THE WALLS HAVE EARS: DOMESTIC ESPIONAGE

C O N F I D E N T I A L BUDAPEST 000964

SIPDIS

DEPARTMENT FOR EUR/CE; PLEASE PASS TO NSC FOR ADAM STERLING

E.O. 12958: DECL: 09/29/2013
TAGS: PGOV PINR HU
SUBJECT: THE WALLS HAVE EARS: DOMESTIC ESPIONAGE
ALLEGATIONS EMERGE AND EXPAND

Classified By: P/E COUNSELOR ERIC V. GAUDIOSI; REASONS 1.4 (B) AND (D)


1. (U) Accusations continue to circulate as Hungary's
Prosecutor-General and domestic intelligence service
investigate expanding charges of domestic espionage.

SURVEILLANCE: ANY NUMBER CAN PLAY


2. (C) Though allegations of surveillance by ) and against
) the government are standard fare in most political
discussions here, the latest story has expanded rapidly even
by Hungarian standards. Beginning with an alleged
wiretapping campaign against MDF Party President Ibolya David
on the eve of the party's elections (septel),the scandal
quickly implicated internal rivals, FIDESZ officials, and a
company run by a former National Security Office (NSO)
executive and reportedly owned by OTP Bank chairman Sandor
Csanyi, one of the richest men in Hungary.


3. (C) But that was only the beginning. According to
subsequent allegations, the company, known as UD Zrt, has
also targeted the NSO itself by placing spyware in its
computer network. Transcripts from hundreds of hours of NSO
wiretaps from their investigation of UD had been posted on
the internet ( only to be retracted soon afterwards. The
authorities are reportedly still analyzing the materials
seized from UD's offices last week.


4. (C) In the past week, the parties have clashed over the
charges in the press, in closed sessions of the National
Security Committee, and on the floor of Parliament. Although
one of the implicated FIDESZ MP's, Laszlo Kover, has been
conspicuously silent in response to the charges against him,
another MP charged that the government's "framing" has
exceeded even "the darkest hours of dictatorship." Another
FIDESZ MP resigned at Party Faction Leader Tibor Navracsics'
request after shouting "you will hang!" at a government
official during discussion of the case September 29. On
September 30, yet another FIDESZ official announced his
intention to sue the government minister responsible for
oversight of the security services for misuse of office.

"THIS IS BAD"


5. (C) The Prime Minister has been quoted as characterizing
the scandal as "the worst in Hungary since 1990," and MSzP
officials are working the diplomatic circuit hard to raise
the profile of the issue. But, as one news commentator aptly
observed over the weekend, "perhaps no one in Hungary knows
exactly what is going on." Indeed, no criminal charges have
been filed as yet, and government officials have thus far
alleged only misjudgment by the opposition for its
association with UD Zrt. Nonetheless, many believe the
revelations regarding the David wiretapping represent only
the tip of the iceberg.


6. (C) It is an article of faith among most Hungarians that
both sides have used the intelligence services as well as
private "security firms" for political purposes, and some
fear that the current scandal could unearth many more
skeletons. MSzP MP Attila Mesterhazy comments privately that
"I know more about this than you've seen in the newspapers
and this is bad - so bad that I don't want to know more." He
fears that a line has been crossed with the alleged
penetration of the NSO, commenting that "the parties are now
at war."


7. (C) Comment: With Parliamentary votes on the budget and
tax package still weeks away, the wiretapping scandal has
moved ) or been moved - into the void. The inevitable
counterattacks will prolong the spectacle and further
undermine the public's faith in the nation's institutions. As
a result, Hungary may end up with yet another long, bitter,
and ultimately inconclusive argument at a time when it needs
a sober, substantive policy debate. End Comment.
Foley