Until recently little was known about Heinrich Pecina, an investment banker and majority owner of Vienna Capital Partners (VCP). His name appeared often enough in the Hungarian media, but he remained a somewhat mysterious character. Now, after the Népszabadság scandal, plenty of information has emerged about the man, none of which is reassuring. His private equity firm specializes in former Soviet bloc countries--Poland, Hungary, Croatia, Russia–as well as China.
Pecina worked for the famed Creditanstalt before establishing VCP in 1998. Ten years later the firm was making more than two billion euros a year by buying, restructuring, and selling large companies in Eastern Europe. One of Pecina’s business ventures in Hungary was the takeover of BorsodChem (2001), which was not without controversy. VCP was suspected of secretly acting on behalf of Gazprom. At least this is what a Soviet dissident think tank, The Jamestown Foundation, claimed.
Prime Minister Péter Medgyessy ordered an investigation, which found no wrongdoing. But it is true that Pecina acquired BorsodChem from Mihail Rahimkulov, a Russian-born Hungarian businessman of Tatar origin, who at one point was a Gazprom executive and still is one of the large shareholders of that Russian company. By 2010 VCP and another private equity company, after some fancy financial footwork, sold 38% of BorsodChem (and an option to buy the remaining shares within two years) to the Chinese Wanhua Group, a chemical company that is the world’s largest producer of isocyanate. For Pecina, Népszabadság is small potatoes.
The alleged illegality of some of Pacina’s complicated business ventures eventually caught up with him. While the drama of Népszabadság was playing out in Budapest, Heinrich Pecina was sitting in a Klagenfurt courtroom as a defendant in connection with a share sale of Hypo-Alpe-Adria Bank to Bayern LB. He and the president of the Hypo-Alpe-Adria Bank are jointly accused of embezzlement and illegal business practices. Pecina already admitted in July to writing three phony receipts for 4.3 million euros. VPC also produced “expert studies” of questionable worth in return for millions from the president of the Hypo-Alpe-Adria Bank.
In 2014 Pecina moved into the Hungarian media market, buying the Swiss Ringier’s Mediaworks, which owned Népszabadság, Világgazdaság, and Nemzeti Sport, as well as regional newspapers and a printing business. About two weeks ago VCP also purchased 12 regional papers with 1,150 employees. An earlier attempt to merge these two holdings was vetoed by the Hungarian Competition Authority, but once Pecina was behind the deal the Hungarian government gave its blessing to the purchase. The Austrian Kurier is convinced that “the Orbán government gave the green light in exchange for silencing the annoying, anti-government Népszabadság” and that Heinrich Pecina had no compunctions about being part of this dirty deal.
As the days go by we are learning more details of Pecina’s involvement with Mediaworks and specifically with Népszabadság. Until recently a foundation of the socialist party owned 27.6% of Népszabadság. The former president of the foundation, László Kránitz, admitted that, although they tried to find out whose “stróman” Pecina was, they were unsuccessful. He also claimed that the losses accrued by Népszabadság were partially due to the purchase of a state-of-the-art printing press during the Ringier period. Another questionable business decision was to move the offices of Népszabadság to a high-end commercial site, the Mediaworks Tower, where the rent was extremely high. In fact, rent for a single month would have covered a full year of maintenance and utilities for Népszabadság‘s own building. Moreover, the contract was for ten years. In the event the contract was broken, as it was, the fine was three-years’ rent. The state-owned MKB Bank provided the guarantee to the tune of two million euros.
Some of Pecina’s employees at Mediaworks were not ready to lend their names to this deal between a financier of dubious reputation and the thoroughly corrupt Viktor Orbán. The Mediaworks employee who was in charge of the affairs of Népszabadság refused to execute the orders from above and quit even before the paper was shuttered. So Mediaworks assigned a new man to the job, who was supposed to negotiate with the editor-in-chief. But he “became ill” and didn’t show. The next day he discovered that his illness was grave enough to warrant quitting his job altogether. Now we have a new man, Tamás Door, who was the marketing director of the firm. I wonder how long he will last.
Today being Thursday, journalists could listen to a performance by János Lázár, accompanied by Zoltán Kovács, who has lately become a television personality with his interviews on BBC and CNN. Naturally Népszabadság was a hot topic. Lázár expressed his puzzlement that there are people who want the Orbán government to save the paper with taxpayer forints. As far as I know, no such demand was ever expressed by anyone anywhere. But he admitted that there were some very good Népszabadság journalists whose articles he enjoyed reading. He will miss them. He also had the decency to express his disapproval of how the paper was shut down. As for the accusations that the government had anything to do with the demise of the paper, Lázár’s sarcastic answer was: “Between 2010 and 2014 Fidesz managed to get a two-thirds majority despite the Népszabadság‘s ‘beneficial’ activities.” Thus, Fidesz had no political reasons to close the doors of the paper.
Even conservative media outlets have offered help to the journalists who are in limbo. Magyar Nemzet, HírTV, and Lánchíd Rádió offered them the opportunity to publish articles and op-ed pieces and to participate in TV programs, which was a nice gesture. The cultural and press attachés of the U.S. Embassy in Budapest visited the journalists, who are now in a small temporary editorial office. On the Embassy’s Facebook page the First Amendment appears in both languages:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
Among the comments I read: “Isn’t it interesting that the amendments to the American Constitution were always for the widening of freedom while all the amendments to the Hungarian Fundamental Law point in exactly the opposite direction?