Only lately have journalists started to shine a spotlight on a company that has been handling more and more government infrastructure projects. The company has a rather unimaginative name with a tinge of the 1950s when practically all state companies’ names started with “Köz” (public). For example, a chain of grocery stores was called “Közért” and a lot of people still refer to the small corner grocery stores as ‘”közérts.” “Gép” in Hungarian means “machine.”
Little was known about Közgép. Its website offers a rather inflated company history that claims that the company goes back to 1921. From the description it is not quite clear what Közgép’s predecessors did exactly, but they seemed to have been closely connected to government organizations. In 1951 the company was reorganized and somehow managed to survive with the financial help of the government until it was privatized in 1994 and became known as Közgép.
Although the website is not exactly full of details of the recent history of the company and the projects it worked on, I found many important government jobs Közgép handled: the four-lane highway M6 (Budapest-Pécs), part of the M43 highway, and road maintenance in Győr, Salgótarján, and Sopron. Among its ongoing projects are the northern railway bridge, the renovation of the railway bridge in Mezőtúr; the M6 viaduct at Szebény, and waste management in the Balaton-Sió area, Nógrádmarcali, Veszprém, and Debrecen. We are talking about billions and billions, not forints but euros. Yes, because most of these projects are financed by the convergence program of the European Union.
According to András Pethő’s history of the company on Origo, it seems that Közgép managed to get hefty government contracts even during the socialist-liberal governments. It is unlikely that they knew that the owner of Közgép was Lajos Simicska, the former “treasurer” of Fidesz and the real power behind the success of Fidesz. He has been providing financial backing for the party ever since its establishment in the late 1980s. Charges of corruption surrounding the renovation of the Margaret Bridge in Budapest were widespread, but it looks as if the greatest beneficiary of the project was Fidesz through Simicska’s company, Közgép, that worked on the project and not the corrupt socialists. Or at least, not only the ones.
Közgép’s website is certainly tight-lipped on the subject of ownership, and even András Pethő of Origo couldn’t get any further than Zsolt Nyerges, a businessman from Szolnok and a partner in some other business ventures with Lajos Simicska. But at last the word is out that the owner of Közgép is Simicska himself. The CEO of the company, Miklós Németh, was forced to reveal his name because of Közgép’s application for a public tender. In such tenders the name of the actual owner cannot remain a secret.
The search for the real owner of Közgép has been going on for years, but certainty eluded the journalists. Although there were rumors about Simicska’s involvement with the company there was no proof, and most of the journalists who tried to learn something about Közgép were reluctant to risk a whopping fine in case Közgép sued the paper for libel.
As soon as Simicska’s ownership was revealed, László Varju, the managing director the Demokratikus Koalíció, announced that his party is going straight to Brussels. At the press conference Varju said that they had been suspicious about the contracts worth billions Közgép received from the Orbán government. Varju listed some of the mega-projects Közgép was involved in and added that the state-owned Hungarian Development Bank just lent 34 billion forints to the company while small and mid-size companies are unable to get credit.
DK decided to go straight to Brussels because Fidesz’s two-thirds majority would prevent convening a parliamentary committee to investigate Simicska’s company. They can’t go to the Government Audit Office because its chairman is a former Fidesz member of parliament. They certainly can’t turn to Péter Polt, the chief prosecutor, or Tünder Handó, who heads the judicial system. However, the European Union has an office charged with investigating possible fraud in European Union subsidies. DK would like a ban on signing further contracts with Közgép until a satisfactory answer is found about the fate of the money Közgép received in the last year and a half.
How much of this money landed in party coffers is hard to judge, but I have little doubt that it was a substantial amount. By now the European Union must feel swamped with complaints about the Hungarian government, and I have no idea whether they will undertake yet another investigation. But I think it would be to their advantage to look into the matter.