Partly Hungarian-owned Russian spy bank and its Hungarian leader placed on US sanctions list

The US Treasury Department's latest sanctions list includes a Hungarian citizen and a bank in Hungary, as well as several senior executives of the same bank earlier in the day Bloomberg had already reported that there would be a Hungarian on the list, although sources speaking on condition of anonymity would not yet reveal the names of the individuals involved (or the reasons for the measure).

This current sanctions list was promulgated in accordance with Presidential Executive Order 14024 on sanctions against Russia (The order may be found here.)

Orbán's important post-Soviet man

The list, published on Wednesday afternoon Hungarian time, includes the International Investment Bank, popularly referred to in the political jargon as the Russian spy bank, and its Hungarian-born vice-president, Imre Laszlóczki, who is in charge of Strategy and Policy.

At the time of his appointment, in September 2019, in our previous editorial office, we wrote of the 1961-born Laszlóczki that "so far he hasn't been known for his financial qualities, and his professional career was mainly focused on foreign affairs, having previously served as Hungarian ambassador to Kazakhstan and Azerbaijan." In the same year, the IIB moved to Budapest, replacing its former headquarters in Moscow with a new one in a European Union city.

In his biography on the IIB website, it says about Lászlóczki that he was "Born in 1961 in Paks, and he graduated from the Moscow State Institute of International Relations in 1987. He worked at the Ministry of Foreign Affairs for about 30 years, heading the Human Resources Department of the Ministry, and was responsible for Hungary's accession to the Schengen area and was also in charge of relations with the Middle East and North Africa for a period. He also wrote about his ambassadorships in Azerbaijan, Kazakhstan, the Kyrgyz Republic and Tajikistan, and diplomatic missions in Italy, Kuwait, Libya, Morocco, Portugal and Russia.

It is also important to know when Lászlóczki, who speaks Russian, English, Arabic, Italian and Portuguese in the listed countries. As we also wrote in 2019, the career diplomat served as ambassador to Kazakhstan and Azerbaijan, two high-profile posts under recent Orbán governments. He was the head of the Hungarian diplomatic mission in Nur-Sultan (still Astana at the time), Kazakhstan, between 2010 and 2015, during which time he was also responsible for Kyrgyzstan and Tajikistan.

Two Russian heads of the spy bank were also listed

The sanctions list published on Wednesday includes several other individuals linked to the International Investment Bank and Hungary. They include Nikolai Kozov, the president of the International Investment Bank, who is a Russian citizen, and Georgiy Nugzarovich Potapov, who is also a Russian citizen and is the vice-chairman of the IIB's board (and who vehemently protested against the claims that they were a Russian spy bank when the bank moved to Budapest in the summer of 2019).

IIB is a Budapest-based financial institution, with almost 50 percent of it owned by Russia and 25.27 percent by the Hungarian state. Earlier this year we reported on a leaked internal letter according to which the bank had used up all its liquidity reserves, that without its funds which had been frozen, it "risks insolvency or will be forced to restructure its bonds as early as May 2023".

The International Investment Bank is important for the Hungarian government because the Hungarian state is the second majority owner of the bank. In fact, after Bulgaria withdrew from the Bank in February, it is now the only owner that is a member of the European Union – along with Russia, Cuba, Mongolia and Vietnam. Minister at the Prime Minister's Office, Gergely Gulyás was asked about the fate of IIB at a government briefing in February, when he replied by saying "I don't know if it is possible to save" the bank, which is "in an extremely difficult situation".

We have, of course, asked the IIB about being added to the sanctions list and the implications of this for the bank and its three senior executives, and will update this article as soon as they respond. We have also sent questions to the Hungarian Ministry of Economic Development, led by Márton Nagy, requesting a comment from the Hungarian government on the bank's inclusion on the sanctions list, as well as whether it still considers Hungarian involvement in the IIB justified after the sanctions – and taking into account the financial difficulties mentioned earlier – and what steps it plans to take. Should we receive a response to these questions, we will also update this article.