Update to HUN36401.E of 22 February 2001 on the extent of organized economic crime; government actions to combat organized crime and corruption; state protection available to those threatened or victimized by organized crime (March 2001-May 2002) [HUN38872.E]

Organized Crime

According to statistics on crime for 2001 released by the National Police Headquarters, the number of criminal acts perpetrated by organized crime groups "quadrupled" and, in some counties, increased twenty times (Magyar Hirlap 19 Dec. 2001).

In a 3 December 2001 article, Magyar Hirlap, a Hungarian newspaper described as "an influential center-left daily," made reference to a law against organized crime. According to a report by the police analysis and co-ordination directorate, the implementation of the law reduced "the scope, the market opportunities and the level of the activity of organized crime groups ..." (ibid. 3 Dec. 2001). For information on the structure and methods of organized crime groups in Hungary, please see the attached article of Magyar Hirlap dated 3 December 2001.

In April 2001, the Co-ordination Centre Against Organized Crime started its activities under the supervision of the Interior Minister (Commission of the European Communities 13 Nov. 2001, 84). Chaired by the Criminal Director of the Hungarian National Police Headquarters, the Centre is mandated to co-ordinate investigations conducted by different state bodies into organized crimes activities (ibid.). Its mandate also includes the collection, the analysis and the processing of public and secret information on organized crime gathered by law enforcement and national security services (ibid.). The Centre also has a co-ordinating body consisting of the deputy chiefs of the Customs and Finance Guard, Border Guards, Tax and Financial Control Office and the national security services, and representatives from the Chief Public Prosecutor's Office and the National Council of Justice (ibid.). For more information on the Centre, please see the attached article by Nepszabadsag.

Reporting on the "mafia case" in Szekesfehervar (western Hungary), Hungarian Radio indicated on 27 February 2002 that the Central Investigation Department of the Prosecutor's Office had laid charges against 23 individuals, including police officers, lawyers, a prison officer, a prosecutor and a prosecution investigator. The charges comprised bribery of officials, abuse of authority, document forgery, economic crime and violation of state secrets (Hungarian Radio 27 Feb. 2002).

In a 2 October 2001 dispatch, Hungarian Radio makes reference to Peter Tasnadi, who has been accused of "the establishment of criminal organizations, grievous bodily harm committed as an instigator for mean reasons, blackmailing, taking the law into his own hands, abuse of fire arms, embezzlement, tax fraud and crimes committed with foreign currencies." The accused was placed in preliminary custody two and a half years ago (ibid. 2 Oct. 2001). According to Agence France Presse, Tasnadi's trial, which started in April 2001, is Hungary's first trial based on a 1997 law on organized crime (24 Apr. 2001). Commenting on the case against Tasnadi, Judge Agnes Czine acknowledged the difficulty for the court to convict Tasnadi in part because of Hungarian courts' lack of experience in this type of case (ibid.). In what AFP describes as "an unusual move," a five-member panel was appointed to judge the case while the normal practice provides for one judge (ibid.).

In an effort to crack down on organized crime, the Budapest police reportedly raided more than 250 bars and night-clubs allegedly controlled by organized crime groups in July 2001 (The Budapest Sun 12 July 2001). Eleven of 58 people arrested in the raids already had outstanding arrest warrants and Ft. 12 million [CAN$60,888 (Bank of Canada 12 July 2001)] in fines were assessed for tax fraud and customs irregularities among other illegalities (ibid.). According to a Budapest police spokesperson, the operation involved 80-85 police and was assisted by personnel from the tax, public health and customs offices (ibid.). The spokesperson also claimed that the actions taken by the police had "intimidated" some organized criminal groups (ibid.).

On 10 May 2001, The Budapest Sun reported the arrest of six members of two criminal groups by the National Police Directorate Against Organized Crime. The groups were allegedly involved in a credit card fraud that caused damages of 12 million forints, [CAN$62,964 (Bank of Canada 10 May 2001)] (The Budapest Sun 10 May 2001).

