Having taken over a reserve of 200 billion forints from former mayor Istvan Tarlos in 2019, current Budapest Mayor Gergely Karacsony and his leftist circles may have spent the sum on their own cronies.

The key figure in the City Hall scandal has disclosed some shockingnew details in an audio recording, whose transcript was obtained by the Hungarian daily Magyar Nemzet. Gyula Gansperger lifted the lid on how the capital led by Gergely Karacsony manages public money and revealed the real financial situation of the Budapest municipality. Among other things, he unveils that Budapest’s left-wing leaders may have spent most of the two hundred billion Hungarian forints – left to his successor by former Mayor Istvan Tarlos – on their own cronies.

The daily recalls that leftist Gergely Karacsony’s activities as mayor were determined by his anti-government campaign and his ambitions as a prime ministerial candidate. In February 2020, shortly after taking office, he accused the government of „bleeding out” Budapest in the debate on the capital’s budget. The mayor claimed that the budget was stretched thin by the government, accusing the government of worsening the economic situation of municipalities by diverting local company taxes, depriving the capital of one hundered billion forints. Those who backed this move were not developing, but bleeding out the capital, he remarked.

Later, in November 2021, Gergely Karacsony’s cabinet turned to the ruling Fidesz-led government centre, to find out why the government wanted to bleed out the capital.

However, the real situation is quite different from what one would assume from Mr Karacsony’s accusations. In an interview with Index in November 2020, former Mayor István Tarlos clearly refuted his successor’s claims with concrete figures. He said:

„After having been out of office for over a year, I would not like to comment on what the current situation is regarding the capital’s resources. But I know exactly what we left behind: 160 billion forints in securities and 40 billion in cash as reserves. This is two hundred billion forints. Even though they say this goes into projects, they have no new projects worked out, they have only the projects that we had prepared, and left for completion. And, in terms of the EIB credit line that we left, we didn’t even call off half. You need to know about the debt we left behind – which is two and a half times lower than what inherited, when we took over – that it’s made up of development loans, which needn’t be repaid now. The earliest repayment term expires in 2030, but most of them need to be paid off in 2044 or 2049. Almost thirty years from now. So what we have is not what the majority believe, that 110 billion must be paid back right away. Instead, the loans must be repaid over 29 years.”

All in all, Mr Karacsony and his colleagues had a significant reserve of two hundred billion forints when they took over the capital in 2019 and they used up most of this money without launching meaningful new investments or development projects. Summarising the official data on the financial assets held by the municipalities in Budapest shows that the financial situation of the districts in Budapest remained stable all along – even during the coronavirus pandemic – while the budget balance of the Budapest municipality shows a deficit of 62.7 billion forints based on preliminary data for 2021. It can be established that between the end of 2019 and the end of 2021, the financial assets held by the Budapest municipality decreased by nearly 115 billion forints and would have reached a record low level below one hundred billion by 2022 if 65 billion had not been accessed in development loans at the end of 2021.

This begs the question of what Mayor Karacsony and his colleagues could they spend this huge amount on. The audio recording reveals that the key figure in the City Hall case – the „battlefield buddy” of former leftist PM Gordon Bajnai – was also looking for an answer to this question. „They have plenty of cronies,” he commented earlier.

The army of consultants around Gergely Karacsony make up a significant part of the cronies in question, costing up to hundreds of millions of forints a year to taxpayers in Budapest. Budapest Mayor Gergely Karacsony and his four deputies spent close to 400 million forints on consultants, hiring a total of 54 (senior) consultants in 2021. 47 of the consultants remained in employment for one full year, and were thus entitled to receive 12 months of salary.

The group of cronies is made up of old, entrenched leftist-liberal confidants, who already proved their loyalty to the party in the leftist-liberal Gyurcsany-Bajnai era. The circle includes Benedek Javor, who is not an advisor, but still receives plenty of money, courtesy of the leftist leadership, as Mayor Karacsony entrusted him with leading the Representation of Budapest in Brussels for a monthly salary of 990 thousand forints (2600 euros). Another important person is David Koranyi who, until the end of last year, worked as the mayor’s chief diplomacy advisor, earning a monthly 900 thousand forints (2400 euros).

Mr Koranyi created the US foundation called Action for Democracy, which transferred the bulk of the 4 forints that it received in donations to the Hungarian Dollar Left during last year’s general election campaign.

Balint Misetics, a prominent member of the Soros network in his capacity of an activist of the Varos Mindenkiert (City for Everyone) group, which is supported by the Open Society Foundations, also earns some 900 thousand forints at City Hall as the mayor’s chief advisor of housing and social affairs. The big fish, however, is Zoltan J. Gal, who was, among other things, state secretary under (disgraced former PM) Ferenc Gyurcsany back in the day. In 2021, he was the campaign manager of Gergely Karacsony’s prime ministerial campaign and is currently the mayor’s strategic advisor. As one of the most influential people at City Hall, Mr Gal was also responsible for the mayor’s Facebook posts, earning 1.15 million forints (3 thousand euros) a month.

So, the cronies’ upkeep costs a lot; it is expensive to pay off members of the leftist-liberal clique, as the key figure of the City Hall case may have implied. Later in the quoted conversation, he elaborated on City Hall’s position on the actual financial situation of the capital, indicating that cash government bonds worth 200 billion forints (some 526 million euros) had been left to the new, left-wing city government in 2019. He added that “there is 112 billion forints (294 million euros) in development loans on them, with the repayment of the first one to be started in 2030, obviously with an interest. The loan will have to be repaid between in 2030, between 2030 and 2040, in 2040, and between 2040 and 2050. So at the moment they have no debt service, no capital.”

He then outlined that, due to a drop in revenues from trade tax and from Budapest’s public transport company, City Hall has incurred a loss of about 25-30 billion forints (65-78 million euros). However, City Hall’s total revenue was more in 2020 than in 2019. So, even Mr Gansperger does not think that it explains the spending of the 200 million forints (or approx. 526 million euros) of reserves. When asked how City Hall had spent 526 billion euros worth of cash and government bonds, the key figure of the City Hall scandal answered succinctly, saying:

“F*ck knows.”

The quoted audio recording is part of a longer, almost 10-hour audio recording which was sent to the authorities in an uncut form by Anonymus, and which constitutes the investigation material of the City Hall case. The scandal erupted in Hungary after Anonymus, released several audio recordings to the public in the autumn of 2021. The recordings forwarded to editorial offices revealed that the leftist-liberal city management headed by Mayor Gergely Karacsony secretly planned to sell the extremely valuable City Hall building and the plot it occupies in exchange for several billions in bribe money. An individual with left-wing ties contacted investors from Russia, Italy, the US and Israel regarding the sale of the property. The negotiations with the Russian investors and their intermediaries were presumably recorded by one of the participants.

Based on the conversations, a well-defined circle of people emerged, specialising in real estate deals in the capital. This group operated a corrupt, so-called commission scheme, ensuring that certain individuals received kickbacks.

The Hungarian National Bureau of Investigation launched an investigation into the case, and the police interrogated three individuals on suspicion of influence peddling. Suspects in the City Hall case included two brothers, Zsolt Berki, considered a key figure behind the corruption scheme operating in the capital, and Jozsef Berki. Zsolt Berki approached some business circles well-known in Hungary in connection with the sale of the City Hall, while what is noteworthy about Jozsef Berki is the fact that he used to work for the late Socialist minister Peter Kiss at the time when the minister’s chief of staff was none other than Ambrus Kiss, who is currently one of Mayor Gergely Karacsony’s deputies. Police have questioned a crown witness in the case and the criminal proceedings continue, Magyar Nemzet writes.