Russian spy chief, oligarchs and Kremlin operatives accessed Hungarian cash-for-residency program

Hungary served as a key gateway to the European Union for a growing number of Russian spies, oligarchs and Kremlin political operatives, thanks to the sale of residency bonds between 2013 and 2017. A joint investigative report by the 444 news site, Direkt36 and Russia’s Novaya Gazeta, published in both Hungarian and English, shows that Russian citizens who should have raised national security concerns in Hungary were being granted full access to the EU by Hungarian authorities, in exchange for cash. This story first broke early this year and we covered it in HFP. Thanks to a follow-up report, we now have specific names of prominent and often questionable Russian nationals who bought their way into the EU, via Hungary.

Hungarians celebrate Vladimir Putin and Russian influence on the streets of Budapest. Photo: MTI.

Vladimir Blotskiy, a Member of the Duma and prominent businessman, was among those to be granted residency in Hungary, along with his family. Mr. Blotskiy’s name appears in the so-called Paradise Papers–a documentary collection of data on prominent politicians and businessmen with secret off-shore accounts and networks. Mr. Blotskiy claims that he ultimately ceded his right to take up residency in Hungary after he was elected to the Duma in 2016.

Far more troubling is the fact that Hungarian authorities gave residency to the son of Sergey Naryshkin, the head of the Russian Foreign Intelligence Service (SVR — Sluzhba vneshney razvedki). The SVR’s mission is to engage in espionage activities outside the Russian Federation and to collect foreign intelligence. Mr. Naryshkin’s son, the 39 year old Andrey, was a participant in Hungary’s cash-for-residency program. Sergey Naryshkin appears on an EU list of sanctioned Russians, for having supported the invasion of Crimea. 

Among Hungary’s clients was businessman Dmitry Borisovich Pavlov, who is believed to be affiliated with organized crime in Russia. In November 2017, when Mr. Pavlov celebrated in his fiftieth birthday party in Moscow, a bloody shoot-out ensued, injuring six people. Mr. Pavlov was feted by a crowd of Russian crime lords, alongside members of the Duma. Hungarian authorities, apparently, were unconcerned.

Another name that causes alarm is that of Evgenii Evstratov, the former deputy head of Rosatom, which is leading the contentious expansion of the Paks nuclear energy plant in Hungary. Mr. Evstratov was arrested on charges of embezzlement (2.7 million euros) and was imprisoned for three months before the criminal case was dismissed. It would appear that Hungarian authorities ultimately rejected Mr. Evstratov’s application, as the applicant was deemed to be “politically exposed.”

A handful of other prominent Russian businessmen applied and were approved for Hungarian, and by extension, EU residency.

The Hungarian cash-for-residency program was implemented by Fidesz, without proper vetting or debate, less than two years after returning to power. It proved such a grave scandal, that the government cancelled it in 2017. Residency bonds were sold for 250,000 euros, but in an outrageous move, Hungary would return these funds to the applicant after five years, even though third party firms, often off-shore companies tied to key Fidesz political elites, managed these bonds and served as intermediaries. The firms collected service fees for this work, ranging from 40,000 to 60,000 euros per bond and often purchased the bonds from Hungary at discounted rates. All the while, Hungary and Hungarian taxpayers would remain on the hook for the full amount five years later. Some 20,000 such bonds were issued and will have to be paid back through taxpayer generated funds in the coming years, while the third-party offshore firms that profited will likely be long gone.

On Monday, the Democratic Coalition turned to the European Commission, noting that “the Hungarian government has allowed criminals, terrorists and spies on European Union soil.”

This is the narrative that combines Fidesz’s propensity for systemic corruption with its ties to the most disturbing elements in Moscow–including both the criminal underworld world and the Russian security establishment. The European Union, and specifically the European People’s Party, turns a blind eye at its own peril.

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