American influence in Hungary (1)

During the regime change, SZDSZ (Alliance of Free Democrats political party) was the party with the strongest set of international connections. They used these opportunities to both smear their opponents and collect campaign funds. We will now introduce, with documents and writings, the smaller-scale version of the contemporary American fundraising tactics from Budapest Mayor Karácsony and failed PM candidate Márki-Zay. In our series of articles, we will reveal how the appearance of foreign financial entities funding political parties and then their participation in privatization has been a left-liberal model used back in the 90s already. Another pillar of foreign influence in Hungary was the establishment of a network of non-governmental organizations and their continuous funding from the United States.

For months not, the “dollar liberals” controversy has been preoccupying the public.There had been rumors surrounding this, but around the end of the summer, Péter Márki-Zay himself admitted that they had received hundreds of millions from abroad – in fact, later it turned out to be 1.8 billion forints (4.3 million euros). The money was gathered by a foundation started by none other than Dávid Korányi, Budapest Mayor Gergely Karácsony’s chief adviser and a long-time reliable member of the Soros network. As the left-liberal podcast from online portal 24.hu said: “This overseas relationship… according to opposition folklore, was previously under Gergely Karácsony. …But since that project collapsed for various reasons… this system found its way to Péter Márki-Zay.” 

Since the regime change, this is an unprecedented volume and intensity of foreign election interference; however, the financing of left-liberal politics from abroad is not without precedent. Former Prime Minister Gordon Bajnai and politician Viktor Szigetvári regularly pop up in the current ongoing affair, but they have long-been beneficiaries of the Center for American Progress, an institution supported by George Soros, receiving hundreds of millions of dollars since the establishment of their Együtt (Together) party , after the fall of the Bajnai government and through Bajnai’s Haza és Haladás (Patriotism and Progress) Foundation.  

Pioneers in American money: SZDSZ 

“We received funding from an American foundation, but at the same time, this funding can be seen fully on our bank accounts. US law strictly prohibits the support of political parties through foundations. Foundations that support political parties lose their tax breaks,” Tibor Vidos, executive secretary of SZDSZ told MTV (Hungarian public broadcaster) News on January 3, 1990. What he did not mention was what was revealed in 2011 by Átlátszó, the independent investigative online portal: according to this report, SZDSZ was the first Hungarian party in 1989 (!) to gather donations from the USA. 

It is worth noting that 33 years ago they had already developed a very similar model to support Hungary’s leftist-liberals. On the exact same day, November 20, 1989, both Vidos, on behalf of SZDSZ, and future president of the party János Kis, on behalf of the European Hungary Foundation, entrusted The Bancroft Group LP with fundraising. The documents proving this are still available today. What is particularly interesting is that SZDSZ had to report the identity of its “agent” to the US Department of Justice as according to the 1938 Foreign Agents Registration Act (FARA): 

 

János Kis, on behalf of the European Hungary Foundation, entrusted the Bancroft group with the exact same responsibilities as did SZDSZ. 

 

The foundation also “confessed” in the American justice register at that time, near the end of 1989, that they were financed by “János Bródi” and “Mihály Korniss”. Obviously in the case of a typo this would refer to the famous musician and acclaimed author – as online publication Heti Válasz noted in October 2015. Incidentally, according to the newspaper, the lobbying contracts were in effect until January 25, 1994 – so roughly until the start of the second free electoral campaigns.  

But how and why did Bancroft Group LP come into the picture? A certain man by the name of Fred Martin is the answer to this; he was a campaign advisor for SZDSZ between 1989 and 1990 while also president of the Bancroft Group. In 1990, Martin provided a detailed description of his campaign experiences to the New York Times. In fact, later on, Bancroft got involved in Hungary’s privatization. The very fast-paced privatization that served mainly foreigners and was most heavily promoted by none other than SZDSZ. 

Just two examples: in January 1995, the Romanian Magyar Szó newspaper reported that, 

US President Bill Clinton announced on Friday (January 13, 1995 - ed.) that the Washington government would provide support in the form of loan guarantees for the establishment of two funds worth a total of 340 million dollars to promote further investments in Central and Eastern Europe… Another fund to be created under the management of the Bancroft Group which is based in Washington and specializes in investment consulting, has a share capital of 100 million dollars and will make direct capital investments in the processing and service sectors of the countries concerned, including Hungary and in private and privatization companies. 

And lo and behold, on December 2, 1996 Magyar Nemzet reported that, “Digital 2002 Rt, which provides local telephone services in the Vác and Gödöllő areas, along with Déltáv Rt, service provider for the Szeged and Szentes regions, have added new shareholders. Alongside the old owners – French CGSAT and Israeli Giltek – GE Capital owned by General Electric, Budapest Bank, the Bancroft Group (USA), France-based Part’Com, Chase European Equity Associates, and Austria’s Raiffeisen have joined the ranks as well.” 

It is thus clear that the appearance of foreign financial entities funding political parties and their participation in privatization is a longstanding left-liberal model stretching back to the 1990s. In the next part of our series, we will further dissect the source and fate of the foreign funds flowing into SZDSZ as well as how Hungarian policies could be shaped in exchange for overseas dollars. 

Photo: Péter Márki-Zay (Photo: Árpád Kurucz)