Static of Corruption Interrupts Growth of Local Radio

The most common mistake that people make when thinking or talking about corruption is that it is solely, or even overwhelmingly, a probably of bad government. Sure, there is plenty of petty and grand corruption in Hungary's public institutions, as well as those of every other country on Earth, including those annoyingly incorruptible Scandinavian bicycle monarchies. But that shouldn't distract us from the fact that a lot of the corruption in countries like Hungary doesn't involve government, even as a bit player. Following is one such case.

This week's horror story involves allegations of self-dealing and other varieties of impropriety in the local radio industry, as experienced by the husband-and-wife team of Mark and Marilyn Wodlinger. Fixtures of Hungary's international community, the Wodlingers run something called Rádió Hírszolgálat Kft, which is a service that offers radio stations across Hungary news updates in exchange for advertising time in these far-flung local markets. They also own two FM stations in the countryside, one in the western border city of Sopron, and one in the southwestern town of Zalaegerszeg.

Unlike many of the fast-talking foreign entrepreneurs who came to Hungary and other bits of the "New Europe" after the changes (the Wodlingers also have stations in Lithuania and Estonia) Mark Wodlinger has a great deal of experience in his industry, including stints in several of America's largest radio markets, as well as South Africa. Actually, at a youthful 82, he probably has more hands-on experience than the cumulative careers of the entire staffs of many radio stations in Hungary. And Wodlinger believes that the static of corruption in Hungary's radio industry is louder than he's ever heard it.

The basic problem, he told me, is that many or most of the ad agencies and media buyers who stand between the advertisers who pay to go on radio and the stations who broadcast the ads are guilty of routinely taking kickbacks from the stations, and of otherwise not acting in the interest of their clients (the advertisers).

I know what you're thinking: big whoop - everyone knows that placing ads in Hungary is a dirty business. Perhaps, but I doubt you know just how dirty it can be. Because Wodlinger isn't just complaining about people taking small backhanders to steer ads to stations or timeslots that don't make sense for the client. Instead, his current battle is against someone whom he claims is simply pretending to have clients' spots run, and pocketing the entire amount budgeted to pay for them.

Marilyn and Mark Wodlinger: And they thought they'd seen it all

The problem involves the local stations owned by the Wodlingers, as opposed to the news network. According to documents Wodlinger showed me, a fast-growing domestic media buying agency is engaged in a complex scam to defraud its clients, and Wodlinger, by pretending to book ads on these stations. The culprit, who I've decided to leave unnamed for the time being, got found out when a local executive of one of the advertisers in question contacted the station and asked why he hadn't heard his company's ad. The station told the advertiser that, in fact, it had never received an order from the media buying agency.

When the client asked the media buying agency what had happened, the latter simply forwarded them a bunch of phony materials purporting to show that the ad had run, including forged confirmation orders and - I'm not joking - a CD with the ad crudely dubbed into a recording of the station's normal programming. (I said "crudely" because the break between the ad and the show is apparently rather plain, and the show in question took places weeks after the ad was supposed to have run.)

Soon, another similar case of a phantom spot appeared.

"This is just the tip of the iceberg," Wodlinger told me, and said that he believes there could be dozens of such cases. "This goes much deeper."

While the agency in question has since sent out what sounds like peace feelers, and news of the scam could damage the regional radio business, Wodlinger said he is determined not to let the outrage go unpunished. Indeed, early last week he said he was poised to file charges with the police, and showed me an affidavit to that effect. "He's a crook, and I want him out of business," he said of his nemesis. "There is a pattern here. The guy should be in jail."

Okay, you may say, but this sort of outright fraud has nothing to do with kickbacks or cronyism.

But I'd say it does. Because where the story really gets interesting - and, depending on your mood, either infuriating or deeply depressing - is what happened when Wodlinger brought the scam to the attention of the senior decision-makers at some of the companies who had likely been victimized.

"That's last year, and it's over," he said, summarizing the response of one of the companies. "The worst thing is that the clients don't really seem to care."

So why wouldn't a company care that it was the victim of a small but brazenly criminal rip-off? Well, I'd argue that the most logical answer is because they already know they are the victim of a large but less brazenly criminal rip-off, namely the institutionalize practice of trading ads for kickbacks, and otherwise not letting price and quality decide who gets what business.

In other radio news, the members of the National Radio and Television Board (ORTT) last week found themselves unable to reach a consensus and appoint a new president to head public channel operator Magyar Rádió Rt, to replace the outgoing Katalin Kondor, whose term expires in late July.

Leading candidate György Such failed to secure the necessary two-third of the votes, which, in addition to delegates from the country's main political parties, belong to representatives of a number of "civil society" groups apparently selected by random from among the nation's countless NGOs. In other words, the future of national radio in Hungary is currently in the hands of such experts as the National Alumni Society of the Poor Teaching Sisters of Our Lady, the National Self-Government of Germans in Hungary and the National Asthma and Allergy Association.

Then again, it could be worse - they could have left it up to the media-buying agencies.