Hungary's central bank has initiated a criminal complaint following an internal investigation into alleged misconduct related to its former leadership's dealings with Erste Group Bank AG. This complaint escalates an ongoing case that has already raised concerns about political pressure. Concurrently, the central bank also filed a police report concerning the renovation of its headquarters.
Further investigations have revealed significant issues within the central bank's foundation assets, managed by Optima Investment Ltd. A draft report from the State Audit Office of Hungary indicates that these assets may have suffered serious deficiencies and substantial financial losses due to risky investments. Optima allegedly operated through an opaque network of companies, engaged in overpriced property investments, and channeled some funds to companies linked to Ádám Matolcsy, the son of former central bank Governor György Matolcsy. Examples of these alleged overvalued investments include shares in GTC S.A. in Poland and Ultima Capital S.A. in Switzerland.
The new management of the National Bank of Hungary, led by Mihály Varga, has swiftly implemented personnel changes and launched investigations to ensure responsible management and increase transparency. They are actively exploring the sale of Optima's approximately 63% controlling stake in property developer Globe Trade Centre (GTC) due to a nearly 62% decline in GTC's share price over three years, reducing its market value to about $370 million. The central bank aims to divest from activities outside its core monetary policy functions, particularly given that prosecutors are scrutinizing deals from the previous governor's tenure.
The State Audit Office's draft report highlights that the foundation's operations and solvency were in immediate danger, proposing reforms to the asset management system. It notes that Optima raised nearly HUF 130 billion by buying bonds from the Neumann János University Foundation but was unable to repay them, potentially leading to further financial problems. The report also suggests that adequate control mechanisms were absent, and decisions were often made without proper financial planning, with some funds allegedly diverted to companies associated with Ádám Matolcsy's business interests, such as the BOKK investment in Balatonakarattya and the development of the Burg Hotel in Budapest.
