Being audited is never fun, but when it’s part of a government witch-hunt against legitimate dissent it’s particularly frustrating and exhausting. The Hungarian authorities have targeted around 60 NGOs in the last few years in an attempt to intimidate and harass dissidents through paralyzing tax investigations.
The Krétakör Foundation started as theatre group 20 years ago, and still uses drama to educate and mobilize people to discuss politics. It’s an award-winning organization with a Europe-wide reputation for standing up to intimidation. It organizes workshops and is famous for guerrilla marketing to promote social debate on homelessness, corruption, immigration and for co-ordinating NGO action in an increasingly oppressive political climate.
Hungary’s Prime Minister Victor Orban, encouraged by the election of President Trump and what he sees as the advent of a new order of political illiberalism, is trying to throttle all forms of dissent in Hungary. Independent media is being bought out or closed down. Those enabling criticism of the government are routinely targeted. Local NGOs have compiled a timeline of the harassment of civil society. Tax audits are a favorite tool.
Krétakör was duly notified that it had been selected for a tax auditor in January 2015. For the last two years it has been under almost constant investigation.
Managing Director Dóra Papp said “We first got a letter saying we were to be audited for the previous three years. It meant digging through more than 50 files,” she told me. “Usually audits are limited to a narrow time or a specific project but to be asked to supply everything for three years was astonishing”.
It was a huge job. “Two tax officials came to our office and immediately realized this was such a massive undertaking they insisted we bring all the files to the tax office. We had to copy every piece of paper, page by page, and then sign each one over individually to the officials. Just the process of formally handing over the documents took five days. Then they went through all the files and a few months later called various current and former employees for questioning, even people who’d done business with us.”
The audit meant that the NGO had to divert an enormous amount of meagre resources to comply with the investigation. “Of course it negatively impacted our work,” said Papp. “There was lots of collateral damage, we couldn’t concentrate properly on the work we were supposed to be doing because the audit ate so much of our time.”
After a year of constant investigation the tax authorities eventually told Krétakör on 3 February 2016 that the matter was closed and there would be no charges. Then, six weeks later, it informed the NGO it was initiating another investigation. “This time they told us it would be a ‘tax audit’ as opposed to a ‘general audit’, covering 2012 and 2013, even though those years had already been dealt with in the first audit,” said Papp.
Whatever it was called it was clearly another attempt to further drain the NGO’s resources. “We had to hire a law firm to help us cope with the new audit,” she said. The second audit lasted until 17 January 2017 when, again, the authorities closed it saying they had found no irregularities.
“This has been an exhausting, expensive two years,” says Papp. “We’ve paid thousands of dollars in legal fees, and an estimated 800 person hours each year.”
It’s a relatively cheap, efficient way for the Hungarian authorities to harass, distract and cripple its critics. Last year United Nations Special Rapporteur on Human Rights Defenders Michel Forst visited Hungary and urged the authorities not to undermine “peaceful and legitimate activities through criminal defamation and excessive administrative and financial pressure”. Orban’s government is clearly not listening, and new legislation further attacking civil society is anticipated soon.
Krétakör and other critics are bracing for further assaults but remain defiant. “We were targeted for being ‘too loud,’” said Papp. “But they’re not shutting us up.”