The Ministry of National Development and the building of a “national bourgeoisie”

As we know, the Orbán government doesn’t hide its intention to assist the development of a very rich Hungarian upper crust. Although Viktor Orbán prefers to talk about a “national middle class,” Orbán’s middle class is not exactly the kind of middle class we normally envisage. We are talking here about the super rich. Orbán and Fidesz are using the whole state apparatus to enrich those few very rich men who in turn are beholden to the party and the government and who therefore are supposed to fill the coffers of Fidesz and most likely even the pockets of its leading politicians.

One common tactic is to award government contracts at inflated prices, often without competitive bids, from which the recipient is supposed to kick back a certain percentage to Fidesz and/or leading Fidesz politicians. The fattening of these big cats has cost Hungary a lot and not just in money. According to József Papp, a professor of economics at Corvinus University, the last year and a half was spent building up a strong Hungarian capitalist class and assisting them through more and more government orders and subsidies. This artificial and unnatural way of creating a domestic capitalist class is not good even for the Hungarian businesses involved because their growth is tied to government orders and they are at a loss in the competitive marketplace.

It is hard to ascertain how much is true about the alleged incredible graft that is going on, especially in the Ministry of National Development which just got a new head–a no-name minister without a university degree. It is widely believed that Mrs. László Németh (until recently we didn’t even know her first name) is a front behind whom important businessmen with close Fidesz connections stand.

József Debreczeni in his latest book on political corruption (Slough of Politics) spends several chapters on party finances. According to Hungarian law parties can spend very little money on election campaigns. One million forints per candidate. This is naturally not enough, and the money that is actually spent–about ten times more than the official figure–is ill gotten. No one knows exactly the source of this money but I suspect that most of the under-the-table money comes from Hungarian businessmen who win government contracts only if they hand over part of the money to the party “comptrollers,” a position that came into being in 1989-1990 when some of MSZMP’s incredible wealth that had accrued during the Rákosi and Kádár regimes had to be converted into invisible business ventures. It was MSZP that had the first comptroller, but Lajos Simicska, the man who handled Fidesz’s affairs, turned out to be much better at illegal wheeling and dealing. While the socialists and the liberals were caught at least once, Simicska’s “financial empire” was never seriously threatened. There was talk but that was all.

 

Lajos Simicska

Simicska is a very good friend of Viktor Orbán from his high school and college days. According to some, he is one of the most influential people in the Orbán circle because the prime minister considers him to be a financial genius. Perhaps he is, but most people also describe him as an unscrupulous and ruthless fellow without any moral compunctions.

Simicska is surrounded by other influential businessmen who are now occupying important positions either in government or as business leaders ready to reap the benefits of Fidesz’s new position. One such man is a lawyer from Szolnok, the birthplace of Anikó Lévai, wife of Viktor Orbán. His name is Zsolt Nyerges, and he recently ventured into the business world. The Hungarian media know little about Nyerges because he is very good at staying out of the limelight.

Zsolt Nyerges

Another businessman is Csaba Baji who lately became the CEO of Magyar Villamos Művek (Hungarian Electric Works). Interestingly, he is also from Szolnok. Several other people close to Simicska and Nyerges ended up in the Ministry of National Development. For example, Zoltán Schváb, assistant undersecretary in the ministry, or Ágnes Molnár, undersecretary responsible for the coordination of economic development. Another undersecretary, Sára Nemes, is also from Szolnok. Thus the whole top echelon of Tamás Fellegi’s ministry, including the former minister himself, is in one way or another connected to Lajos Simicska and his close friend Zsolt Nyerges.

