Back in 2009 there was quite a scandal in the Hungarian media world. The licenses of two powerful radio stations were up for renewal. Both were owned by foreign companies. Sláger was owned by Emmis Communications Corp., Danubius by Accession Mezzanine Capital, an investment fund based in Vienna. These two stations were powerful enough to cover the whole country and therefore much coveted.
At the time I wrote a detailed account of the events: “Fight over the Hungarian airwaves or more than that?”. In order to understand the current law suit against the Hungarian government by the Indianapolis-based Emmis International Holding B.V., a unit of Emmis Communications Corp., and the Bermuda-registered venture capital fund Accession Mezzanine Capital LP one should read the background post.
The most important information I managed to glean at the time was that Barbara Brill, senior vice-president of Emmis Communications’ international subsidiary, claimed that they “were approached by a political party and it seemed clear that a deal was being offered in return for the party’s support in the tender.” The Economist at the time was convinced that the party that approached Emmis was Fidesz, then in opposition, which “has stoked discontent with privatization, foreign investors and, to an extent, free-market capitalism in general.” The Economist concluded that “outsiders must hope that Fidesz can contain the genies it has so casually unbottled.”
Because of the law suit that was brought against the Hungarian government by the former owners of Sláger and Danubius, we now know a little more about this murky affair. The plaintiffs claim that the tenders for the frequencies were “seriously flawed”and actually “amounted to the expropriation of investments.” Those who received the two frequencies were “politically favored persons.”
The plaintiffs allege that representatives connected to Orbán’s Fidesz party and the leadership of MSZP urged the investors to “reach an accommodation” with the political parties “to have a chance” at renewing their licences. One of these mysterious visitors from Fidesz was none other than Tamás Fellegi, former minister of national development and currently minister without portfolio in charge of the still non-existent IMF/EU negotiations.
Once Danubius lost its bid because it refused to make a deal with Fellegi on behalf of Fidesz, a brand new Hungarian company received the frequency. The company was owned by–you guessed it–Tamás Fellegi and Zsolt Nyerges, his business partner of long standing about whom one can read a lot in the Hungarian media lately. Fellegi naturally denies any wrongdoing.
Emmis, which had operated Sláger Rádió for twelve years prior to the tender, said that it “received overtures” from MSZP’s chairman, Ildikó Lendvai, and László Puch, the party treasurer at the time. Or at least this is what the court documents claim. Puch denies ever meeting the investors or conducting talks with them. Lendvai describes her meeting with Emmis’s representative as a discussion of the investors’ concerns that local bidders may outbid the incumbents. As it turned out, the locals offered exorbitant and totally unrealistic licencing fees. However, Lendvai denies that she held “talks with Fidesz or any other political party regarding any sort of political deal.”
Advenio, the company Fellegi and Nyerges set up, won the tender for Danubius’s frequency by offering to pay 200 million forints ($907,700) and 55 percent of projected net sales each year after July 2011. The other company, FM1, a consortium more closely allied with MSZP and the winner of the Sláger frequency, offered to pay 200 million and 50 percent of expected sales.
However, these two new companies had to pay the fees they pledged for only six months. After that, the fees were cut because of “challenges stemming from the economic crisis” and “unfair price calculation.” The new Media Authority refused to disclose the amounts currently being paid by Advenio and FM1.
Emmis and Accession turned to the International Center for Settlement of Investment Disputes based in Washington because they claim that “the media law precluded any meaningful remedy” in Hungary.
So, Tamás Fellegi and Zsolt Nyerges again.
Yesterday Viktor Orbán proudly displayed his senior paper on his website. And who do you think his senior advisor was? Tamás Fellegi! And what is the connection of Nyerges to the Orbán family? Nyerges is from Szolnok, as is Anikó Lévai, Viktor Orbán’s wife. Moreover, after the Orbáns got married they lived in Szolnok for two years. The connection between Nyerges and the Orbáns most likely goes back quite a number of years.
After HVG managed to uncover Pál Schmitt’s plagiarism the Hungarian media became somewhat emboldened and is making a more serious effort at investigative journalism than previously. I have managed to collect quite a folder on Nyerges et al. that I will share with you soon.