The end of an Orbán family business?

In November 2014 I wrote a post,”How do European Union funds end up in the hands of the Orbán family?” It was about the new member of the Orbán clan, István Tiborcz, the husband of Viktor Orbán’s eldest daughter, Ráhel. Tiborcz and Ráhel had known each other for at least six or seven years before they married in September 2013. The young man in 2008 was a fledgling businessman, half owner of a small business dealing with electrical supplies. In 2010, however, one of Közgép’s divisions purchased the majority of shares in Tiborcz’s business. From this point on the business, named Elios Innovatív Zrt., changed directions and became the leading installer of LED-technology street lighting. One after the other, Fidesz-led municipalities made sure that the to-be son-in-law’s company received lighting contracts. By 2012 Elios was thriving. What surprised me at the time was Közgép’s withdrawal from the company just when Elios was doing so well. I wrote: “what baffles me is the role of Simicska’s Közgép. I find it more than a little odd that Simicska’s Közgép shows up to support the fledgling business of István Tiborcz, already known to be Ráhel’s boyfriend, only to withdraw from the firm after its spectacular growth. Közgép is not, as far as I know, active in venture capital or private equity.” Now, a few months later, I am no longer baffled. Közgép/Fidesz, because it is difficult to know where one began and the other ended before the Simicska-Orbán fallout, in fact did play the role of venture capitalist. It financed the “promising” company of István Tiborcz, the future son-in-law of the boss. Moreover, it was a surefire investment given Elios’s business profile. Especially since, as it turned out, the government allocated almost 9 billion forints of mostly EU money to upgrade ordinary street lighting to LED technology. And orders from Fidesz-led municipalities could be counted on.

Looking back now on the beginnings of Tiborcz’s business career, I’m almost certain that Tiborcz’s transition from owning a business that sold electrical supplies to owning one that installed street lighting was inspired by Viktor Orbán himself, who by 2010 knew very well that there would be plenty of EU money for more efficient street lighting fixtures. It was to the advantage of the municipalities to embark on such a project because 85% of the cost was covered by EU and Hungarian government money. And given the family connection, business success for Elios was guaranteed.

István Tibor and his father in law, Viktor Orbán having some  homebrew

István Tibor and his father in law, Viktor Orbán, having some homebrew

My suspicion was further aroused when I read lately that János Lázár, then mayor of Hódmezővásárhely, was the first head of any Hungarian city to come up with the idea of LED-technology street lighting. That was in the fall of 2009, before the 2010 elections. At the time such technology was still in its experimental phase, even in the most developed parts of the world. The city fathers approved the idea and soon enough Hódmezővásárhely chose István Tiborcz’s brand new company to do the job. It was this job that established Elios as the expert in LED street lighting technology.

In fact, Elios was too successful, Tiborcz too greedy, or the municipal leaders too servile. Far too many contracts landed in Tiborcz’s lap, and questions kept popping up about his business success, which smacked of corruption and nepotism. Yet, although months went by and negative articles multiplied, Viktor Orbán didn’t seem to be bothered about the unfavorable press. In fact, Nándor Csepreghy, assistant undersecretary for communication involving European Union projects, outright lied to György Bolgár of KlubRádió when the reporter asked him about the inordinate number of projects in which Tiborcz’s firm was involved. He claimed that there were hundreds and hundreds of such municipal orders and that Elios won only a couple of dozen of them. Soon enough it became known that so far only 33 cities have received grants from the EU and the government for street lighting to the tune of 5.7 billion forints and surprise, surprise, István Tiborcz’s firm won 71% of these contracts–that is, close to 4.1 billion forints. Very often Elios was the sole firm that qualified because the demands of the Fidesz-led municipalities were tailor-made to fit the son-in-law’s firm. Details of this highly irregular affair can be found in an article published by direkt36.hu in March of this year.

Although Viktor Orbán acted as if he were oblivious to the growing scandal surrounding his son-in-law’s business dealings, by now we learned that the decision to escape from a very sticky situation was made sometime earlier. They decided “to sell” István Tiborcz’s 50% stake in Elios. On May 28 Napi Gazdaság, the new servile government newspaper, reported that exactly one month earlier, on April 28, István Tiborcz sold all of his businesses that had anything to do with public procurement. The family could no longer stand the constant attacks by the opposition and the antagonistic media.