No information on state protection available to those threatened or victimized by organized crime could be found among the sources consulted by the Research Directorate.

Money Laundering

In its 2001 report on Hungary, the Commission of the European Communities stated the following:

As for the acquis on money laundering, new legislation adopted at the end of 2000 prohibits the opening of anonymous savings books and the deposit of additional funds into existing ones, and requires customer identification for withdrawals. However, these new provisions will only enter into force upon Hungary's accession. While the stock of anonymous savings deposits has decreased during the latest years the remaining deposits still amount to approximately 600 million [euros]. As a result of the present situation, Hungary was added to the list of non-co-operative countries and territories in June 2001 by the Financial Action Task Force (FATF), an international body set up to promote the fight against anti-money laundering. In October 2001, the Government submitted a bill to Parliament, which aims at meeting the FATF recommendations. If adopted, this bill would considerably strengthen the fight against money laundering by accelerating the conversion of anonymous savings books into registered accounts. It would also tighten regulations and identification and reporting requirements with respect to beneficial ownership, funds handled by non-financial institutions such as certain liberal professions, the transfer of cash across the border and currency exchange.
...
Hungary's legislation on money laundering already provides a good basis for alignment, provided that the pending legislation on money laundering is adopted. The phasing out of anonymous savings books should be brought forward. A financial intelligence unit with 10 staff members has been operating within the Organised Crime Directorate of the National Police since 1994. The unit receives approximately 1,000 suspicious transaction reports per year. So far, 9 cases have been prosecuted. The financial intelligence unit needs to be strengthened further. Hungary needs to ensure compliance with the recommendations of the Financial Action Task Force and should seek its removal from the FATF's list of non-co-operative countries as soon as possible (13 Nov. 2001, 46).

As a result of its plenary meeting in early February 2002, the Financial Action Task Force (FATF) praised Hungary for adopting almost all the legislative and regulatory measures that the FATF was considering necessary to fight money laundering (Tax-News.com 19 Feb. 2002). In particular, there is a reference to a law on money laundering that came into force in January 2002 (Magyar Hirlap 18 Jan. 2002). For information on this law, please see the attached Magyar Hirlap article dated 18 January 2002. According to Laszlo Balogh, the government commissioner in charge of the campaign against money laundering, the FATF is expected to determine in June 2002 whether or not Hungary should be removed from the list of "non-cooperating countries" (ibid.).

According to Magyar Hirlap, the number of alleged money laundering cases for the first quarter of 2002 almost equals the number of such cases reported in 2001 (23 Mar. 2002). Commenting on the implementation of the law on money laundering, Laszlo Balogh indicated that investigations into ten cases of money-laundering had been initiated between early 2000 and November 2001 (ibid., 18 Jan. 2002). Out of the total, two cases were brought to courts (ibid.).

Corruption

At a press conference where 2001 police statistics on crime were presented, Lt-General Peter Orban, the national police chief, announced that the police had reported approximately 1,500 corruption cases, which amounts to a 20 per cent increase (Magyar Hirlap 19 Feb. 2002). Among state officials, the number of corruption cases grew threefold (ibid.).

In its 2001 Corruption Perceptions Index (CPI), Transparency International (TI) ranked Hungary in 31st place (out of 91) with a 5.3 per cent CPI score (15 Oct. 2001, 234). The 2001 CPI score ranges between 10 (highly clean) and 0 (highly corrupt) (ibid., 236).

