Lothar Matthaus, the most recent manager of the Hungarian football team, was looking for a job in Brazil last week. But on Monday, his lawyer said the former German footballer's contract with the HFA did not expire until 2008. But Imre Bozóky, the departing president of the HFA insisted that Matthaus must have been referring to a draft contract.

This strange story highlights the chaos that has afflicted Hungarian football recently. Bozóky, who served as president from 1999, was recently attacked by István Kisteleki, the president of the Hungarian Football League (HFL) that represents professional football clubs. Matthaus's contract was the focus of his attack. An audit commissioned by the HFA came to the same conclusion, and this led to Bozóky's fall.

The circumstances of his fall are remarkable. The audit came to light during a December 20 meeting of the HFA's board. The next day, five of the HFL's delegated board members resigned. Two remained, Sándor Puhl, a former international referee, and Róbert Kutasi, manager of the the first division club REAC. These two ignored the agreement reached with the professionals and did not take part in the putsch, allowing the board to remain quorate. Only 61 per cent of the delegates voted against Bozóky in a confidence vote, short of the two-thirds majority needed to force him out.

But on January 3, two board members, delegated from the county football associations, which represent amateur players, announced that they were resigning. This brought the board below quorum, meaning it had to be disbanded and bringing Bozóky's presidency to an end. The audit report states that the HFA owes HUF200m in taxes and that a further HUF500m are unaccounted for. Only a third of Matthaus's annual salary of EUR300,000 is mentioned in his contract. The rest is paid by Kentaro AG, a Swiss company that acts as the HFA's exclusive consultant and sells viewing rights to the HFA's matches.

The report also criticises a contract signed with Péter Pellady's company Derball, under the terms of which Derball receives 30 per cent of sponsorship fees earned by the HFA. In 2004, the fees amounted to EUR363,000, and last year they reached EUR620,000. A further 20 per cent was transferred to Matthaus as a bonus. Partly as a result of this, the HFA suffered a HUF260.7m loss in 2004 and a HUF229.2m loss last year.

Bozóky described the leaking of the report as a personal attack, "Not a single forint was lost to the Hungarian game," he said, adding that Matthaus's fees were covered by an annual EUR100,000 grant from Arcadom Rt, a company linked to Sándor Demján. Bozóky seemed not to be bowed on leaving his post. He listed as his achievements improved training for trainers, better international relations, the renaming of the People's Stadium after the legendary footballer Ferenc Puskás and the HFA's anti-racism campaigns.

The claims of success seem exaggerated. Bozóky leaves the same rotten finances behind him as he encountered on his arrival, despite the consolidation the sport has undergone in the past 15 years.