Former Leaders of Bankrupt Hungarian Airline Convicted for Causing Financial Loss

Published: November 24 2023

Former leaders of the bankrupt Hungarian airline, Malév, have been convicted for causing a significant financial loss to the company. The verdict, though considered light, highlights the breach of fiduciary duties and the misappropriation of assets by the defendants.

The Budapest-Capital Regional Court found the former chairman of the board of directors and one of the former CEOs guilty for causing over HUF 800 million in financial loss to Malév. The defendants were instructed to conclude consultancy contracts with a company in which the chairman had an interest, resulting in payments for contracts that were not fulfilled.

Both defendants were sentenced to two years' imprisonment and a fine of HUF 1 million. However, the court suspended the prison sentences for four years and banned the defendants from holding executive positions for five years. The third co-defendant was acquitted due to lack of evidence.

The Office of the Prosecutor General of Budapest has appealed for harsher sentences for the defendants, including custodial sentences, bans from public office, and increased fines. The prosecution is also appealing for a finding of guilt and a sentence for the acquitted co-defendant.

What is the Malév case? The Malév case refers to a legal case involving the former chairman of the board of directors and two former CEOs of the Hungarian airline Malév. They were found guilty of causing a financial loss of more than HUF 800 million to the airline, which went bankrupt in 2012.

What were the charges in the Malév case? The charges in the Malév case included misappropriation of assets and breach of fiduciary duties.

What did the defendants do in the Malév case? The former chairman of the board of Malév instructed the two former CEOs to conclude consultancy contracts with a company in which he had an interest. These contracts were paid for by Malév, but the consultancy tasks were not actually fulfilled. The defendants transferred the funds to companies of their own interest for their business activities.

What were the consequences for the defendants in the Malév case? Both defendants were sentenced to two years' imprisonment and a fine of HUF 1 million. However, the court suspended the prison sentences for four years and banned them from holding executive positions in companies for five years. The third co-defendant was acquitted.

What is the appeal in the Malév case? The Office of the Prosecutor General of Budapest has appealed for an aggravation of the defendants' sentences. They are seeking a custodial sentence, a ban from public office, and an increase in the amount of the fine. In the case of the third Malév manager who was acquitted, the prosecution is appealing for a finding of guilt and a sentence.