In its 2001 report on Hungary, the Commission of the European Communities stated the following:

Anti-corruption measures
Although the fight against corruption remained high on the political agenda of the Government, corruption continued to be a problem, as also pointed out in last year's Regular Report. To address the issue, the following steps were undertaken during the reference period:
- The Government approved a long-term anti-corruption strategy containing modifications to existing laws and a completely new law on lobbying activities. The package covers, among other things, regulations on incompatibility and the extension of the property declaration obligation. Persons responsible for bribery have to be dismissed. Those who pay the bribe ("active briber") may escape prosecution if they detect the bribery and closely co-operate with the authorities. A special body will monitor the enforcement of the forthcoming anti-corruption strategy.
- Parliament adopted stricter conflict-of-interest regulations according to which high-ranking civil servants and their families will have to give an account of their assets annually. Cases raising suspicion will be followed up by a Public Service Control office under the authority of the Ministry of Interior.
- Parliament also amended the law regulating MPs' asset statements. The amendment obliges MPs to make annual asset statements and to include in them all sources of their income.
- Within the Hungarian police forces a mobile unit was created to combat bribery of police officers on street duty. Their task is to detect and report on officers claiming bribes from citizens and to start disciplinary action or criminal proceedings against them, which would then be pursued by the General Prosecutor's Office. In 2000, around 800 such cases were detected.
- Hungary ratified the Council of Europe Criminal Law Convention on Corruption in November 2000

.

Hungary is also member of GRECO (Council of Europe Group of States against Corruption), which has made provisions in its statute for regular evaluation of its member countries. As such Hungary is currently being evaluated. Hungary is also participating in the monitoring of anti-corruption measures effected by the OECD Working Group on Bribery in international commercial transactions.
Hungary has not signed the Council of Europe Civil Law Convention on Corruption.
In spite of these developments, there is a continuous negative background of corruption which could undermine the trust of the citizens in the democratic institutions (13 Nov. 2001, 18-19).
... The amended penal code introduced criminal liability of heads of businesses in connection with bribery of foreign public officials and fraud affecting the European Communities' financial interests. Furthermore, the concept of passive bribery of foreign national public officials was made punishable. As a result, public officials of international organisations and officials of a foreign country will have to face the same punishment as Hungarian public officials in case of both active and passive bribery. In November 2000, Hungary ratified the Council of Europe Criminal Law Convention on Corruption.
...
Staff at the Security Service of Law Enforcement Agencies of the Ministry of Interior that is responsible for the prevention, detection and investigation of corruption cases within law-enforcement agencies have been increased by 86%. A new work programme has been adopted for the prevention of corruption of staff of law-enforcement and public-safety services. Within the police, a specialised mobile unit has been set up to detect street corruption of police officers. Their tasks include detecting and reporting of officers taking bribes from citizens and starting disciplinary action or criminal proceedings against them. In 2000, a total of 800 such cases were detected, 200 of them by this unit. Training in this area also continued. In order to strengthen the fight against money laundering, the Financial Intelligence Unit within the Hungarian National Police was further strengthened through the recruitment of additional staff (ibid., 84).

In the section on corruption of their 2002 commercial guide for Hungary, the US and Foreign Commercial Services and the US Department of State stated the following:

Corruption is not pervasive or institutional within the GOH [Government of Hungary], although some foreign companies have complained about incidents of corruption or illicit influence in government administration. Taking bribes is a criminal offense, and media scrutiny is high. Hungary signed the OECD Anti-Bribery Convention in December 1997, and incorporated its provisions into the penal code effective May 1, 1999. The Ministry of Justice has agreed to incorporate further OECD recommendations into the penal code in 2000.
The Hungarian Parliament passed conflict of interest legislation in early 1997 that prohibits members of Parliament from serving as executives of state-owned companies (1 Aug. 2002).

This Response was prepared after researching publicly accessible information currently available to the Research Directorate within time constraints. This Response is not, and does not purport to be, conclusive as to the merit of any particular claim to refugee status or asylum. Please find below the list of additional sources consulted in researching this Information Request.

