How to ruin a businessman with government help? The case of the famed Zsolnay porcelain factory

Zsolt Páva made quite a splash back in October 2009, right after he became the mayor of Pécs in a by-election. One of his first acts was the forcible takeover of the city’s hydroelectric company with a view to expropriating the 48% of the company’s shares owned by Suez Environment, a French company. At 3:00 a.m. security men occupied the headquarters of the firm on the orders of the mayor, and when the employees arrived, they prevented 13 people belonging to the upper and middle management of the company from entering. Prior to the “lock-out” the city fathers, including the MSZP members of the council, had set up a new company with a modest 5 million forint investment.

The optimistic city fathers were sure that Suez would gladly sell their shares for very little money. Wrong. Two years later Suez filed a claim at the Vienna International Arbitration Court seeking €32.3 million (more than 10 billion forints) in compensation for revenue lost. The parties eventually settled for a payment of 3 billion forints, which the city of Pécs was unable to come up. The bill was eventually paid by the Orbán government. At that time I wrote a post titled “Foreign investors in Hungary beware: Pécs and Suez Environment.” The Pécs incident occurred months before Viktor Orbán became prime minister, but surely Páva acted with the encouragement of if not at the instigation of Fidesz. And the case foreshadowed the kinds of crude attacks on foreign businesses that the Orbán government has pursued since.

Now, Páva and the businessmen behind him are embarking on a similar adventure, but this one is unlikely to have the same sorry end that the Suez escapade did. Because this time, it seems, everything will be done “in house.” The city will simply be an intermediary, eventually passing the Zsolnay Porcelánmanufaktura on to a Fidesz oligarch. The methods being employed are akin to those used in the Suez takeover. Just as then, the city has established a new company. It has enticed the majority of the approximately 150 workers to abandon Zsolnay in favor of the new city-owned company. The aim is a forcible takeover of private property.

Vintage Zsolnay vase, ca. 1870

Vintage Zsolnay vase, ca. 1870

Zsolnay became internationally famous in the late nineteenth century thanks to a distinctive style combined with innovative materials. The eosin process was one such innovation, used especially in the art nouveau period. After 1948 the factory was nationalized, and its products bore no resemblance to vintage Zsolnay.

Zsolnay’s exquisite porcelain creations wouldn’t have been enough to keep the factory going. What made it profitable was the invention of pyrogranite, an ornamental ceramic product that is fired at a high temperature. This process makes it acid- and frost-resistant, and thus suitable for use as roof tiles and other outdoor decorative ceramics. Pyrogranite was developed by 1886, just in time for the millennial building frenzy that provided Zsolnay with fantastic business opportunities. Apparently today it is the factory’s tiles that makes the business so attractive as a take-over target.

The current owner of the Zsolnay factory is Bachar Najari, a Syrian-Hungarian-Swiss businessman who arrived in Hungary in 1970 as an exchange student. He is married to a Hungarian and speaks the language fluently. He decided to come to the rescue of Zsolnay for the sake of his wife, who felt very strongly about the survival of this famous porcelain factory.

After 1990 there were many attempts to revive the 150-year-old company, but with no success. The owner just before Najari was so exasperated that he “sold back” the factory to the City of Pécs for one forint.

In 2013 Najari bought 74.5% of the shares from the city for 180 million forints and promised to invest 500 million forints into the enterprise. At the time of the purchase the company had a deficit of 268 million forints, but two years later the loss was only 54.1 million forints. There was also an outstanding loan of 413 million forints taken out by an earlier owner. It is this loan that, in conjunction with the “pillage” of Zsolnay workers, is now being used to wrest Zsolnay from Najari.

The loan was extended by the state-owned Hungarian Development Bank (MFB), whose “core tasks include the provision of funding for growth under favorable terms and conditions to Hungarian enterprises, supporting the long-term development objectives of the state, and obtaining funds from money markets for these purposes.” According to the original agreement with Najari, the city of Pécs was supposed to negotiate with the MFB to convince it to forgive this old loan for the sake of saving the factory. The bank in fact didn’t press Najari to do anything about the loan. But then suddenly, on May 18, MFB informed him that he had 15 days to pay it back in toto.

It is hard to escape the suspicion that the Hungarian government is complicit in this affair. Months ago Zsolnay was declared an “economic organization enjoying strategic priority,” a status that allows the government, if necessary, to take over the liquidation of the company.

The company that the city of Pécs established to squeeze Najari by hiring away his workers will probably become the new owner of record. But the city is unlikely to remain the owner for long. Attila Paár, a Fidesz oligarch, is very interested in buying the factory. In fact, his company has already purchased MFB’s claim against Najari.

Paár is the owner of the West Hungária Bau company, which was in charge of the restoration of the Várkert Bazár. Paár’s name may also be familiar to readers of Hungarian Spectrum because he was the person who “bought” Elios Zrt. when the European Commission’s Anti-Fraud Office started looking into Viktor Orbán’s son-in-law’s company.

Museum of Applied Arts

Museum of Applied Arts

Why is Paár so eager to buy Zsolnay at this junction? First of all, in the last two and a half years Najari and his wife have considerably improved the financial situation of the company, which was desperate straits at the time of their purchase. Among other things, they have invested a billion forints in the company. Second, several important buildings in Budapest will be reconstructed in the near future, among them the Museum of Applied Arts, whose whole roof was originally covered with pyrogranite tiles made by Zsolnay. The building where the ministry of economy will move in the Castle District also had a Zsolnay roof. As far as Fidesz is concerned, these projects, financed mostly by the European Union, should benefit those Hungarians who are steadfast supporters of the Orbán regime. Najari, who was born in Syria, doesn’t cut it.

June 17,2016
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Observer
Guest

The Orban Mafia state par excellence.

