A suspected international criminal and the Syrian dictator’s money man also bought Hungarian residency bonds

2018 március 28., 04:30

„We are not going to let Hungary become a country of immigrants!”

“The only thing that matters is the security of the Hungarians”

These have been the governing Fidesz party’s key messages in its campaign for the upcoming parliamentary elections on April 8. While the government fiercely opposes taking in refugees and migrants, a joint investigation by 444 and Direkt36 has revealed that people who could pose serious security risks for Hungary and the European Union were granted residency through a controversial residency bond scheme run by the Hungarian government.

One of them is a Syrian man who is suspected of being the member of an international money laundering network working for groups involved in human trafficking and smuggling of weapons and drugs. Another Syrian, a key member of Syrian president Bashar al-Assad’s inner circle, who is on the United States’ sanction list, also was granted a residency permit in Hungary.

These revelations came after both 444 and Direkt36 received an envelope from an unknown sender more than two months ago. The envelope contained the names of citizens of various countries, who, according to the sender, had received residency permits through Hungary’s residency bond program.

The law creating the program, initiated by Antal Rogán, a powerful politician of Fidesz and now the chief of staff of Prime Minister Viktor Orbán, was rushed through Parliament without substantial debate in 2012 and quickly became one of the most controversial initiatives of the Fidesz government. Under the scheme, those who invested 250-300 thousand euros in Hungarian state bonds were granted a Hungarian residency permit. Under the program, the residency permit could also be extended to their immediate family members. With the Hungarian permit in their pocket, the investors were given freedom of movement inside the entire European Union.

The most heavily criticized aspect of the program was that foreigners did not invest in the residency government bonds directly, but did so through designated intermediary companies with opaque ownership structures. The companies were handpicked by the Economic Committee of the Parliament without any public tenders.

Between 2013 and 2017, Hungary handed out nearly 20,000 permanent residence permits for residency bond investors and their family members. While most of the customers were Chinese nationals, permits were also issued to hundreds of Russians and dozens of immigrants from the Middle East and Africa. The Hungarian authorities, citing privacy concerns, have been resisting calls for disclosing the names of the bond buyers.

Direkt36 and 444 made various efforts to verify the data sent in the envelopes. We could identify several of the people by matching their personal details (like date of birth) with public records. We also managed to track down their connections to Hungary through their business activities or simply through social media postings.

Also, months before the arrival of the envelopes, a source provided us with names of a group of residency bond buyers. These names matched several of those sent in the envelopes. In addition to this, a source familiar with the administrative procedures that the Hungarian authorities conduct on immigrants also confirmed that several people listed in the envelopes indeed received Hungarian residency papers.

444 and Direkt36 have decided to reveal the names of buyers only in cases where the disclosure serves the public interest. In this story, we are publishing the details of two Syrian men with controversial backgrounds.

Salmo Bazkka, one of the residency bond buyers, is now suspected by the Italian authorities of being a member of an international money laundering network. A businessman named Atiya Khoury, who also received residency permit in the Hungarian program, was put on a sanction list by the United States’ Treasury Department for assisting Syrian president Bashar al-Assad’s regime in 2016.

It is not known when the two men bought the residency bonds – before the respective accusations against them or after that. Sources familiar with the Hungarian authorities’ administrative procedure said, however, that the screening of the bond buyers was superficial, in large part because of the high number of people that had to be checked.

Both in the case of Bazkka and Khoury, we have found links that connected them or their family members to Hungary. A relative of Bazkka confirmed that the man bought residency bonds. A source familiar with the administrative process also confirmed that both men received residency permits through the program.

Bazkka is in the custody of the Italian authorities because of his role in the alleged criminal network.

Detained by the Hungarian counter-terrorism unit

In the early morning of November 28, 2017, members of the Hungarian Counter-Terrorism Center raided five locations in Budapest and the countryside. At one of the sites, the heavily armed officers smashed the gate of the house and detained three Syrian citizens, all suspected members of an international criminal network. According to the police’s account, the officers confiscated 143 million HUF in cash (461 thousand EUR) and three kilos of golden jewelry.