References


Agence France Presse (AFP). 24 April 2001. "Hungary Starts First 'Mafia' Trial." (NEXIS)

Bank of Canada. 12 July 2001. "Currency Converter." http://www.bank-banque-canada.ca/en/exchform.htm [Accessed 16 May 2002]

_____. 10 May 2001. "Currency Converter." http://www.bank-banque-canada.ca/en/exchform.htm [Accessed 13 May 2002]

The Budapest Sun. 12 July 2001. Eszter Balazs. "Mafia Crackdown." http://www.budapestsun.com/full_story.asp?ArticleId={D8ACD245B9104CBFAE67105886D95CD1}&From=News [Accessed 10 May 2002]

_____. 10 May 2001. "Six Face Jail After Card Sting." http://www.budapestsun.com/full_story.asp?ArticleId={2A4158F840F0490CBD6A34C0027A9CA8}&From=News [Accessed 10 May 2002]

Commission of the European Communities [Brussels]. 13 November 2001. 2001 Regular Report on Hungary's Progress Towards Accession. http://www.europa.eu.int/comm/enlargement/report2001/hu_en.pdf [Accessed 13 Nov. 2001]

Hungarian Radio [Budapest, in Hungarian]. 27 February 2002. "Charges Brought Against Civilians, Officials in Hungarian 'Mafia Case'." (BBC Monitoring 27 Feb. 2002 /NEXIS)

_____. 2 October 2001. "(Corr) Hungary: Mafia Crime Suspect Wins Libel Suit Against National Police." (BBC Monitoring 2 Oct. 2001/NEXIS)

Magyar Hirlap [Budapest, in Hungarian]. 23 March 2002. Ildiko Nagy. "Reports on Suspected Money Laundering Cases Multiplies in Hungary." (FBIS-EEU-2002-0326 23 Mar. 2002/WNC)

_____. 19 February 2002. Zoltan Gaal. "Number of Corrupt Hungarian Officials Trebled, Police Statistics Show." (FBIS-EEU-2002-0220 19 Feb. 2002/WNC)

_____. 18 January 2002. Peter Szakonyi. "Hungarian Government Commissioner Views Anti-Money Laundering Law." (FBIS-EEU-2002-0118 18 Jan. 2002/WNC)

_____. 19 December 2001. "Hungarian Police, Interior Ministry Report Different Crime Figures for 2001." (FBIS-EEU-2001-1219 19 Dec. 2001/WNC)

_____. 3 December 2001. "Hungary: Police Detail Methods, Funding Sources of 72 Organized Crime Groups." (FBIS-EEU-2001-1203 3 Dec. 2001/WNC)

Tax-News.com 16 February 2002. Ulrika Lomas. "Switzerland Praises Hungary Over Anti-Money Laundering Campaign." http://www.tax-news.com/asp/story/story_print.asp?storyname=7358 [Accessed 13 May 2002]

Transparency International (TI). 15 October 2001. Robin Hodess, Jessie Banfield and Toby Wolfe (eds). Global Corruption Report 2001. http://www.globalcorruptionreport.org/index.htm#download [Accessed 13 May 2001]

US and Foreign Commercial Service, and the US Department of State. 1 August 2002. Hungary Country Commercial Guide FY 2002. Prepared on 15 July 2001. http://www.buyusa.org/hungary/en/index.php?page=105 [Accessed 13 May 2002]

Attachments


Magyar Hirlap [Budapest, in Hungarian]. 18 January 2002. Peter Szakonyi. "Hungarian Government Commissioner Views Anti-Money Laundering Law." (FBIS-EEU-2002-0118 18 Jan. 2002/WNC)

_____. 3 December 2001. "Hungary: Police Detail Methods, Funding Sources of 72 Organized Crime Groups." (FBIS-EEU-2001-1203 3 Dec. 2001/WNC)

Nepszabadsag [Budapest, in Hungarian]. 10 April 2001. "Hungarian Anti-Mafia Center Opens for Business." (FBIS-EEU-2001-0410 10 Apr. 2001/WNC)

Additional Sources Consulted


IRB Databases

LEXIS/NEXIS

Internet sites including:

European Union Accession Monitoring Program (Eumap.org)

Europol

Financial Action Task Force on Money Laundering (FATF)

Interpol

Radio Free Europe/Radio Liberty (RFE/RL) [Prague]

United Nations Crime and Justice Information Network (UNCJIN)

United Nations Office for Drug Control and Crime Prevention (ODCCP) [Vienna]