Hungary’s Ill Fortunes

Vagyonregeny. Ipszilon-tortenet (Fortune Novel: Y Story)
By Istvan Kerekgyarto 354 pages, Budapest: Magveto, 2000, 1st ed. (in Hungarian)

As ordinary Hungarians have become poorer with the advent of the market economy, they have witnessed the spectacular — and inexplicable — rise of a small class of megarich. How these individuals came by their fabulous wealth has been the object of constant popular speculation. That their fortunes could not have been amassed so quickly by legitimate means is one of the few topics on which broad swaths of the Hungarian public agree, even without the benefit of documentary evidence.

An assessment of Hungarian inequality uttered by one of the main characters in Fortune Novel: Y Story touches a raw social nerve in Hungary:

It was then that I broke off my contacts with several old acquaintances of whom I had been quite fond…. They included a few university lecturers, a doctor involved in research — who, of course, could not depend on income from his patients in the form of "gratitude payments" — two sociologists, an architect… and a few teachers. To cut a long story short, every last one of them earned a pittance. From 1990 onwards whenever we met the only topics of conversation were how poor they were and the "bastards," a term encompassing everyone who made a better living than they did — in other words, businessmen and politicians. It also covered those of us who finessed a pretty penny from the fringes of privatization.

In his successful first novel, Istvan Kerekgyarto, a privatization consultant, entrepreneur, and lecturer in economics, initiates Hungarians into the world of back room machinations, mafia heavies, and shady dealings that many have suspected but few have seen. Fortune Novel traces the phenomenon of spontaneous privatization, whereby key figures in the enterprises themselves, in the absence of an existing regulatory authority, decided how to privatize state companies and factories. The story begins with the distant days of 1989, when political parties emerged from their semilegitimate underground status, and ends in 1997, by which time the market economy was firmly established. According to official figures, 1,859 state companies valued at 1.67 trillion Hungarian forints ($26.5 billion at 1990 exchange rates) awaited privatization in 1990. Although only 2.5 percent of state enterprises fell under the category of spontaneous privatization, the excessive appropriation of income in these cases captured the media’s imagination and molded public perceptions, perhaps irrevocably.

Fortune Novel is a somewhat schizophrenic work in which the main events are revealed through alternating accounts of the two main protagonists, Anna and Kata. Each comments on the other’s version of events, which are in turn analyzed by an outside observer, a researcher whose brother-in-law found the separate stories by chance in a vacuum cleaner dust bag. Anna writes her confessional in the wake of a nervous breakdown induced by the crumbling of her business interests. It charts Anna’s progress from philosophy student, to prominent local administrator under communism, to value appraiser, and then to the exalted status of company owner, an advancement that is achieved at the price of her marriage, her health, her integrity, and her friendship with her erstwhile business partner, Kata.

What lends the novel plausibility is the wealth of detail concerning the business practices in which the characters indulge. Kata uses connections from her university days (the Hungarian elite is small and incestuous) to identify individuals open to bribery by virtue of the meagerness of their salaries. One of these is her friend Anna, whom she entices into a partnership both by flaunting her own wealth and by underscoring Anna’s bleak prospects if she were to continue her old career. As a consultant, Kata buys insider information from low-level employees within the nascent privatization authority and ensures that her firm is included on its official list (a system launched in 1991 and abolished in 1994).

Historically, these consultant firms then carried out the privatization of their client’s companies unimpeded by outside influence. The less scrupulous concluded secret contracts in which they were awarded a share in the privatized enterprises alongside the hefty success fees. In return for their services, the mentors also expected gourmet meals in the most expensive restaurants, jewelry, antiques, bogus jobs for their spouses, education in foreign boarding schools for their children, and invitations to lecture in exchange for huge fees. Similar means were employed to snare appraiser contracts, a lucrative undertaking spawned by the newly privatized banks’ urgent need to determine whether goods and properties put forward as collateral for loans actually existed and, if they did, whether their actual value bore any relation to what was claimed.

The final stage of Anna and Kata’s partnership involves a transition to ownership. This goal is achieved by procuring a list of firms about to go on sale from an individual in the upper echelon of the privatization authority and by partnering with two businessmen, who raise the cash for the bank loan (with the extra precaution of bribing a member of the bank’s credit approval committee) in exchange for the money back with interest and the assets of the privatization deal that most interest them. Throughout the novel, the position of the two protagonists is precarious: They prosper only until elbowed out by multinationals with whose vast wealth and prestige they cannot compete, making them the villains of the piece to Anna’s mind. In actuality, Anna’s downfall (following Kata’s death in a traffic accident) results from being ripped off by her most trusted employees in a perpetuation of communist-era practices in which theft and dishonesty were indispensable to survival.

The second part of the book, uneasily grafted to the first, presents two alternative scenarios for Anna in the wake of her downfall, a bifurcation that accounts for the subtitle, Y Story. The reformed Anna (whose road-to-Damascus change of heart is never entirely convincing) is plunged into destitution, whilst the feisty, depraved Anna soars triumphant from the ashes to purchase a seat in Parliament. In a setup as corrupt as that prevailing in Hungary, it is the wages of repent-ance, not sin, that lead to ruin.

The author succeeds in unmasking privatization, showing it up for the shabby, sordid patchwork of small-time fraud it was and shattering Hungarians’ illusions about conspiracy on a grand scale. With their ruthless amorality, callousness, self-centeredness, and snobbery, the characters represent everything the general public disapproves. Kerekgyarto’s story offers ordinary citizens who face eviction for not paying for their utilities — bills due to former state monopolies sold off into foreign hands — the consoling glow of schadenfreude (or, as Hungarians would say, karorom) at how even the bad Anna’s triumph is no more than a Pyrrhic victory in moral terms. Perhaps this explains why his opus has gone through two editions and sold a respectable 5,000 copies.

That Kerekgyarto chooses to disguise fact as fiction is no surprise. There is no hard evidence for the machinations he outlines, given that entrepreneurs with a vestige of common sense engaged competent lawyers to cover their tracks. Moreover, he cannot afford to open himself either to libel charges or to suspicion of having availed himself of such strategies in his own undertakings. Then again, there is always the fear of that equally evasive, yet persistent, specter of Hungarian life, the mafia. The thugs that skulk as heavies in the pages of Fortune Novel also wander the streets of Budapest.