The members of the criminal network

„were dealing with laundering and distributing money made from drug and weapon trade, and illegal migration,”

the police said in a statement.

52-year-old Salmos Bazkka, suspected of being a member of the alleged criminal network, was among the detained people. He was also one of the thousands of people who bought residency bonds in Hungary. His name was among those sent to 444 and Direkt36, and one of his relatives confirmed that Bazkka indeed purchased bonds.

“Yes, he purchased it, we are not migrants [in the usual sense],” said a man at the site of the Bazkka family’s company in Budapest. The man did not introduce himself but said that he is a relative of Salmos Bazkka. He explained that Bazkka made use of the opportunity and extended the residency permit to his family members as well.

The raid in November was preceded by a lengthy investigation by the Italian authorities which began in 2015 when they detained a Libyan citizen at an airport in Milan. The Libyan attempted to enter the country with 300 thousand EUR in cash, according to the Italian authorities’ statement.

Italian investigators found out that the person had been transporting large amounts of cash, 50 million EUR in total, on various trips to Germany, the Netherlands, and France. On the person’s devices, the authorities also found photos and videos suggesting links to radical Islamist groups. (The authorities did not provide details on the nature of these links.)

The subsequent investigation uncovered a network operating in Italy, Hungary, Morocco, Libya and Egypt, which, according to the Italian authorities, was laundering money originating from illegal activities. 13 suspected members of the network – 6 Egyptian, 5 Syrian and 2 Moroccan – were arrested in Italy and Hungary last November. One of those detained in Hungary was Salmo Bazkka, who, according to his relative, has already been extradited to Italy.

The office of Hungary’s Prosecutor General said that Hungary was only providing legal assistance in the case. “The Italian partner requested information such as lists of phone calls and bank transaction data,” the office said in a statement.

From Aleppo to the suburbs of Budapest

Bazkka started doing business in Hungary 20 years ago. His first business, which sells clothes, was established in 1998, when Bazkka’s residential address was still in Aleppo, Syria. While company documents show that the selling of clothes has not generated a big profit, in September 2012 - a few months before the launch of Hungary’s residency bond program - Bazkka bought a house in Pesterzsébet, a suburb of Budapest. The headquarter of his company was moved to this location, and, in 2016, he also founded a new company. In the latter, not only Salmo Bazkka became a co-owner, but also four sons of a Syrian woman who used to live under the same roof with Salmo Bazkka back in Aleppo.

One and a half years later, two of the four boys - 26-year-old Alaa Bazkka and 22-year-old Mohamad Bazkka - were also named by Italian authorities as suspected members of the alleged criminal organization, along with Salmo Bazzka. Presumably, they were the three Syrians detained in the Hungarian police’s raid last November, but the authorities did not provide further details about the operation.

Shortly before his arrest, Alaa Bazkka founded a money exchange company in downtown Budapest. In February, one of Alaa’s brothers founded a new company that carries out brokerage activities at the very same address.

Salmo Bazkka appears on several publicly available photos made in Hungary between 2014 and 2017, mostly in the company of his family and friends. We asked the Office of Immigration and Nationality about the legal basis of Bazkka’s stay in Hungary during that time, but the Office refused to answer our questions citing privacy reasons.

The moneyman of Bashar al-Assad

„From expanding its weapons of mass destruction program to inflicting horrific violence upon the Syrian people, the Assad regime relentlessly engages in destabilizing behaviour. Treasury will continue to act against those responsible for fuelling the Assad regime’s repressive actions and dangerous weapons proliferation,”

- begins the announcement made by Adam J. Szubin, Under Secretary for Terrorism and Financial Intelligence of the U.S. Department of Treasury, on July 21, 2016.

That day, the United States imposed sanctions against seven companies and eight individuals, whose assets in the US were frozen and with whom US companies and nationals were prohibited to do business.

