Vol 2, No 1
10 January 2000
C S A R D A S:
A Law Unto Themselves? White Collar Crime, the Police and Corruption in Hungary, Part Two
Part 1 of this article
Mr Tibor Karancsai, a former police officer in Békés county, decided to turn to the media with his story of collusion and illicit profits following his dismissal from the force on 16 September 1999 on the grounds of being unfit for office [for this and the events recounted, see HVG 2 October 1999]. "They are like snails," Mr Karancsai sneered on the subject of the failure on the part of his superiors to take action on the basis of his reports of wrongdoings in the past, "they have houses but no backbones". He accused officers in Békés county of being implicated in (or at the very least turning a blind eye to) the illegal activities of local entrepreneurs in the oil and alcohol sectors and claimed that representatives of the Mafia had tried to bribe him into silence by offering him a luxury car and a two-storey house with a garden (Mr Karancsi currently inhabits a 51 square metre attic flat and drives a small Polski) in exchange for his silence. The immediate counter charge, broadcast on breakfast television, came from no less a figure than Péter Orbán, national Police Chief. "We did not kick him out because he blew the whistle on oil-related cases, but because an independent court had found him guilty on four counts involving criminal charges". (These included violation of the privileges of office resulting in one year's probation and three offences expiated by fines).
Szeghalom, the scene of the occurrences, is a small town of some 10,000 souls. It is surrounded by the former sites of agricultural co-operatives where huge fuel tanks lie, linked to the outside world by both roads and factory sidings. The site at Macskás, near Füzesgyarmat, is a typical example of such desolately functional architecture. For years, a crop drying plant operated there, fuelled initially by oil, later by gas, a changeover which freed up oil tanks capable of storing several hundred thousand litres. It was here (on plot 0740/4 to be precise) that in February of 1995 Full Marker Ltd. registered its seat. Its owners, Mr János Gidai and Mr Miklós Farkas, founded the company with the declared intention of trading in vehicle fuel. Shortly after business was launched, on 15 February, the company changed hands, the two founders replaced by Mr Farkas's father and Mr Gidai's wife. Until February of the following year, however, Mr Gidai stayed on as manager. It was on 26 May 1995 that the fateful encounter with Tibor Karancsai took place.
The police officer was then head of the intelligence-gathering group within the local force. He and his men visited Füzesgyarmat in the morning as part of an investigation into a series of car break-ins. They stumbled upon ten railway container cars from which a petroleum product was being transferred into the on-site fuel tanks. According to the bill of lading, the product was designated as "miscellaneous fuel oil", originating from Slovnaft in Slovakia. At the same time, a different, unspecified product was being siphoned back into the railway tanker cars. The results of customs officials' laboratory analysis later showed that a form of acid treatment was being employed here together with mixing to create an end product similar to diesel oil from substances to which a low rate of taxation applied.
When the perpetrators were caught in the act, their documents as well as the suspect product were at hand. Mr Karancsi recalls that, on submitting his report, far from being praised for his initiative in bringing the facts to light, he received a reprimand from Lajos Kucsera, head of the Criminal Investigation Department. What business did he have visiting the site at Macskás? Customs investigators were responsible for dealing with such matters, not his unit. They would be contacted immediately, and the police would await their arrival in the local station offices rather than returning to the scene itself. Six hours elapsed according to Mr Karancsi's recollection before the customs officials turned up (although this was denied by Mr István Tibori second in command of the county's customs investigation office, who claimed that they set off as soon as they were informed of the circumstances).
By the time the customs officials set foot on the site, it was virtually deserted. One single broken down tanker was found. Karancsi managed to snatch one small victory from the jaws of defeat by blocking the path of the departing train, driving in front of the locomotive at a nearby level crossing. An examination of the documents revealed that the consignment, destined for ETL in Miskolc, contained a product subject to a higher rate of taxation than that declared at the time of customs clearance in Komárom, thus justifiably raising the suspicion of contraband. Although the matter was subsequently referred to the public prosecutor in Borsod county, it was never actually taken to court.
The oil itself, along with most of the documents, disappeared without trace. Mr József Ruzsinszky, in charge of running the site, conducted a successful defence at a later date by maintaining that he was ignorant of the exact contents of the various containers and that he was innocent of tapping the oil. This meant that the investigation concluded with the recognition that a crime had indeed been committed, but that individual responsibility could not be proven.
