A suitcase full of cash from the Solntsevo Mafia: does Putin have a video kompromat on the Hungarian leader?

Today Vladimir Putin is arriving on an official visit to Hungary, where he will meet Prime Minister Viktor Orbán, one of the European leaders seen as among the most loyal to the Kremlin. As The Insider discovered, one of the reasons for his loyalty might be a video with compromising info on Orbán, filmed back in the mid 1990s by crime kingpin Semyon Mogilevich. As a result, the Russo-Hungarian friendship is growing, while money from joint contracts flow to opaque offshore accounts.

In 1998, when the leader of the Fidesz (Hungarian Civic Alliance) Viktor Orbán was first elected Prime Minister, unlike his predecessors, he skipped visiting Moscow and often chastised Russia, particularly after Vladimir Putin came to power. For example, in 2007, Orbán harshly lambasted the Government for being «blind» to the «growing influence» Russia wielded via its vast energy giants, and suggested that Hungary should play it European. “Those young people following us should not allow Hungary to become Gazprom’s most cheerful barracks,” said Orbán, alluding to Hungary’s pre-1989 status as “Moscow’s most cheerful barracks.” In 2008, he continued to criticize the Kremlin, calling other European governments “Moscow’s puppets,” and deeming the endorsement of the “South Stream” project by the previous government as high treason.

Suddenly in 2009, everything changed. Orban unexpectedly showed up at the “United Russia” convention in Saint Petersburg, where he met Putin. He immediately ceased criticizing Russia, and a year later, when Orbán became the Hungarian Prime Minister, he became one of the key Putin apologists in Europe. Whatever happened to Orbán in such a short period of time? Could it be the arrest of criminal kingpin Semyon Mogilevich in Moscow, that influenced the Hungarian leader?

A suitcase full of cash

In reality, the story began way earlier, back in the mid 1990s. We learned about it thanks to a German journalist, Jürgen Roth, who managed to loosen up the lips of businessman Dietmar Clodo and to get him to talk (Roth published their conversation in his recent book “Dirty Democracy.”) Clodo is a German national who in his youth was involved with RAF (Red Army Faction, a leftists terrorist organization, which was active in Western Germany in the 1970s.) He also founded the SAS Security Company, which provided protective escorts for cash transportation and security services in Germany, France, and Russia. In the 1990s, Clodo lived in Budapest and was a section chief of the Hungarian Commercial and Industrial Chamber. Clodo spent eight and a half years in Hungarian jail for bomb manufacturing (he claimed to be innocent) and was released in 2011. He allegedly had ties with various intelligence services. He met Mogilevich through Sergei Mikhailov’s (Mikhas’, one of the leaders of the Solntsevo mafia) nephew, whom Clodo in turn met in Afghanistan. Here is a written statement (an affidavit) signed by Dietmar Clodo (The Insider has a copy):

“In the 1990s I lived in Budapest, where I was doing consulting and owned a private security company SAS. There I met a well-known businessman Semyon Mogilevich. We established relations of trust, partially because both of us were religious Jews. In the mid 1990s, actually between 1993 and 1996, he asked me to hand over cash to various people. One of them was Sándor Pintér (the current Hungarian Minister of Interior Affairs, The Insider.) At that time I only knew that he was a senior police officer and that he was working for Mr. Mogilevich. I was officially introduced to him later, after he quit his job with the police. It happened in 1996/1997. Semyon Mogilevich asked me to hand him money, and I did so. It was clear to me that these people were influential. For me Sándor Pintér was just one out of many corrupt people to whom I handed envelopes with cash on behalf of Mogilevich. He and other people used to come to my home on Meggy Utca 19, in the third district of Budapest. They used to take money in envelopes, 10,000 Deutsche Marks each. This practice continued through 1996, later the money was transferred through somebody else. Once in the spring of 1994, on the eve of the parliamentary elections, Mogilevich’s interpreter brought me a suitcase with almost one million Deutsche Marks.

This money was supposed to be handed to a young man. However, the young man refused to enter my home. I told him: “Listen, I have the suitcase with the damn money, and I am not going to step out to the street with this cash. If you refuse to enter, I’ll give the suitcase with the million back to Mr. Mogilevich. I don’t care.” He went up to my place with another older-looking gentleman, and I handed over the suitcase with cash. I didn’t care who he was. Only after the parliamentary elections I realized that the young man was Viktor Orbán from the Fidesz. Mogilevich called it “a crucial contribution to the electoral campaign.” Other people who regularly visited me to collect their fees include László Tonhauzer, who at that time was the head of the Budapest Police Organized Crime Division, former Senior Police Investigator István Sándor, and László Juszt, an influential media man.

The main reason why I was assigned for this money-transferring task was the fact that I had nothing to do with the Russians, and as the international section chief of the independent Hungarian Commercial and Industrial Chamber I was seen as a serious man. I declare, under penalty of perjury, that I was telling the truth.

