A Hungarian oligarch: Sándor Demján

While in Russia some of the oligarchs came to oppose Vladimir Putin's rule and his vision of Russia, it seems to me that most of the Hungarian oligarchs admire Viktor Orbán and are steadfast supporters of the current Hungarian government. Viktor Orbán, who while in opposition accused the socialist-liberal government of being a government of plutocrats, isn't shy about openly displaying his close relationship with some of the richest men of Hungary. He has very special relations with two men: Sándor Demján, a real estate developer, and Sándor Csányi, head of OTP (Országos Takarékpénztár), Hungary's largest bank. Csányi can often be seen with Orbán, at home and abroad, mostly at soccer games. Orbán made certain that Csányi became the president of the Hungarian Soccer Association.

The two wealthy men have a lot in common. Both started their careers in the late Kádár regime. Demján was the head of the most successful department store chain of the period, the Skála. Csányi led OTP at the time when it was the only bank in the country.

Today I would like to focus on Demján because lately he has been playing an important political role at the side of the prime minister. For example, he was one of the key speakers at the conference organized to celebrate the first anniversary of the Orbán government. The message of Demján, and I guess through him that of the new government, was an odd combination of Marxist-Leninist clichés, primitive anti-intellectual notions, and a total ignorance of the most basic principles of economics. Keep in mind that according to the latest survey, Demján is the richest man in Hungary, worth about 300 billion forints.

He was born in Börvély (today Berveni) in 1943. The village is just north of Nagykároly (Carei), very close to the Romanian-Hungarian border. At the time of Demján's birth, because of the Second Vienna Award, the area belonged to Hungary. Demján's family actually came from the area that is a point of controversy today between Romanians and Hungarians, the Land of the Szeklers. From what I could piece together of a fairly complicated and far from complete story of his parents, they settled in Börvély only in 1940. According to one source, after the Second Vienna Award the local Hungarians chased the recently settled Romanians out of the village and in their place came settlers from the Szekler area that still remained with Romania.

The family was of peasant origin, but his father briefly worked in a factory in Börvély that was producing hemp. However, Sándor didn't know his father because he died on the Russian front. The mother with three children moved west and they lived in terrible poverty. At one point the children were placed in a state institution because the mother couldn't care for them. It is likely that Demján's right-wing political ideas have a great deal to do with the family's origins and his father's disappearance in the Soviet Union.

Sándor Demján from his earliest childhood showed a talent for business. In 1965 he finished a college training young people to enter commercial activities and the catering business. At the time this was not a particularly promising career. There were barely any tourists in Hungary, the hotels were old and decrepit, and a graduate could aspire to no more than running one of the state-owned stores or restaurants. But Demján made a spectacular career for himself and became famous as the head of the Skála department stores where, under the circumstances, there was a relatively large supply of desirable goods. By 1986 he tried banking as well. In 1996 he established the TriGranit Fejlesztési Rt. and became a very successful real estate developer. He built a lot of shopping centers not just in Hungary but also in Slovakia and Poland.

Demján with his rather meager educational background can come up with some strange ideas. Here I'm gathering a few nuggets out of what he told the listeners at the government's celebration of its "very successful" first year. According to him Europe is in decline. In fact, although he is no politician, he can tell that "the third world will begin with Europe in twenty to twenty-five years." But luckily not all countries in Europe will decline. Those countries that have enough factory workers will survive. The problem is that Europeans "don't want to work."

The stress in his speech was on "productive work." Something tangible must be created. Thus one doesn't need as many university professors as Germany has. He doesn't "want to be too harsh on education because for many this is a painful subject." However, he decided to tell his opinion: "one doesn't need so many university professors" because Hungary must be frugal and after all university professors don't produce anything tangible. Moreover, if there are fewer university professors the government will be able to pay them better.

Demján's other startling suggestion was that the country should return to the socialist practice of decorating physical workers for their achievements. The whole school system–according to Demján–is built on the premise that "you must learn because if you don't learn you must work." But "without producing goods a country cannot be well off." And for that you need physical workers. He understands that in elementary school every child wants to be an artist, but "there should be a rule that if there is an extracurricular study group on the arts there must also be one on technology." 

He repeated several times that people in marketing, lawyers, and merchants (the service sector) are not doing anything that is productive. Also, the state should buy up land because "Europe will be starving" and these large state farms will be very lucrative within a couple of decades.

However, when it came to the interests of business Demján was an unabashed apologist. There shouldn't be more holidays "just because of some kind of saint or historical event…. One must work more not less." He was naturally against closing large chains on Sundays. He was also in favor of foreign investment, especially establishing large factories. He came out in favor of close economic relations with China and said that good Russian-Hungarian relations are also necessary. However, he added that "diplomatic mistakes slowed economic negotiations" between the two countries. He was also critical of the Orbán government's unfriendly moves against the employers by wanting to send "commandos" to force them to pay higher wages. He pointed out the employers' support of Fidesz in the past; therefore, he noted, "this step was ill advised and unfriendly."

Interestingly, Demján criticized "political populism" but it seems that he doesn't consider Viktor Orbán's populism "harmful for democracy and for the strength of the economy." He seemed to be glad that the adoption of the euro has been postponed. We found out from his speech that the Hungarian capitalists actually "demanded the postponement" because with a "favorable exchange rate and average inflation Hungary can catch up with or surpass the European Union."

