In the financial district of Budapest, nails are being bitten and newspapers anxiously scanned. Last month the ministry of finance asked the police to launch an investigation into possible fraud at Postabank, the retail bank rescued by the government last year. The investigation is expected to lead to at least one charge of balance-sheet manipulation.
Investigators want to talk to Gabor Princz, the bank's former chief executive, who invested the bank's funds (drawn from post office deposits) in a bizarre range of equity investments including a cookery magazine, a military clothing manufacturer and a plastic surgery company. Princz - who had close links to the previous government - has become persona non grata in Budapest and now lives in Vienna.
There is also a wider issue concerning transparency. Over the past three years - during which the bank lost over Ft40 billion ($180 million) - Postabank has used a large number of accountants, including Arthur Andersen, KPMG, Deloitte & Touche, and Ernst & Young. None of these ever managed to produce a consolidated set of accounts owing to the bank's freewheeling management structure. But audits were produced.