On April 30, two days after the sale of Elios, HVG reported a “sensational piece of news.” János Lázár himself rejected the city of Jászberény’s proposal because its wording was suspiciously designed to match Elios’s qualifications. Well, in light of our current knowledge that by that time István Tiborcz was no longer a co-owner of Elios, Lázár’s bravery, hailed by HVG, is less admirable than it seemed at the time.

Who is the new part-owner of Elios? His name is Attila Paár, another Fidesz oligarch who has been involved in many large projects, such as the renovation of the Várkert Bazár and the National Civil Service University. On April 23, 2015 he established, together with two partners, a business called WHB Befektetési Kft (WHB Investment), which  five days later purchased Tiborcz’s share of Elios.

Before Tiborcz’s share of Elios was sold, Tiborcz and his partner took out 470 million forints in dividends from the company’s profits, which left the company with only 6.29 million forints on its balance sheet. The deal has all the earmarks of a fictitious transaction.

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Member

This epitmises the way Hungary is run under Fidesz. State sponsored corruption is so deeply embedded here now it’s beyond belief. The shocking point is how blatant they are.

Incisive, investigation could join the dots and bring down the whole house of cards.

The Tibor case is a great way in.

The morphing of his business to become the number one in LED street lighting, with the insider knowledge of substantial upstream EU funds.

The ratio of Fidesz controlled districts awarding ‘tendered’ contracts to Elios Zrt compared to non Fidesz councils.

The similarity of wording between tenders, the composition of tender decision makers.

The timing of selling of shares in a highly profitable company and opening of a police investigation into the business.

The lengths and timing, the government goes to, to cover their tracks, Re. János Lázár’s high level attempt at obfuscation, and therefore implication.

This can only be tackled from outside the country, but would be definitely worthwhile, it’s sloppy and brazen approach has left it vulnerable. This is EU taxpayers money.

Jata
Guest

I got one word for you: stróman. (front)

There’s no way Orban will part with those billions (hundreds of millions just in legal profits from this Elios alone). Using srómans is a reliable way of operating within Fidesz and in Orban’s family too.

This is a non-news really, a simple internal restructuring.

spectator
Guest

Spot on!
It never occurred to me either that Viktor will bother with the curly pigs himself, oh no.
He ceremoniously opened the facility, lowered the VAT on the product – but the pigs themselves bear the name of the Mészáros & Mészáros – or whatever the actual company called – so, there is no paper trail point back to daddy.

Not even party membership granted to them, I’m afraid – a rare few of their kind.

Guest

When Orban’s power crumbles his strawmen will forget they are strawmen and cheat him.
It seems that it already began in Tokaj.

http://www.pesterlloyd.net/html/1522tokajkriege.html

Ron
Guest

Eva: Before Tiborcz’s share of Elios was sold, Tiborcz and his partner took out 470 million forints in dividends from the company’s profits, which left the company with only 6.29 million forints on its balance sheet. The deal has all the earmarks of a fictitious transaction.

I do not believe this transaction is fictitious, although there are some questions. Why pay out dividend/ Dividend result in dividend tax (16%), and subsequently Income Tax. You could restructure the entire sale in such a way that no tax would have been paid whatsoever.

These guys made at least Ft.1 billion/ Eur 3.3 million (exchange rate used 300) on street lighting alone, what about the solar systems they sold, was that included in this business or is that a separate business? According to the below mentioned report (article of December 20, 2014 it was 2.5 billion annual profit.)

http://hungarianspectrum.org/2014/12/20/how-do-european-union-funds-end-up-in-the-hands-of-the-orban-family/

I do not think it was a fictitious transaction, I think it was a quick get out deal. A structured deal would have take time, for what ever reason they believe they do not have time.

hill
Guest

Let us advocate the Chinese style justice to stop corruption.

God save Hungary from these regimes.

Guest

Capital punishment didn’t stop corruption in China.

petofi
Guest

I think I like the Arab way: cut one hand off for the first offense…and it builds from there for subsequent offenses. Seems like the perfect deterrent for Hungaricoes who will no longer be able to twirl their mustachios after two offenses!

spectator
Guest

Yeah, but they still be able to push the button in the Parliament, so, you’ll have to come up with some alternative solution in order to solve the problem..!

petofi
Guest

The button will have a little flip-top with a key. And, to get to your key, you have to use your parliamentary ID card to open the drawer.
How’s that?

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