After having escaped scot free from this escapade, Messrs Gidai and Farkas continued to trade in fuel under the auspices of a new company, Garderfort Ltd. Fortunately for the customs officials who carried out a spot check on Garderfort Ltd, the contents of petrol pumps belonging to the company at Békéscsaba could also be analysed. Samples were taken simultaneously from the site in Macskás and the petrol station, refuting Gidai and co's averral that they were merely renting out their storage space at the site and had nothing to do with counterfeiting oil products since the substance found in the tanks proved to be identical to that found in the petrol pumps. The petrol station operator also admitted that he had received his fuel from Gardefort Ltd. On 27 October, charges of tax fraud and selling poor quality products were finally brought before court (though not without a struggle, as the City Prosecutor's Office in Gyula rejected the accusations and they had to be referred to the chief prosecutor of the county before the decision to proceed was finally taken).
János Gidai and his father-in-law, József Farkas, a lawyer (and relative of Miklós Farkas) refused to react to Karancsi's version of events. The lawyer could be drawn no further than to state that the documents brought before the court contain conflicting expert opinions concerning the confiscated oil derivatives.
Karancsi and his team also cast serious doubts on the honesty of another, more influential, figure on the business scene in Szeghalom, that of Mr Zoltán Árpád, owner of the distillery in Füzesgyarmat. In Tiszakürt (situated in the neighbouring county of Jász-Nagykun-Szolnok), Mr Árpád also has a plant that manufactures cheap liquor for commercial purposes on the basis of industrially-produced pure alcohol. Customs officers, acting on a tip-off from Karancsi, looked into the matter of extremely poor quality liquor of unknown origin that was being sold in local pubs. There were therefore good grounds to suppose that an illegal distillery was being run in the vicinity. It was found on a poultry farm and the equipment was confiscated together with the entire stock of alcohol. In the thick of the operation, a microbus arrived. In it, labels, bottle caps and several wads' worth of customs seals, which could only legitimately be used by A&L Ltd at the plant in Tiszakürt, were discovered.
The customs officials convinced by the damning nature of the evidence, forwarded it to the public prosecutor in Gyula. To their astonishment, they were subsequently informed that a supplementary investigation had been ordered instead of a bill of indictment being drawn up. It emerged that, following a house search, A&L's managers had lodged a complaint to the prosecutor to the effect that some of their accounts had been ignored. When the remaining evidence - comprising paperwork pertaining to the application for a licence to trade in products subject to excise duties - was released by the customs office in Békéscsaba it was found to refer to a quantity of alcohol that corresponded exactly to the amount (presumed to be illegal) uncovered in the poultry farm. This saved Árpád and his cronies from penalties more severe than a fine of a few tens of thousands of forints in spite of the fact that they had originally claimed to have made all their accounts available when they handed over the documents.
Árpád's business ventures were also being held up to scrutiny elsewhere. A&L was involved in exporting huge quantities of vodka into the former Soviet Union, and the Ukrainian security services, smelling a rat, requested the aid of the Hungarian police in calling Árpád in for questioning and seizing his accounts. In Tiszakürt, the officers from Kunszentmárton charged with pursuing investigations were informed that the documents were in Füzesgyarmat, whereas the team from Szeghalom was informed that the documents were in Tiszakürt. Curioser and curioser! However, one of the officers from Szeghalom, Attila Karakas, noticed a package of documents completely by chance and ordered an immediate search, which yielded precisely the documents sought after. On delivering them to the district police station he was not only chided for his actions by Imre Berke (sic!), but was disciplined for overstepping his mandate. It was only at the beginning of September of last year that the officer (who has since transferred to the army) was vindicated when an industrial tribunal announced that he had been entirely justified in his actions. The seized documents were returned on the basis of a prosecutor's decree without any copies having been made of them.