Mrs. Németh’s performance before the parliamentary committee was miserable. She read whatever little she knew about the workings of the ministry and when it came to questions, she couldn’t answer most of them even with the help of the undersecretary sitting next to her. Apparently even the Fidesz members of the committee were taken aback, but being good partisan politicians they voted for her. According to Magyar Narancs, her appointment doesn’t come as a surprise to people in the know because Mrs. Németh belongs to the circle of Nyerges, Simicska, and Baji. After the elections Mrs. Németh, in spite of her lack of a university degree, was put into a very high position in the Magyar Fejlesztési Bank, a state-owned investment bank which seems to be the private wealth fund of the Fidesz government. (It just spent 4 billion forints buying the Ferencváros (Fradi) soccer team and the club’s real estate holdings. A poor team and a losing business venture.) She was made a member of the board of MVM (Magyar Villamos Művek) where the CEO is Csaba Baji, as I said a close associate of Nyerges and Simicska.

The general impression has been for some time now that Fellegi’s ministry is under the influence of the Simicska-Nyerges group. It is the Ministry of National Development that receives all the EU subsidies, some 1,200 billion forints. Already one of Nyerges’s companies, Közgép Zrt., received at least 200 billion forints in government contracts in the last year and a half.

And here is the new minister. The only female minister in the second Orbán government.

Mrs. László Németh

Mrs. László Németh seems, outwardly at least, formidable. However, she behaved very timidly before the committee which was chalked up to nervousness. Most people, including some Fidesz politicians and supporters, think that she is not qualified and will only make sure that government contracts end up with the “right people.”  The national bourgeoisie!

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Paul
Guest

Very depressing reading. My one hope for Orbán was that, although he was making a God-awful mess of things, he was at least doing it with some good intentions.
I know this sounds naive, but remember that almost* the entire Hungarian side of my family are rabid Fidesz, so I get ‘Saviour Orbán saving Hungary’ in answer to my every question and criticism. It’s hard to believe that so many good and intelligent people have been ENTIRELY conned.
*Excluding the few who have become disillusioned with Orbán and who now intend to vote Jobbik!

Paul
Guest
OT, but not entirely: “PM Orbán: What gives me strength Sunday, December 25, 2011 “In Hungarian domestic politics the real debate is not about the government. That only appears so. In fact, the various political forces are separated by what they think of the country. I am the leader of a community that thinks that Hungary is capable of achieving great things. Our opponents deny that. But it is not some kind of romantic nationalism that makes me think so, but experience — our country has great future ahead of it because we are hard-working and talented people. Between 1998 and 2002, I already served as a prime minister and I know exactly what we are capable of, what we can achieve if we join forces. If today, we would be where we were in 2002, then we could take the current European crisis lightly; turning up the collar of our shirts would be enough to weather the crisis, but things have been changed since then and now, we need raincoat. In 2002, unemployment was six percent, the national debt was fifty-two percent and we had 4 percent annualized GDP growth. We were Central Europe’s most successful and most respected… Read more »
Member

I the MNO “interview” IMHO is very heavily, and I must say professionally, edited propaganda. No way Orban could answer these questions this consistently in a live QA session. The questions are very direct and provocative, like “You announced a fight against debt and now we are in bigger debt than we were when you took over”.
Sadly all the responses, even though they are shameless lies, will appeal to the average Joe.The interview is full of populist propaganda, playing on the “Forza Hungaria” sentiment, like in Paul’s quote “we are the good guys, because we believe in you, unlike the opposition”. Sly populism at it’s best. Very general, nothing about the actual details of the most controversial laws.
This interview is scary as hell.

Ron
Guest

The article of Eva mentioned only the top of the problems. It is actually very bad, especially since the new Procurement Act came into force. Transparency International monitor this behavior since 2006, and it is only getting worse.
http://www.transparency.hu/Two-thirds_of_purchases_are_not_regulated_by_the_new_Public_Procurement_Act?bind_info=index&bind_id=0

