At the Investment Migration Forum in Geneva, the Hungarian residency bond program was held up as the basket case of how not to do a residency permit program. The government managed the impossible:
- Sells access to the EU while bashing it on billboards,
- Doesn’t require any real investment, only a loan to the state at interest rates 6 times higher than market rates
- Lets in wanted criminals without background check – while claiming to protect from terrorism
- Makes its own peasants pay interest to the “investors” AND a 20% cut to the dealers (approx. 400 million euros and counting)
- …with no benefit to the country whatsoever.
Hungary is not the only country selling its access to the single market – while bashing it with all its might. Politicians’ can afford that split personality because voters don’t call them out on the contradiction.
But Hungary is the only one whose residency bond program brings literally no benefit to the country. It requires no investment, buying real estate, FDI – like countries tend to do – not even a night spent on Hungarian soil as a tourist. It just asks immigrants to lend the state 300 thousand euros in bonds for 5 years – at 6 times the market rates.
The program started in 2012 and belongs under propaganda minister Rogán and his business partners. It attracts potential security risks and costing a lot in interests and fees.
These bonds have cost an estimated:
– 9 billion forints (30 million euros) in interests, plus
– 113 billion HUF (377 million euros) in fees (20%)
to the Hungarian taxpayers to date.
The cut Rogán and his friends take is enormous. It is hard to justify the 60 thousand euro fee on a 300 thousand euro bond. Especially since the taxpayer is on the hook for not just their 20% fee, but also for the juicy interest rates these bonds pay (5-6 times the market rates of identical bonds).
They have no security check for applicants.
From the buyers’ point of view, it is the best. You (or your cash) won’t be checked, you don’t have to come to Hungary, you don’t even have to be able to point it out on a map. Small wonder, Hungarian residency bonds are the second best selling ones in China, after US ones.
Hungary doesn’t ask where your cash comes from.
Just take the widely publicized case of Gaith Pharaon, a Saudi arms dealer who had been wanted by the FBI for 25 years for financing terrorism. He has not only applied for and gained residency in Hungary without any background check, he even bought a villa next to Orbán’s.
PM Orbán lovingly called him “Professor Pharaon” on radio, while the wanted Saudi enjoyed a yachting holiday at the port of Rijeka with Orbán’s front, Lőrinc Mészáros, and did business with the head of Hungary’s biggest ever Ponzi scheme, Csaba Tarsoly. (The scheme collapsed and massive links to the government were uncovered and even confessed by Tarsoly, but no one feels like investigating.)
Pharaon died in January this year (his castle bought by the Orbán clan), but the story of his effortless entrance into the EU through the Hungarian residency bond program should not be forgotten. By the world, I mean. The Hungarian parliament has already buried the story, Orbán’s ruling party, Fidesz has voted against a committee on the case. Since then, investigative journalists revealed that even Pharaon’s early visa application explicitly stated that he is about to meet Viktor Orbán for business. He probably failed to declare the FBI bounty on his head, so… you know… Hungary is the protector of Europe from terrorism.
And Pharaon is just one of the people who walked into Hungary without even his fingerprint taken.
The program attracted 85% Chinese citizens, but Russians and Middle Eastern immigrants are also fond of it. Many follow up their bond purchase with real estate investment – pushing Budapest housing costs up and locals over the edge. This just happens to make Rogán’s other business very lucrative: his businesses buy downtown real estate from the state and sell it to Chinese and Russian investors in bulk.
The program is paused but it is customary to keep short breaks after big scandals or before elections, said industry experts.
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