Regensburg

06/15/2016»

Dietmar Clodo also gave an interview to the Austrian TV channel ORF, in which he said that in the 1990s, Sándor Pintér was receiving 10,000 Deutsche Marks monthly for “Hungarian police turning the blind eye on the Mogilevich’s scheming with Ukraine and Russia.” The criminal kingpin’s main office was located in Budapest.

Former Hungarian education minister Bálint Magyar, who wrote the famous book “Post-Communist Mafia State: The Case of Hungary,” revealed corruption schemes to The Insider that the ties between Sándor Pintér and Dietmar Clodo were long known: “We had suspicions about these ties back in the 1990s. In 1998, the party “Alliance of Free Democrats” even held a press-conference on the corrupt links between Sándor Pintér and Dietmar Clodo.”

However, Hungarian politicians and law-enforcement officials deny any knowledge of Dietmar Clodo. Back in 1999, Sándor Pintér declared to the Hungarian media that once he was present at business negotiations where Dietmar Clodo’s wife was a secretary, but it was a coincidence. Yes, he has heard of this man, but hasn’t met him personally. Government spokesman Zoltán Kovács refused to comment to The Insider on the information regarding these corruption links.

Clodo’s accusations are easy to ignore, since he is a man with a questionable reputation. However, the tables would be turned if these charges can be verified with documents. And Mogilevich would be the man who could have such evidence.

The real reason why the envelopes with cash were supposed to be handed over inside Clodo’s house and not outside was not because he was afraid about the money being stolen. A hidden camera, “as a precautionary measure,” recorded the procedure of money transfer, and the films were handed over to Mogilevich.

Photo of that hidden camera published in local press in 1999

Mogilevich's deal

Semyon Mogilevich moved to Budapest in 1990 and lived there through the early 2000s (his home was located 300 meters from the Russian Embassy.) He managed to take control over an armaments factory during the period of privatization in Hungary by using various schemes. According to the FBI, his main business was money laundering for the Solntsevo crime syndicate.

Mogilevich is currently one of the FBI’s top ten most wanted criminals . He attracted the attention of the FBI, the Italian police, and Swiss law-enforcement agencies back in the 1990s, and in 2003, Interpol included him on the international most wanted list. As a result, he moved from Budapest to his Moscow suburban dacha and has not left Russia since then. The Mogilevich issue was raised again in 2000, when a Ukrainian Security Service (SBU) major Melnichenko made his famous tapes public: in one of his recorded conversations with former President of Ukraine, Leonid Kuchma, former head of the SBU Leonid Derkach mentioned that, though officially Mogilevich lived in Hungary, “he became a neighbor of (the Russian Communist leader) Gennady Zyuganov, whose Moscow suburban dacha was adjacent to that of Mogilevich.” Responding to Kuchma’s surprised reaction, Derkach specified: “well, he maintained good relations with Putin from the Leningrad times.” “We should be careful about him,” noted Kuchma. Meanwhile, in 2005, the SBU mysteriously destroyed the Mogilevich file.

In the first stage of his new Moscow life, Mogilevich didn’t face any challenges. According to 1998 FBI info, he owned the luxurious Balchug-Kempinski hotel, located right next to the Kremlin. Today the Balchug-Kempinski belongs to an offshore company, and according to Fox, a Slovakian company wants to buy it. The Swiss Service for Analysis and Prevention (DAP) (currently a part of the Federal Intelligence Service (NDB)) suspected that Mogilevich had colluded with Russia’s special services. Here is what a DAP report said in 2007:

It is long presumed that many organized crime leaders were protected by the state agencies, i.e. the FSB. For example, Semyon Mogilevich, one of the most powerful honchos of Russian organized crime, has been wanted by the FBI since 2003 for fraud and money laundering. Russian law enforcement agencies have never bothered him. He was allegedly present at the Russian-Ukrainian negotiations on natural gas supplies. So far none of the organized crime leaders have been prosecuted in Russia, and not because of lack of evidence against them. Quite the opposite: the leaders of criminal organizations enjoy protection at the very top level.”

However, in 2008, after this report was written, Mogilevich was arrested in Moscow, not as a result of an FSB request, but for tax evasion in relation to the “Arbat Prestige” case. Mogilevich spent a year and a half in jail, and was released in June under written undertakings not to leave Moscow. Soon the case was closed “due to insufficient crime elements.” Dietmar Clodo believes that in order to secure his release, Mogilevich yielded some of his assets and shared his documents compromising Viktor Orbán with the Kremlin.

“Unfortunately, Orbán is a puppet today, who follows Putin’s instructions,” – commented Clodo to The Insider. He believes that Mogilevich, in exchange for his freedom, handed over the compromising tapes to the former FSB Director Nikolai Patrushev. At any rate, Orbán was suddenly invited to visit Moscow right after Mogilevich’s arrest, and this was the exact moment that Orbán made a sharp U-turn in his policies.