Ending on a very optimistic note, Demján claimed that "in a declining Europe Hungary can be an island where with appropriate national strategy there will be wealth. However, for such an outcome one needs one and a half million more people in production. These one and a half million people must be highly "respected" because they are the ones who produce all the future wealth of this happy island in the middle of starving Europe. Basically, to hell with the artists, university professors, lawyers, and other useless creatures on this planet.

Demján made his billions not as a manufacturer but as a real estate developer who among other things built the Palace of the Artists.

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Member

Could be an interesting exercise to dig up how could someone under the communism could become so wealthy? Demjan was not starving the least bit under the Kadar “regime”. Of course this clown group will have nothing against him, as long as he willing to contribute to keep them in power. Maybe he should pay some special taxes too to help out the Hungarian debt. He indeed made his fortune in Hungary, under all regimes…

Ron
Guest

Someone: He did not make his fortune under all regimes. He did well under the communistic regime, because he had access to foreign currency. But he was also a trusted figure, otherwise you would not be able to run Skala.
He made his fortune, by receive/buying that piece of land, which is currently the BankCenter. When the BankCenter was not even finished he sold it to an American Pension Company for a whooping USD 60-80 million. The only way why he could do it, is because one of the tower was fully rented out to Deloitte and OTP.
And he did so well because for him quality was everything and taxes not.
In 1999 I was at a seminar, during which he was very critical of the Orban kormany, but especially about the bureaucrats, and how many there are. And at that time he made sense.
Now I am not certain. His fortune is based upon the service industry and not production industry. If Hungary overnight change to the production/agricultural industry he will loose a fortune.

Sackhoes Contributor
Guest

Someone writes: Could be an interesting exercise to dig up how could someone under the communism could become so wealthy? Demjan was not starving the least bit under the Kadar “regime”. ”
Demjan had a great deal of common sense and “pe4asant wiliness” (parasztos furfang). He convinced the authorities to let him organize a “collective of collectives”, where state collectives could rent space and sell their wares in a modern space. Skala took a rental fee. As time went on, the individual stalls dosappeared and Skala provided the retail services. The buildings were convenient for shoppers, had parking and a number of other services. He invented (copied from France) the modern hypermarket.
To keep the authorities off hos back, he made sure high muck-a-mucks had a “financial interest” in the business. His biggest problem was explaining his enterprise to visiting soviet bigwigs, who loved to shop at Skala. He told them that the idea came from Lenin himself. Skala was a collective, a trimuph of Leninist thinking. The soviets went home happy…

Member

Ron: “He did not make his fortune under all regimes.” Let me correct the, he lived a very wealthy life under all governments. For that matter I personally knew some of then people who were very involved with Skala, and they all lived very well, many of them took off to bigger ventures from the wealth accumulated. Now, I am not saying that is wrong to become wealthy or you have to be a crook to become wealthy, but you ned to serve somebody to get there if you are able to pull it off under all circumstances. As one of my favourites, Bob Dylan would say “But you’re gonna have to serve somebody, yes indeed
You’re gonna have to serve somebody”

Kirsten
Guest

I hope he did not forget to advertise a closing of Corvinus. There might be people who teach that wealth could also come from science and technological change not devised directly at the work bench.

Eva S. Balogh
Guest

Kirsten: “. There might be people who teach that wealth could also come from science and technological change not devised directly at the work bench.”
His ignorance is incredible but the real problem is that this kind of notions crop up in Orbán’s speeches as well. His emphasis is often on “productive work” as opposed to non-productive ones. And that is truly tragic. The prime minister of a country should know a bit more about economics.

Johnny Boy
Guest

A retired historian, having lost her sanity long ago, claims the man running the richest business in Hungary is completely ignorant about the basics of economy.
And nobody is laughing except me?

Member

His speech was so absurd and stupid that I actually thought he isn’t serious. It sounded like a tightrope walking act (Planet Hungary Circus). He tried to say a few things that may sound criticism but at the same time tried to suck up hard to Orban. The whole speech was pathetic. My favorite bon mot was this: “There will be no poverty if the 50% of the citizens will be wealthy”. I had the impression actually that he may not be as stupid as he looks. He’s just complimenting on the Emperors new clothes. It’s a sad fact that the Hungarian Oligarch (Magyar Nábob ?) seems to be a spineless jerk, who thinks his wealth – cozy relationship with the government – is more important then telling the truth and stepping up for his country.

Member

@And nobody is laughing except me?
That’s absolutely right. Nobody but you.
Your the only one here who is praising a guy who made his fortune on “connections” not “work”.

peter litvanyi
Guest

Let me bring up one of my favorite quotations:
“Even today I can’t make up my mind. Is the British ruling class malicious? Or are they simply stupid?”.
/”Parkinson” Dr. Northcote: “Life and Times of Horatio Nelson”/

Johnny Boy
Guest

“That’s absolutely right. Nobody but you. ”
Shows the quality of readers here.

Johnny Boy
Guest

“Your the only one here who is praising a guy who made his fortune on “connections” not “work”.”
You are seriously mistaken, I never praised Gyurcsány.

Member

“You are seriously mistaken, I never praised Gyurcsány.”
Good one.

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[…] work–building, manufacturing, and agriculture–is worth supporting. Once I spent a whole post on this profoundly ignorant man, but every time he opens his mouth I get wound up again. This time […]

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