Scandal at the Hungarian Red Cross
A Hungarian Red Cross director appointed to put the organisation in order had only just been hired when she was summarily dismissed,apparently because he was uncovering earlier management failings at the organisation.
© Fazekas István
"After my appointment, I learned of several matters that were damaging the HRC. There was tax fraud, there were fraudulent contracts and illegal activities," she wrote in a document handed out to people arriving for the HRC's board meeting. In her summary, she writes that the cost of the various illegal activities she had uncovered ran to Ft104m. At the meeting, it rapidly emerged that it was impossible to discuss the 2008 budget, since the previous year's budget had not yet been drawn up. Czimbalmos dismissed the finance director for his tardiness. Board members were not surprised by the budget problems, since as vice-president Marta Nemesvari said: "It wasn't long ago that we would pass closing figures when they weren't real numbers."
The irregularities did not emerge over the past nine months. "We've been having problems dealing with donations for at least 10 years. There are real problems with managing and auditing the activities of the county branches," Istvan Buzasi, president of the HRC in Veszprem county admitted. The State Audit Office also criticised the HRC's management and accounting problems in a report in March 2006.
© Végel Dániel
The board voted 12 to 6 in favour of dismissing the director immediately - bringing the irregularities to public light. The organisation must now explain how Veszprem county's Ft41m deficit is being covered. Expert assessments indicate one reason for the organisation's debts is that an old people's club built using Ft13m of subsidies and Ft1m in own resources is running at a loss. But nobody knows if the national organisation's contributions to the county organisations were loans - and, if so, when they will be paid back. No contracts have been found.
The director, who was appointed last summer, also discovered that the organisation has failed to account for donations sought after the December 2004 tsunami in the far east. Some Ft760m was received in donations, of which the HRC spent Ft603m. A community house was built in Sri Lanka and a pediatric wing was built in a hospital in the Indonesian town of Banda Aceh. Except that Sri Lanka's honorary consul, Mr Nanayakkara, who managed the construction works, has not sent any documentation relating to the $108,000 the organisation provided. There are similar failings in the case of the pediatric hospital, where the missing money runs to E30-40,000 - and nor has the contractor, Austria's Vamed, met its promise of sourcing as much of the medical technology as possible from Hungary.
A further Ft2.5m in losses come from payments the HRC made in August 2006 to PolgArt Publishers. The agreement was for the publisher to produce a book entitled Tsunami about Hungarian activities in the areas affected by the catastrophe. But the project stalled and the publisher went bankrupt before a single line of the prepaid volume was written.