case file

The Andras Horvath case: Tax inspector against the $4.5 billion carousel fraud

Professional Background / Sector:Civil Servant

Retaliation Suffered:Criminal Proceedings , Job Loss , Reputational Damage

Case overview

Andras Horvath had been working as a tax inspector for 11 years when he realized that something wasn’t right. Some big companies in Hungary were stealing millions from the tax authorities through a complex scheme known as the carousel fraud that cost the budget $4.5 billion per year.

01

What was uncovered

According to Horváth’s estimates, the sum of the illegally evaded and reimbursed VAT equaled 5 to 6 percent of the country’s GDP.

02

What wrongdoing occured

Tax fraud, abuse of office.

03

What consequences followed

Just after whistleblowing, his career at the tax authority was over. Criminal proceedings were initiated against him, which lasted three years. He was unable to get a job within these years. Even the municipalities led by opposition politicians refused to hire him. In the second half of 2016, he was finally hired by an opposition party as an analyst. Apparently, he is still blacklisted at the public sector. He applied to the Integrity Authority for an investigator position but was not hired in 2023.

04

What sources it is based on

Overall, the reports by HVG, Index, Origo, 24.hu, 444, and Atlatszo likely received the most attention. These liberal sources contain the largest amount of archived material, interviews, and background analysis.

Whistleblowing timeline

WHISTLEBLOWER WITH POLITICAL ATTITUDES

Even the municipalities led by liberal politicians refused to hire him.

“Naively, I thought that if I have factual proof of a case that concerns such an incredible amount of public money, if I am brave enough to go public with a story, then no government can look the other way,” Horvath said.

timeline

Member of FIDESZ

Local Council Member for Budapest’s 10th District as FIDESZ politician.

End of FIDESZ cooperation

Employee of Hungary’s National Tax and Customs Administration

Mr. Horvath shared his findings with the management

He repeatedly sent letters to high officials through the mail and through intermediaries.

Report to Hungary’s Chief Prosecutor

Whistleblowing

Search of his home

Unemployed

Analyst at a liberal political party

Not hired to the Integrity Authority for an investigator position

Participation in the audit of Budapest’s 14th District at the request of the liberal mayor Rozsa. Mr. Horvath lost his job, criminal proceedings were initiated against him. He was unemployed for years. Despite enjoying the support of the liberal press, even the liberal-left local governments refused to hire him. His name was blacklisted.

PART I – THE WHISTLEBLOWER

Andras Horvath was a former Orban led FIDESZ politician (Local Council Member for Budapest’s 10th District) later as an employee of Hungary’s National Tax and Customs Administration became a public whistleblower in 2013.

He approached the senior leadership of the Hungarian Tax Authority, but his visit yielded no results; on the other hand, his superiors were angry with him for bypassing the chain of command. Afterward, drawing on his old connections, he contacted the government on two occasions, though he refused to reveal any names. He said only that years ago he had approached an official working closely with the prime minister, which led to the launch of some sort of investigation—one that, according to him, has yet to yield any results. On the second occasion, with the help of a member of parliament, he sent a letter to the Ministry of National Economy detailing the companies’ VAT fraud practices.

Later he regularly spoke as an expert on anti-corruption and transparency issues and collaborated with civil society organizations and public figures.

PART Ii – WHO LOST WHAT AND WHO WON WHAT

Four detectives appeared at the whistleblower’s door at 7:30 in the morning a few days before Christmas. They searched the house and confiscated the green folder, Horvath’s hard drive, and a notebook where he kept the names and phone numbers of journalists, politicians, and lawyers he was in touch with. The moment Mr. Horvath stood in front of cameras with his green folder, his career at the tax authority was over. For the next three years, he was unable to get a job. Apparently, he is still blacklisted at the public sector. Even the municipalities led by opposition politicians refused to hire him. In the second half of 2016, he was finally hired by an opposition party as an analyst. He applied to the Integrity Authority for an investigator position but was not hired in 2023.

The carousel fraud is still spinning. “Protected taxpayers” are the companies with the highest tax contributions (when the main tax categories are combined, they pay the most tax); this includes the largest retail chains and major exporters, regardless of whether they are Hungarian- or foreign-owned.

Even the US government took notice of the scandal, introducing a visa ban against six Hungarians, including the then-chief of the tax authority. The US embassy in Budapest cited Horvath’s green folder as one piece of evidence. The most corrupt managers at the tax authority were fired or sidelined.

PART Iii – LIST OF AVAILABLE AND CANCELED RESOURCES

The “Green Folder” was a collection of documents and analyses that Horváth said contained evidence of large-scale VAT fraud and alleged failures within the tax authority to effectively investigate or stop it.

According to Horvath, the folder included:

information on specific companies and transactions,
records related to tax investigations,
descriptions of internal procedures,
and evidence suggesting that certain tax fraud cases were not being properly pursued.

Because the material reportedly contained confidential tax information, the full contents of the folder were never released publicly.