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