A month ago The Wall Street Journal reported that OLAF, the European Commission’s Anti-Fraud Office, after a two-year investigation of 35 projects undertaken by Elios Innovatív Zrt. to modernize municipal street lighting in Hungary, found “serious irregularities” and recommended to the Hungarian authorities that they take legal action against the persons involved. Unfortunately for Prime Minister Viktor Orbán, the principal owner of the company in question was his own son-in-law, István Tiborcz.
The company’s fraudulent activities were substantial. According to OLAF’s calculations, Tiborcz and his accomplices pocketed more than €40 ($49.8) million in EU funds through illegal business practices. Although the report was submitted to the Hungarian authorities, who apparently passed it on to the prosecutor’s office, the Orbán government was loath to make the report public even though, in the past, it had been more than eager to release such documents if they involved fraud cases before 2010.
I have written so many times about this case that I won’t bore regular readers with its details. Suffice it to say that by 2014, when OLAF began its investigation, it was obvious that the fabulous rise of Tiborcz’s company was due to his relationship with the prime minister’s family. By then one could also hypothesize that Tiborcz’s decision to switch from electrical and energy supplies to the installation of LED lighting was inspired by his future father-in-law, who was fully aware that the government had put aside 9 billion forints in EU funds for the purpose.
At the outset there were two problems: Elios needed money and it needed at least one city to entrust its project to Elios as proof of the company’s soundness. With the help of Viktor Orbán both problems were solved in short order. A telephone call to his friend Lajos Simicska, who had handled Fidesz’s finances ever since 1990 and who in the interim had become an extremely wealthy man, was enough to get the necessary capital. Simicska infused much-needed capital into the business of Orbán’s future son-in-law through buying the majority of the shares in the company. The second problem was also easily solved. János Lázár, mayor of Hódmezővásárhely and by 2010 head of Fidesz’s parliamentary delegation, was more than happy to help Tiborcz out. By October 2011 Hódmezővásárhely was touted as the first city in the whole of Europe to use LED technology exclusively. Mission accomplished. Two years later Tiborcz and his partner bought out Simicska, and by the end of 2011 Lázár’s city was called “the European Los Angeles.”
But it seems that all of the advantages his ties to the Orbán family offered weren’t enough for the 24-year-old Tiborcz. He was also dishonest. What we didn’t know until now was how corrupt he, his associates, and the government authorities who dealt with him were.
Well, today we know. Or, more precisely, now we are beginning to learn the details of a mafia-like corruption ring engulfing Viktor Orbán and his family.
24.hu managed to get hold of a copy of the OLAF report that the Orbán government is so eager to hide. We know from a recent OLAF report, which was made public, that these reports are extremely long and detailed. This particular investigation covered 35 business transactions, so I assume it is a lengthy document. The journalists who gained access to the OLAF report had only a few hours to study it, so I’m sure there will be plenty more information trickling in as time goes on.
So, let’s start with what we now know. According to 24.hu, Tiborcz and Co. “misappropriated public funds” in a “criminal association” and “on a commercial scale.” There was a network of people involved in the wholesale fraud Elios’s business partners and their helpers committed. All 35 cases involved the “misuse of public funds,” and in 17 cases OLAF discovered organized criminal activity. There were all sorts of fraudulent activities involved, but perhaps the easiest to understand is that the same person on the same computer wrote up the competitors’ so-called “indicative offers” and in every case priced them exactly 5% and 7% higher than Elios’s bid. Later we learned that this person was one of the directors of Elios.
We already know some details of the fraud through the case of Szolnok’s contract with Elios. That case indicates that even government authorities who handle the European Union’s “environmental and energy efficiency operational program” (KEOP) helped Tiborcz win the contract by changing the parameters of the requirements on a Friday with a deadline on Monday to fit Elios’s specifications. The scheme worked the following way. Ivette Mancz, the Elios director in charge of public lighting, was also involved in writing the specifications for the job ordered by the municipalities. And once Elios finished the work, an “independent auditor,” INS Kft., inspected the finished work. The signature on the so-called independent audit, however, was Mancz’s. The scheme was foolproof: Mancz set the terms, Mancz’s firm did the work, and Mancz was also associated with the company that checked the results.
These revelations were naturally welcomed by all the opposition parties, whose politicians had already decided that the Tiborcz case is “the atomic bomb” they have been waiting for. Considering that the prosecutor’s office is solidly in Fidesz hands, I wouldn’t be too optimistic. Nonetheless, these disclosures shook even some Fidesz politicians. For example, in the city of Zalaegerszeg, whose city lighting was handled by Elios, two opposition members of the city council requested a copy of the OLAF report and, behold, 6 of the 12 Fidesz members supported the opposition. But it took only a few hours for the mayor to declare that, sorry, it was a mistake. The Fidesz members simply pushed the wrong button. As for the major opposition parties, they are up in arms. They seem to be concentrating on Chief Prosecutor Polt, who “will have to end up in jail.” Jobbik went so far as to demand Orbán’s resignation.
The Orbán propaganda media’s response will most likely follow the reasoning that Magyar Idők proposed in an article which appeared on January 20. It tried to shift the blame onto Lajos Simicska, who for a short time was the majority shareholder of Elios. Origo today published another piece along the same line. We can expect dozens of such articles in the next few days. In the meantime, investigative journalists will have a heyday exploring and exposing Elios’s fraudulent business affairs.