BUDAPEST — The managing director of the company whose reservoir unleashed a lethal torrent of red sludge on three villages last week has been arrested, the Hungarian prime minister said Monday, castigating the company for corporate greed before Parliament.
“There’s probable cause to suspect that there were persons who had been aware of the dangerous weakening of the storage pond walls,” Prime Minister Viktor Orbon said, “but they thought, because of their private interests, that it was not worth mending them and hoped the disaster wouldn’t happen.
But the arrest also revealed the complex intersections of business and politics within the state companies that were privatized in a rush in the 1990s.
The arrested official, Zoltan Bakonyi, is the son of Arpad Bakonyi, a businessman who played a central role in the privatization of the country’s aluminum industry and is the largest shareholder of the company now under scrutiny, the formerly state-owned MAL. The elder Mr. Bakonyi is also a close business associate of a former prime minister, Ferenc Gyurcsany, who is Mr. Orban’s political archrival.
The younger Mr. Bakonyi will be charged with criminal negligence leading to a public catastrophe, a government spokeswoman said. If convicted, he could face a sentence of up to 10 years.
In a statement to the Hungarian news agency M.T.I., he denied breaking any rules and said that the most recent inspections had shown no anomalies. “We observed every regulation to the letter,” he said.
A week ago, nearly 200 million gallons of caustic red mud — a byproduct of the conversion of bauxite to alumina, for aluminum — poured out of a reservoir after part of its containing wall collapsed. The cascade killed eight people and injured hundreds. Hundreds more have been forced from their homes, and tens of millions of dollars in private property have been destroyed.
On Monday, as part of its response, the government took control of MAL, the Hungarian Aluminum Production and Trade Company. Mr. Orban told Parliament that a state commissioner would be appointed to manage the company and its assets. As custodian of the company, he said the government would make sure it paid for damage. He said the government would also focus on saving jobs and identifying further risky industrial sites.
“We need to hold the company responsible for the red sludge spill under state control,” he told Parliament.
Analysts said that Mr. Orban’s quick moves to take control of the situation and positioning as a Hungarian protector had provided a lift to his center-right government, elected overwhelmingly this year. It may also benefit from a wave of national unity over the disaster — and the distraction from the country’s economic woes.
But some saw the government’s moves as mainly a power grab.
Peter Rona, a Hungarian economist and visiting fellow at Oxford University, said, “It is certainly the case that the behavior of MAL’s management has been bloodcurdling and inept.”
“But,” he added, “Mr. Orban is seizing every opportunity to accumulate economic and political power in the hands of the government and is taking advantage of the situation to further his agenda.”
Anna Nagy, the government spokeswoman, said that the government was not renationalizing but rather protecting the public interest. “The government is becoming the caretaker of a company that has shown all too clearly that it can’t run itself properly,” she said.
As for the ruptured reservoir wall, disaster management officials said that other cracks appeared to be contained for the moment.
Gyorgyi Tottos, spokeswoman for Hungary's Catastrophe Protection Unit, said fissures in the northern wall, which experts feared could collapse over the weekend, had not expanded overnight.
“I have just returned from the site, and there are three gaps in the wall that are a half-meter wide and 20 meters long, which suggests that the wall will fall over time,” Ms. Tottos said. “But we are hoping that a concrete barrier we are building to contain the sludge, along with an emergency dam, will do their work and that the effects of the wall collapsing will be less dramatic than last time.”
Peter Szijjarto, the prime minister’s spokesman, told the broadcaster TV2 that he was hopeful that the dam would be finished by Tuesday. “We have 4,000 people and 300 machines working at the scene so we are doing our utmost to prevent another tragedy,” he said.
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