The list of sanctioned people announced in the summer of 2016 includes a Syrian citizen named Atiya Khoury. He is one of the most important moneymen of the Assad regime and responsible for human rights violations, according to the US. We found Khoury's name when we cross-checked the names sent to us in the envelope with the publicly available US sanction database.

According to the sanction documents, Atiya Khoury owns and operates Moneta Transfer & Exchange, a financial services network that deals with currency exchange and cash transfers similar to Western Union and other companies. Due to the Syrian civil war and the accompanying violent conflict, the Assad regime has become more and more financially isolated. Thus, the network operated by Khoury has played an important role in maintaining the regime. According to the US, the Syrian government paid for fuel through this network and Khoury received a commission after each transaction. Atiya Khoury is also reported to have cooperated with a Syrian businessman named Mudalal Khuri. Khuri was also included on the US sanction list in 2015 because he was helping Syrian government forces to buy oil from ISIS. Reuters wrote that such oil sales helped ISIS become the world's wealthiest terrorist organization.

The sanction documents also indicate that Atiya Khoury moves cash between Syria, Lebanon and Russia following the instructions of the president of the Syrian Central Bank.

Khoury also helps Assad's family as he takes part in the management of the business empire of Rami Makhlouf. The billionaire nephew of Bashar al-Assad, Makhlouf is the richest Syrian and head of the state-owned telecom company Syriatel. According to the US, Khoury coordinates the finances of the Makhlouf family and is also involved in the management of their companies.

In the residency bond program, not only the investors, but also their close family members can apply for residence permit, and many people chose this option. Among the names sent to 444 and Direkt36, Khoury’s 14-year-old daughter and his 18-year-old son were also included as family members.

Khoury's 18-year-old son is active on Facebook, Youtube and Instagram, regularly posts pictures about his life, including skiing in Switzerland, diving in Thailand, and driving around in sports cars in the United Arab Emirates. This January, a photo appeared on the young man’s Instagram, which was taken near the basilica in Esztergom, Hungary.

We contacted Khoury via multiple channels before publishing this article, but we did not receive any response.

There was no chance for serious security screenings

The application procedures were carried out in “a satisfactory manner in terms of security,” said Zsuzsanna Végh, director-general of the Office of Immigration and Nationality, during the March meeting of the Defense and Law Enforcement Committee of the Parliament. According to Végh, only twenty potential investors and 44 family members have been rejected by Hungarian authorities on the ground of security concerns.

According to information provided earlier by the Ministry of the Interior, potential bond investors went through a security screening carried out by four authorities: the Office of Immigration and Nationality, the Counter Terrorism Centre, the Constitution Protection Office and the police. We contacted these authorities before the publication of the article. We wanted to know what protocol these institutions followed for the security screenings, and whether they continue to think that Bazkka and Khoury do not pose security risks. The organizations replied that they cannot provide information about individual cases.

Two sources talked about the shortcomings of the security screenings.

One of them knows the operations of VolDan, a company which was authorised to sell bonds to Russian citizens. The source said that within the company, the security screening was treated as a formality, an unpleasant, but automatic part of a bureaucratic system. It was not a question whether an applicant will or will not pass the security screening, the only question was when he would do so.

Our other informant knew the process from the state authorities’ side. The source said that the authorities normally just run the names of applicants against international wanted lists and similar automatized databases. There were no real investigations and there could not have been any because of the vast number of participants in Hungary’s residency bond program. This is how he described the situation:

“The real risk is not posed by those people who are on international wanted lists, because they would not apply for the residency bond program, and they would also be very easy to spot. The task would be to carry out a thorough screening of each individual, to have people working at the embassy of their country of origin that map out the investor’s network, look into the origin of their money, as this is the only way to see whether the applicant poses a security risk to Hungary or to the European Union. As a vast number of people bought residency bonds in the program, there was not even a chance for such a real investigation.”

At the beginning of the week, we contacted Antal Rogán, the initiator of Hungary’s residency bond program who currently leads the cabinet office of the prime minister. We wanted to know whether he was worried by the fact that through the bond programme individuals posing national security risks could come to Hungary and to the European Union, but he did not answer our questions.

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