate corporate network, obscuring the real value of assets. Furthermore, investments in foreign real estate firms led to significant financial losses, while entities linked to Matolcsy’s son, Ádám, appeared to benefit from these transactions. The report also raised concerns over governance failures, including a lack of oversight and control mechanisms within the foundation.

Further investigation needed

As scrutiny intensifies, the National Bank of Hungary, now under new leadership, has initiated an internal investigation into the foundation’s dealings and potential malfeasance. Meanwhile, the Neumann János University Foundation, which was involved in financial transactions with Optima, denied any wrongdoing, insisting that bond redemption negotiations remain ongoing.

Transparency International Hungary’s legal director, Miklós Ligeti, criticised the timing of the SAO’s investigation, arguing it should have commenced in 2016 when the Constitutional Court ruled that the MNB’s foundation assets constituted public funds. The findings raise broader concerns about potential financial improprieties, including embezzlement or misappropriation, and highlight the need for further legal scrutiny.

Keeping things from the public

As mentioned, the SAO report outlines concerns over opaque financial structures, risky investments, and potential losses amounting to hundreds of billions of forints. Telex notes that PADME has fiercely opposed the report’s release, citing national security risks, potential economic repercussions, and threats to Hungary’s international standing.