Former Hungarian National Bank (MNB) governor Gyorgy Matolcsy was detained on October 21 in connection with an ongoing investigation into suspected financial misconduct linked to the central bank and its foundations, Telex.hu reported, and the Central Chief Prosecution Office of Investigation (KNYF) later confirmed the news.

Authorities carried out coordinated raids at several locations, including Gyorgy Matolcsy's home. BneIntellinews learned that police seized a large amount of cash and confiscated assets during the raids. Investigators questioned Matolcsy during the day, but he and the two other suspects reportedly declined to make statements.

The 71-year-old, who served at the helm from 2013 to 2025, was taken into custody in the early hours, with two other suspects. One of the persons detained is a lawyer who regularly represents companies linked to Matolcsy’s son, Adam, and a representative of private equity fund officially registered as the owner of a villa on the Greek island of Mykonos associated with Adam Matolcsy.

Prosecutors have requested their pre-trial detention, with a court decision expected on October 23. The three persons were taken to a Budapest detention facility.

Later in the day, local media reported that police issued international arrest warrants for Adam Matolcsy and Gyorgy Stofa, the former head of the investment company Optima, which managed the central bank’s foundations’ assets. Stofa later joined the leadership of GTC Group, a Warsaw-based property company linked to the foundations’ investments.

In the ongoing case, prosecutors allege that sham securities lending agreement signed in February 2025, in the final day of Gyorgy Matolcsy's term, was intended to transfer control over the remaining assets of the MNB foundations to a business circle close to the Matolcsy family after his term ended at the central bank.

KNYF said the resulting financial loss cannot be precisely calculated at present, but is "well over" the HUF500mn (€1.4mn) threshold for a "particularly significant financial loss.

Adam Matolcsy made headlines days before the April 12 election after reports surfaced that he was shipping his luxury old-time cars and furniture Dubai, where he reportedly resides. Last year he was spotted with his luxury sports car there.

Although independent media had extensively reported concerns about the MNB foundations, the issue entered the public spotlight in March 2025, when the State Audit Office (ASZ) published a damning report on the management of the central bank’s Pallas Athene foundations.  

The report highlighted serious financial and transparency shortcomings, questionable investment decisions and substantial losses. At one point, the foundations managed assets worth nearly HUF500bn. Auditors also raised concerns about inadequate oversight and an opaque network of companies involved in managing the funds. ASZ subsequently filed a criminal complaint over suspected wrongdoing, prompting a police investigation.

Optima Investment's new management later said its audit found that the Pallas Athene Foundations incurred a HUF270bn loss between 2014 and 2024 under the previous management.

In earlier videos, Gyorgy Matolcsy defended the creation of the Pallas Athene foundations, arguing that they were established to support education and improve financial literacy. Set up in 2014 with an initial investment of HUF260bn, the MNB foundations also invested in government bonds, paintings and other cultural treasures. Following an inquiry by the European Central Bank (ECB), the MNB halted its purchases of government bonds.

The overpriced renovation of the MNB headquarters also drew scrutiny. The historical landmark building near the US embassy on Liberty Square underwent a HUF100bn (€256mn) renovation, nearly double the original 2019 budget of HUF55bn. The audit highlighted extravagant spending on luxury and non-essential items, including a presidential gold toilet, marble walls, high-tech bathrooms, VIP floors, and costly kitchen equipment. The renovation work was carried bout the business circle close to Adam Matolcsy

According to Telex.hu, last month MNB management filed a criminal complaint over the depreciation of five properties acquired by Optima, citing suspected embezzlement, negligent management, fraud and abuse of office. Previous reports estimated that around HUF200bn had been lost in connection with property-related deals.

In September, Matolcsy was questioned as a suspect in a separate investigation into allegations that a central bank official had pressured Erste Bank to remove former MNB governor András Simor from the board of Erste Group in Vienna. In a television interview after the elections, Simor said Erste Group chief Radovan Jelasity told him about a private meeting with an MNB deputy governor, during which Jelasity was allegedly instructed to dismiss Simor.

Otherwise, the bank would face "extremely strict and very unpleasant" supervision for as long as Simor remained in his position. Simor, who led the MNB before Matolcsy, had a history of clashes with the Orban government.

In a YouTube video released the same day, Matolcsy dismissed the allegations as a "false tale," denying any knowledge of the alleged conversation. He maintained that only two people involved in the case could confirm whether the meeting had taken place.

The flames of "Operation Cleansing Fire" are burning ever stronger, Prime Minister Peter Magyar posted in a short Facebook comment, referring to his government’s quest to uncover alleged misconduct and abuses during Viktor Orban’s years in power and bring those responsible to justice.