NWO
Guest
Those of us who have been watching the economy for Hungary for years understand the much of it has revolved around the gathering of assets for the political parties. This was true under MSZP as well. What seems to have changed is the level of avarice and the exceptionally hard ball tactics currently being used. Currently, almost any business not owned by a significant foreign investor is at risk of being taken over by political interests. This is done either via legislation (eg, the nationalization of the SMS payment systems last week) or in the more old fashion way (individuals with political power essentially extorting their way to control) (eg, see the stories that surrounded the sale of Orangeways last year (to name one of many)). On the Orangeways issue, I have no first hand knowledge. The fact is-and this is one of the greatest failures of the Hungarian political system, that at least since the mid-1990s, politics is seen as a primary route to wealth creation. You go into politics not to make the country better but to make yourself richer. Even power is not available to most politicians. Does being a backbencher given one any real power (does… Read more »
Ron
Guest

One picture says more than a thousands words.
comment image

Kirsten
Guest

Paul, who does the website you suggested us to have a look at belong to? I could not find that on the site. Quite interesting altough I wonder whether they will make it to the new “bourgeoisie”. The system with the national development ministry (called differently but that does not matter, simply the ministries in chanrge of public investments) is similar in the Czech Republic too. And it is not decided yet whether it can be obstructed even with a press that can be called free, so the prospects with neither the press nor the judiciary being independent are really worrisome.

Eva S. Balogh
Guest

Ron, the picture is great. Another Nyerges story in Magyar Narancs. A very important frequency was given to a company called Prodo Voice owned by Nyerges. He seems to have a mysterious Dutch business partner whose name is Gerardus Petrus Jacobus Ligtenberg. Here are the details. Have you ever heard of a Gerardus Petrus Jacobus Ligtenberg?
http://magyarnarancs.hu/belpol/juventus-frekvencia-78063

Guest

Paul and Kirsten: I am puzzled by Hungarian Ambiance (with its ‘quote of the month’ which never seems to change. I have always assumed it to be a Jobbik site and really do not understand why it is in English.

Wondercat
Guest

@Prof Balogh — leaving out the middle names, “Gerardus Ligtenberg” appears to be a director at Treschnak GmbH, Zollhausstrasse 5, D-58640 Iserlohn. Treschnak (http://www.metall-kunststoff.de/) manufacture machine tools.

Member

Sorry all, it is in Hungarian about the Nyerges connection:
http://tinyurl.com/84rlz3n
Today in the NOL, there is an article about a new letter Hilary Clinton wrote to Orban on December 23rd. It is about democracy and apparently even Klubradio is mentioned. No details yet although.

Eva S. Balogh
Guest

Some1: “It is about democracy and apparently even Klubradio is mentioned. No details yet although.”
Apparently it is hard hitting.

Ron
Guest

Eva: He seems to have a mysterious Dutch business partner whose name is Gerardus Petrus Jacobus Ligtenberg.
What I could find on the internet is:
Egyéb bútor gyártása ANTIPODE BÚTORGYÁRTÓ ÉS KERESKEDELMI KFT. 5002 Szolnok 701 – 1000 millió Ft 50-99 fő között G. P. J. Ligtenberg ügyvezető igazgató

Ron
Guest

Eva: Have you ever heard of a Gerardus Petrus Jacobus Ligtenberg?
Yes I do know him, although I have not spoken with him for a long time.
I could not believe the story, as he is not that type of guy.
So I called around, and spoke with people who met him recently, and all were surprised that his name came up in this article.

Eva S. Balogh
Guest

Just heard: Balázs Nagy-Navarro and the woman who have been on hunger strike for seventeen days have been fired by MTVA

Member

Another news from Planet Hungary:
The will be a show in the BP Opera to celebrate the new “constitution” on January 2. All the FIDESZ bigwigs are invited.
The soup kitchens ran out of supplies during Christmas.
I want the Habsburgs back …