The Solntsevo Mafia and restoration of the Monument to Suppression of the Budapest Uprising

One of the testimonies of friendship between Orbán and Putin was the decision to restore monuments to the Soviet soldiers in Budapest: those who liberated Hungary from fascists and those “who perished while suppressing the Hungarian Uprising of 1956.” It should be noted that in Communist Hungary they used the term “uprising,” while after the fall of Communism, Hungarians define this event as the “1956 Revolution.” In order to understand the significance of this event for the Hungarian people, one should read the national Constitution, which stated: “our present freedom is grown from the soil of the 1956 Revolution.”

The Insider reporter failed to find a single supporter of the Russian World in Budapest. Hundreds of thousands of people left Hungary to Europe and the U.S. after Soviet tanks cruelly suppressed the mass protests. They lived in refugee camps; almost every family in Hungary was impacted by the tragedy. Some of the refugees and their descendants returned to Hungary after 1989. No one regrets the “uprising” even though it was unsuccessful. The Hungarians love to talk about the “Goulash Socialism” of János Kádár. It is widely believed that after the bloody events of 1956, the Communist dictatorship became significantly milder in Hungary, and some elements of the market economy were allowed. Some Hungarian historians, like Andreas Oplatka, believed that Hungary started its countdown to capitalism in 1956 since “after the Revolution, only the facade of Socialism was preserved.”

What really counts is not the fact that a Soviet monument was restored, but who did it. It was done by a “respected (in the criminal world)” businessman Andrei Skoch, who, like Mogilevich, is closely associated with the Solntsevo mafia. In 2012, Skoch restored monuments to the Soviet soldiers who “perished while suppressing Hungarian Uprising of 1956” in a joint effort with the Russian Foreign Affairs and Defense ministries In 2015, Skoch succeeded in his endeavor, and his files incriminating his ties with organized crime mysteriously disappeared under unexplained circumstances from the DGSI (The General Directorate for Internal Security of France) archives. However, this incident became well known, and the agency has launched an investigation of the case.

In 2012, Skoch made an entry in his LiveJournal blog, which was later removed, describing his “noble” mission to Budapest: “Both sides agreed that not only the cemetery was to be restored, but the reputation of the Russian state as well. The restored memorial will be a symbol of total mutual understanding of the most complicated historic events, and openness of the Hungarian government would certainly improve relations between both nations on a state level.” So far, the “total mutual understanding” faces challenges. In 2015, when Putin laid a wreath to the monument for those who died during the suppression of the “Hungarian Uprising,” a scandal erupted. The Hungarian media have accused the Fidesz government of violating the Constitution.

The Joint Business

It can’t be ruled out that the Kremlin never used the Mogilevich compromising documents against Orbán, and might be not even aware of it, and Orbán’s visit to Moscow was a simple coincidence. However, the Kremlin uses not only the stick, but the carrot as well. Russia has been actively developing an economic cooperation with Hungary, and both Hungarian and Russian taxpayers benefit from it. Since he became Prime Minister, Orbán had repeatedly met with Vladimir Putin.

«…Put aside principles, ideologies and look at the interest... that’s the Hungarian approach; …You should know that the Crimea issue is a complicated international law issue... the EU…needs a free trade zone from Lisbon to Vladivostok.» - said Orbán in an interview to Politico after Putin’s visit to Hungary in 2015. He also indicated that “sanctions are not the proper way” in dealing with Russia, though he admitted that he did not intend to veto the renewal of the sanctions on Russia.

On the eve of Putin’s visit to Budapest today, Hungarian Foreign Minister Péter Szijjártó noted that “international sanctions have seriously impacted the relationship between Hungary and Russia.” Besides the sanctions, there is another important subject: the Paks nuclear power plant enhancement worth €10 bln. This project is funded by Russia: this is officially a credit. The Hungarian government, in order to secure the nuclear power plant success, has introduced a tax on solar batteries.

Bálint Magyar firmly believed that both leaders have a share in this deal. He pointed out that when the government of Hungary spoke for enhancement of the Paks nuclear plant, Rosatom had already been selected for this project without any bidding, while the contract documents were classified for 30 years. When the European Commission opened an in-depth investigation for the deal had opaque nature. The Hungarian government argued that the investigation had “political undertones.” As a result, the investigation brought no results. Magyar has explained: EU has no supranational bodies to investigate corruption: there is the European Anti Fraud Office (OLAF), however its task is to assist national agencies to fight corruption. In other words, Hungarian officials were the ones who were in charge of the European Commission investigation: exactly the same people who were suspected in corruption.

Not only did the nuclear plant deal raise concerns, but other energy contracts as well. 50 bln. HUF (€161 million) were diverted to a Swiss intermediary MET Holding AG account. The identity of its true beneficial owner is remains a mystery.