They use these simple tricks time and again believing the robberies have been made legit (lepapirozva). I rather see this as establishing a pattern which proves a criminal intent / conspiracy.

webber
Guest

The Moskva Hotel in Belgrade (orig. Palata Rosija), built in 1908, w. Russian capital, is also roofed and decorated in Zsolnay. It was recently renovated and, it turned out, very few of the original tiles had to be replaced. The quality is that good.

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Related to an earlier topic: The hotel was taken over and used as Gestapo headquarters during the German occupation. The hotel’s (sterling) silverware and gold-plated utensils were looted by the Germans. No compensation was ever paid by Germany for this. If the silverware wasn’t melted down, it is probably gracing the tables of the descendants of a Gestapo officers.

Guest

Not too much OT – a scathing editorial on O and Soros:

George Soros and Viktor Orbán used to agree on a lot of the problems that plagued communism, including government control of the media, the judiciary and certain markets. Now that Orbán is prime minister, he has decided that government control can be good, and that Soros is bad.

Orbán says Soros has changed his viewpoint, and suggests that Hungarians now oppose the philanthropist’s causes. But Soros has been pretty consistent. In fact it is Orbán who has shifted his politics.

http://bbj.hu/opinion/editorial-soros-still-the-same-and-still-needed_117898

Guest

Looking at that incredible 1870 Zsolnay vase immediately reminded me of Herend’s porcelain works which have existed since the 19th. Also another example of fine Magyar artistic craft endeavors done through great workmanship.

Herend looks a ‘settled’ factory today as far as ownership but it appears it suffers from counterfeiting. I have two objects. I don’t think they’re counterfeit as I got them right at the door during the ‘K’ regime. Today though somebody’s making something on the sly. Wonder who is making a nice porcelain profit.

Guest

Herend’s pottery is beautiful, yes. We hosted a family here for a holiday in London – and they presented us with a beautiful Herend porcelain clock – with authentication certificate.

Herend is regularly presented as State presents to foreign dignitaries – William and Kate were presented with a Herend dinner service at their wedding.

We regularly attend the Sidmouth Folk Festival and there is a shop in the town that has a big range of Herend – the only place I’ve seen it on sale in England. (However if I searched hard enough I’d probably find it in the ‘west end’).

Hungary has not yet presented me with anything – but I wait in hope!

Guest

Your guests weren’t unmindful of your hospitality! Getting Herend is a fine ‘koszonom szepen’,

I treasure the objects I have. They have a lot of emotional resonance for me as they help forge a continual link to my ancestral country and family through the ages.

Ndy - PIRACY - a how-to
Guest
Ndy - PIRACY - a how-to

This is now the million+1 example of the official PIRACY programme

webber
Guest

Hungary now has a Balkan standard of living. That is, Hungary is among the poorest in the EU now. Csak a Fidesz –
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tappanch
Guest

Hungarians are elated with the draw against the great Iceland. Hungary will advance from its weak group. Orban & friends are all forgiven for making them poor subjects.

On the photo, observe the Szekely alphabet promoted by extreme nationalists (usually strong anti-Semites)

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Page from the Nickolsburg [Mikulov] codex, the first written record (between 1490 and 1526) of this alphabet. Please notice that it is on same page with the Hebrew alphabet.

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tappanch
Guest

The “ancient” Szekely flag on the first photo [and on the Orbanist Parliament building] is 12 years old only (was adopted on January 17, 2004).

Its closest ancestor seems to be the flag of Crimean Tatar People’s Republic (1917-1918):

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This is pretty funny to me, regarding the pillage of Transylvania by the Crimean Tatars in the 17th century. especially between 1658 and 1661.

Istvan
Guest

Even more curious for me is the celebrant wearning a New York Yankees baseball hat. When I was in Africa helping to deliver aid I saw even more circumspect Yankees logo wearing among tribal people who did not understand baseball in the least.

tappanch
Guest

The blacks shirt with “Magyarorszag” on it + baseball hat seems to be a uniform for male cheerleaders, probably distributed by the Orban government.

See 0:51 in https://youtu.be/BhiZdsdhpvY

tappanch
Guest

We can see different young people on the photo and the video, different locations with the same black shirt and black baseball hat turned backward in uniformity.

tappanch
Guest

Marseille, June 19, 2016:

“Riot police used pepper spray against Hungary supporters in black T-shirts”

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http://www.bbc.com/sport/football/36568629

tappanch
Guest

The black T-shirt fashion started by Hungarian government gift (“organizers”) against the Romanians in September 2013.

http://www.nemzetisport.hu/foci_eb_2016/miert-vannak-szurkoloink-fekete-feher-magyarorszag-feliratu-poloban-2507775

“The Milizia Volontaria per la Sicurezza Nazionale (MVSN, “Voluntary Militia for National Security”), commonly called the Blackshirts (Italian: Camicie Nere, CCNN, singular: Camicia Nera) or squadristi (singular: squadrista), was originally the paramilitary wing of the National Fascist Party from 1919. They may have numbered 200,000 by the time of Mussolini’s March on Rome from 27 to 29 October 1922. Its members were distinguished by their black uniforms and their loyalty to Benito Mussolini, the Duce (leader) of Fascism, to whom they swore an oath. “

tappanch
Guest

Average net wages.

Hungary: 100.0%
Slovakia: 124.2%
Austria: 372.6%

Price levels, 2015. (Source: EUStat, June 2016)

Food and non-alcoholic beverages:

Hungary 100.0%
Slovakia: 112.7%
Austria : 138.0%

Alcoholic beverages and tobacco:
Hungary: 100.0%
Slovakia: 107.7%
Austria: 136.9%

Clothes:
Hungary: 100.0%
Slovakia: 124.7%
Austria: 122.2%

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