Guest
Interfering English Democrat here! Greetings from London! A common reaction and sentiment about Eva’s blog is that the EU is powerless to do anything about a rogue member state. “What can the EU do?” “There are no mechanisms for expelling a rogue state”. Well it can – and very powerful will be its effect. The EU will not like being called to account by the USA – however gently the shortcomings are exposed – by Hillary Clinton, Krugman, Scheppele and others – and then stand idly by. Nor will it stand idly by and allow Fidesz to misappropriate EU funds; strangle democratic institutions; illegally tax commerce and, inter alia, become an authoritarian state with the thinnest veneer of democracy. Nor will it like the stirrings of unrest in the region caused by insensitive voter registration moves (will Hungary ever ‘suck it up’ with regards to Trianon?). Nor will it allow already committed IMF loans to be put at risk by inappropriate Central Bank changes – and certainly won’t commit any more aid under these circumstances. I believe that the net-contributor EU nations are already aware and strongly disapprove of what is going on in Hungary – just from a purely… Read more »
Gábor
Guest

Éva, she is Aranka Szávuly, just to pay a proper respect to her.

Eva S. Balogh
Guest

CharlieH: “Interfering English Democrat here! Greetings from London! A common reaction and sentiment about Eva’s blog is that the EU is powerless to do anything about a rogue member state.”
Actually I don’t share this pessimistic view. I think that the EU politicians realize that they must act and if the decision is made then they can do all sorts of nasty things to Orbán. First and foremost, not giving him any money. That would do the trick.

Eva S. Balogh
Guest

Sorry, I forgot her name.

Wondercat
Guest

@Charlie H: The “But what can the EU do?” stance is reflected in a commentary (Charles BREMNER) on a report (Adam LEBOR) — ORBAN DEFIES BRUSSELS AND PUSHES THROUGH LAWS THAT BREACH EU RULES, the headline shouts — that together take up the entire first page of the TIMES (London) foreign-affairs section. (I tell a lie. The image of Vago Gabor between two policemen and that of Ertsey Katalin holding an “Enough already” STOP-sign use space that might have been given to text. Sorry, no link; the TIMES protects its copyrighted material behind a pay-for-access wall.) Slowly attention is growing; and drip by drip hollows the stone.
Perhaps German and Austrian financial interests will impede action of the sort that you propose. But I trust that it will come.

ChrisW
Guest

I note that the British press are taking notice of what is occurring. There was an interesting editorial in The Guardian on Boxing Day and an article in The Times today. Neither backing Orban in any way.

GDF
Guest

Eva:”Just heard: Balázs Nagy-Navarro and the woman who have been on hunger strike for seventeen days have been fired by MTVA”
It’s a shame!
But I am not surprised, typical dictatorship move.

Paul
Guest

Kirsten and Gretchen – if it isn’t Jobbik. it’s someone very close to them. Which amounts to the same thing.
Why in English? So us non-Hungarian speakers can read it (i.e. nearly 500 million people, as opposed to 10 million).
Jobbik just talking to its voters is a loony right-wing party in a small central European country talking to a few hundred thousand deluded inadequates.
Jobbik talking to the world via a (well translated) English site is a political force the world takes notice of.
A brilliant piece of propaganda – were it not for its loony views and the truly nutty stories it carries (note the number of mentions China gets). It would be cool of me to pretend I visit this site to keep up to date with the enemy, but actually I go there for light relief!

Paul
Guest

CharlieH – the EU doesn’t have any powers to do something about OV and Hungary. The ONLY thing it can do is withhold money.
So, instead of doing something positive to help the poor Hungarians, it’s only option is to help OV destroy people’s jobs and their life savings, take away their homes, and leave then starving on the street.
AND get OV off the hook by providing a ready scape-goat for him to blame.
Hungary could well find that being ‘saved’ by the EU is even more fun than being ‘liberated’ by the Soviets.

Member

Charlie, I hope you are right, but at the same time I feel very sorry for Hungarians. THey were duped into thinking that Orban is the messiah, and still being misguided. They will only realize what hit them, when their money will worth nothing. THe price of milk and bread will fivefold and so forth. Of course Orban will blame the communists and the the last eight years prior to his last two years. The Jobbik will blame the Jews and the USA. Most Hungarians will buy into the propaganda of course.

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[…] projects, a lot of details about the Nyerges-Simicska empire were available much earlier. I wrote once about the relationship between the Ministry of National Development under Tamás Fellegi and […]

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