Genius Trade Investment, Árpád's one-person joint stock company based in Szolnok, has some interesting links to the police force in that city. One officer, Lajos Szántó, decided to become a member of the supervisory board. Árpád indirectly foots the mobile phone bill of the leading lights in the force. Eye witnesses report that both Lajos Kucsera, head of the criminal investigation department, and Lajos Szánto, head of the public order department in the Szeghalom force have been sighted on several occasions on the site at Macskás, that Szántó is a personal friend of Gidai's and that the oil trader played in the police football team (which, incidentally, has Full Marker emblazoned on its strips).
Further links are alleged to exist between important figures in the Békés country police headquarters and businessmen whose activities are dubious to say the least. The highest ranking of these was Mihály Kuzma, head of the department responsible for fighting organised crime, who - in the official version - committed suicide by shooting himself in the mouth on 27 February 1998. His daughter, Valeria, on Monday 21 September decided to prefer charges against unidentified perpetrators for her father's murder at the Metropolitan Attorney General's Office (subsequently referred on 27 September to the Békés county public prosecutor's office). The officer in charge of internal affairs, Gábor Dénes, hanged himself, whilst the officer who took Karancsi's report to the National Police Headquarters, the ORFK, also died by the bullet, again explained away as suicide.
Karancsi attempted to call for an official enquiry into the former police chief in Békés county, László Gál's role, suspecting him of corruption, but his efforts met with no success. Karancsi maintains that his then superior did not manage to set aside time to listen to what he had to say. Last summer, the Minister of Home Affairs, Mr Sándor Pintér, appointed Mr Gál as head of the internal affairs department within the Ministry (the Felügyeleti és Ellenőrzési Hivatal, which is, perhaps ironically, responsible for investigating police corruption!). On Kuzma's death, the heads of the ORFK tried to indict him, but the charges were quashed by the public prosecutor in the absence of any evidence.
There was no love lost between Imre Berke and Karancsi. On September 11 1998, Berke wrote in the assessment leading to a psychological examination to determine whether he continued to be fit for duty that Karancsi had always been diligent, enjoying the praise of his chief of police, but that his behaviour deteriorated after his appointment to head of department. From then on, according to Berke, he suffered from a surfeit of self-confidence, was overbearing and convinced that he was the best officer, hell bent on looking for the bad in everyone.
Whatever the truth of these statements, Karancsi's situation did not improve after lifting the lid on the strange goings on in the county. Driving with a friend off duty, his car tyres were slashed whilst the vehicle was parked outside a pub in Túrkeve. As he recalls, after having done the necessary repairs, he entered a coffee bar to wash his hands and was surrounded in a most intimidating fashion by a group of men. The only way he could escape was to grab one of them by the scruff of the neck and march him out, using him as a living shield. He was brought to justice on three counts, for which he paid fines amounting to HUF 30,000. Whereas the convictions were for rowdiness, the pub owner described what happened as a beating. Only a few hours later, at one a.m. in Püspökladány, he became embroiled in a scuffle with three Roma in the Oros restaurant. Karancsi showed his police badge and used his pistol to knock down two of his assailants, who were themselves armed with poles and iron bars. Chasing after the third as he took to his heels, Karancsi was again set upon, and fired three warning shots. This did not halt the brawl, and Karancsi ended up on the ground. Medical experts subsequently ascertained that he was struck at least eight times by the rods and was mercilessly kicked, so that his upper jaw became detached, tearing apart the roof of his mouth. As far as Karancsi is concerned, the attack was not a coincidence, but was a direct consequence of his investigations into the oil affair. This was not substantiated during the trial, as the three accused denied that the assault had been a put up job.
The verdict against the three Roma passed by the court of attempted manslaughter of an official was "toned down" after the appeal to grievous bodily harm placing the victim in mortal danger. The latter was then confirmed by the Supreme Court with the addition of armed assault in a gang against an official. The sentence passed was imprisonment ranging from two and a half to five and a half years. Under suspicion of rowdiness, Karancsi himself was the accused until the matter was clarified. On the fourth day of his treatment in hospital following plastic surgery, Karancsi's old friend Berke issued a caution against him for breach of the rules on availability whilst on call.
After eleven months on sick leave, Karancsi returned to work. Not quite one and a half months later, Berke took the initiative of calling for the psychological aptitude test. The result was favourable for Karancsi, but he was nevertheless dismissed on the grounds cited above. The final verdict will be passed by an industrial tribunal.
Part Three: The investigation begins.
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