Borvendég Zsuzsanna
The ages of the impexes
CONTENTS, PREFACE
Contents
PREFACE
THE RISE OF HUNGARIAN INTELLIGENCE
SOCIALIST COMPANIES
Trusts and "impex" companies - the economic lobby
The secret side of foreign trade
Rival secret agents
Military opportunities
Civilian intelligence "strikes back"
Internationalist finances
"Constitutional" corruption
Secret party funding
One foot in capitalism - the joint ventures
EMBARGO CHANNELS VIA HUNGARY
Waltham-Videoton cooperation
Videoton and the United States
Waltham Electronic GmbH
Videoton in the "Sahara"
Elektromodul and its contacts
Semiconductors from the East
ON THE TRAIL OF MILLIONS OF DOLLARS
Origins of hard currency accumulation at Mineralimpex
The scandal erupts
István Russay, Ministry of Interior agent
Heinrich Korzil's secret ties to the Red Army
Oil affairs in socialism
"Traitors" in the oil business
American "brothers"
Giants in the background
The arrival of international investors
Emigration as trump card
The kidnapper's loan
Changes of personnel and continuity
Succession battles
Collection time for the state
All quiet on the eastern front
Epilogue
CONCLUSION
BIBLIOGRAPHY
Archive sources
References
APPENDIX
Abbreviations
INDEX
Preface
...
The materials for this book were primarily found in the Historical Archives of Hungarian State Security [Állambiztonsági Szolgálatok Történeti Levéltára, ÁBTL]. The documents on counterintelligence, as well as intelligence, were particularly important in compiling the stories. I am convinced that evaluating and interpreting these resources requires a different approach to examining the materials of Division III/III of the Ministry of Interior. While we can only look at the stories in the civilian intelligence documents through the distorted eyes of a state political police always suspecting and looking for enemies, some of the materials left behind by the divisions conducting secret service tasks in the traditional sense have more reliable value as sources, since the survival of this system was subject to intelligence and counterintelligence providing the most accurate information possible to the senior leadership on the areas they monitored and the events they learned about. I draw attention in particular to the Daily Operative Information Reports [Napi Operatív Információs Jelentések, NOIJ], which are of outstanding value as sources among state security documents. These strictly confidential reports were prepared by state security from 1979, initially to provide daily information to senior officials at the Ministry of Interior, then for an increasingly broad range of leaders. This means that deliberate misreporting and falsification of information are much less likely here as the documents were prepared for use in-house by those controlling the system. These short and concise summaries focused on factual information and recorded a given matter from beginning to end during the 1980s, so we can pull together the main thrust of stories where the operative files are perhaps still classified for reasons of national security. Some of the documents on the economic crimes committed under the cover of Mineralimpex are examples of this. Although they are not yet managed by the archive, a significant portion of the events can be reconstructed with the help of other sources.
The task of intelligence at that time was split between the State Security Division of the Minister of Interior and Military Intelligence Division 2 of the General Staff of the Hungarian People's Army, but the documents of this latter organisation are not available for research, so some of the events described here and the mapping of the links between them are, inevitably, somewhat one sided: we can only examine the events from the perspective of an institution that was frequently a rival. Antagonism between the civilian and military intelligence services marred the relations between the two bodies even prior to 1956, and this did not change during the Kádár era. Since counterintelligence was only practised within the Ministry of Interior, which for many years also handled the internal audit of military intelligence, conflicts of interest were unavoidable. What is more, the investigations into major economic corruption also fell under the purview of counterintelligence, so the investigating authority was far from impartial when revealing the illegal activities of a rival organisation. It is for this reason I endeavoured to interpret the documents of this type with a highly critical eye, and in the knowledge that future research will no doubt refine our understanding in this area.
In writing this book, I used sources from the Hungarian National Archives [Magyar Nemzeti Levéltár Országos Levéltára, MNL OL] with particular regard to the accounting documents of some state companies and sources created by the Hungarian Foreign Trade Bank. The company documents of Mineralimpex examined in the third chapter of the book are stored in the National Archive, but are not currently available for research, so I was unable to use them. I was only able to refer to documents held by the Historical Archives of Hungarian State Security in analysing the operations of the company and its subsidiary in Vienna.
The stories related in the book are just the partial results of ongoing research. The revealed links and examples provided to corroborate them are by no means complete, but they outline a path of research which is worthwhile and - I believe - necessary to continue pursuing. The book attempts to reconstruct the role of Hungarian intelligence during the Kádár era in acquiring goods subject to the Eastern Bloc embargo, and in circumventing the COCOM list, as well as providing some insight into the magnitude of the economic crimes committed from time to time in that period. We will discover how Hungary participated in the games behind the scenes that played out between East and West during the years of the Cold War, to the mutual satisfaction of both sides. We learn about the essence of accumulating hard foreign currency, the concept of "constitutional cost", and how the secret commission system worked through the involvement of various intermediaries, which were initially companies owned by western communist parties, before increasingly becoming Hungarian joint ventures too. I am able to illustrate this mechanism in tangible form by presenting the foreign currency accumulated by Mineralimpex over 15 years.
There is of course a historical background stretching right back to the end of 1944 that led to the intertwining of the communist secret services and party rule after 1956, as well as to the associated abuses of power. The first party companies were established in Hungary in December 1944 behind the front lines and were set up to finance the coalition parties. Back then, there was even competition among the political players to operate cinemas, which not only generated income from this activity but also provided a funnel for their propaganda. Not long thereafter, fierce rivalry broke out between the Communist Party and the social democrats for control over the oil fields in Zala county, but illegal economic activity can be identified in the early workings of the state political police too. In 1946, the Economic Policing Department [Gazdaságrendészeti Osztály] set up the National Trading Company [Nemzeti Kereskedelmi Rt.] as a joint-stock company, which supplemented the budgets of the state political police and the Communist Party mainly from profits derived from cigarette smuggling. These foreign trading joint-stock companies were terminated after the wave of nationalisations, but the now-ruling Communist Party still needed an illegal source of funds: smuggling remained part of the system until the very end, with the methods refined as time went on. Based on the latest research in the archive, this book presents various aspects of the links between those in power, the secret services and the black economy at the time of the Kádár regime.