Tag Archives: Endre Hamar

The latest business venture of Orbán’s son-in-law

István Tiborcz, Viktor Orbán’s son-in-law, pretty well disappeared from the spotlight once OLAF, the European Union’s anti-fraud office, started to investigate his firm, Elios Innovatív Zrt. The firm specialized in LED street lighting technology and practically cornered the market: one city after the other signed contracts with Elios to modernize its street lighting with funds that came from the European Union. With the EU investigation pending, Viktor Orbán and his son-in-law decided that it might be wise for Tiborcz to “sell” his share of the business to Attila Paár, a well-off businessman with excellent connections to the Orbán government.

Only once, in December, did Tiborcz get any media coverage. The story was about Elios’s work in Zalaegerszeg, which seems to have been less than satisfactory. In some parts of the city it is pitch dark, while in others pedestrians have difficulty navigating because the streetlights shine only on the road, leaving the sidewalks practically unlighted. Complaints poured into city hall, which the mayor, naturally a member of Fidesz, “tried to handle discreetly.”

Now the Tiborcz family is back in the news. It seems that István Tiborcz might be one of the investors who purchased the Schossberger Mansion in Tura, which has been described as the most beautiful castle in Hungary, comparable only to the palaces along the Loire River in France.

Who were the Schossbergers? Not much can be learned about them online, but William O. McCagg, Jr.’s Jewish Nobles and Geniuses in Modern Hungary provides quite a bit of information about the family, who were originally from Moravia. The first Hungarian Schossberger who settled in Pest in 1833 was Lázár. His son, Simon Vilmos Schossberg, was the first unconverted Jew to receive nobility from Franz Joseph, in 1863. In 1873 Simon’s son Zsigmond purchased 13,000 hectares from Prince Miklós Esterházy. Ten years later he commissioned a neo-Renaissance mansion based on the plan of Miklós Ybl, one of Europe’s leading architects in the second half of the nineteenth century. Ybl’s best known work is the Hungarian State Opera House (1874-1884).

schossberger

The Schossberger Mansion

After 1944 the mansion was used by the Germans and the Soviet troops. It then became an elementary school. After the regime change it was sold twice, but no one did anything with the building, which would need serious renovation.

Last October a mysterious new buyer showed up: TRA Real Estate Kft., a brand new joint stock company headed by Dr. Judit Tóth. TRA Real Estate Kft. is the parent company of BDPST Ingatlanforgalmazó és Beruházó Zrt., owned by Judith Tóth and Loránd Aurél Szabó, both lawyers. The new buyer wanted to be sure that the city of Tura didn’t have the right of first refusal and therefore sent the law firm of Endre Hamar to approach the city.

It is here that one becomes suspicious. First, Hamar got in touch with the town of Tura on September 7 in the name of TRA, when the firm didn’t yet exist. It was established only a week later. Second, Endre Hamar is a former business partner of István Tiborcz. Third, Hamar’s law firm might exist only on paper. It is ostensibly located in the same building as the headquarters of Elios Zrt. BDPST Ingatlanforgalmazó, which is linked to TRA, also has the same address. As 444.hu notes, Endre Hamar cannot have too many clients, considering that his firm has no website and one cannot even find the firm’s name on the list of businesses renting office space in the building.

Meanwhile, the deal took place. Whoever bought the mansion paid 200 million forints, including a 80 million forint mortgage, to the Széchenyi Bank.

When the the Schossberger Mansion was purchased, the transaction couldn’t be directly linked to István Tiborcz. But three days ago 444.hu found out that it was István Tiborcz himself who paid the 100,000 forint excise tax on August 14, at the time of BDPST’s registration as a new business. What is still a mystery is where TRA Kft. got the millions of forints that it spent on the mansion in Tura. Neither Judith Tóth nor Loránd Aurél Szabó has any other business venture that could fund the purchase.

If Tiborcz is behind BDPST Zrt., he might also have interests in other real estate ventures because BDPST is the part owner of two other businesses dealing with real estate, AMX HS and AMX Nador House. The CEO of both companies is a wealthy Turkish businessman, Suat Gökhan Karakus, who resides in Budapest. The other part owner of these companies is HBRE International Investments B.V. of Amsterdam.

On January 8 Együtt (Together) released a communiqué in which the party asked István Tiborcz and Ráhel Orbán to come forward and explain the source of their wealth. I think Együtt can wait for the day when anyone in the Orbán or, by extension, the Tiborcz family reveals the source of their rapid enrichment. Of course, it would also be nice to know where the 2 million euros came from that Lőrinc Mészáros just invested in the NK Osijek football club. That would be quite a job, not just for an investigative journalist but for a whole slew of the best detectives in Europe and the Americas.

The “well-oiled business machinery” of Viktor Orbán’s son-in-law

At the end of May I posted an article about Viktor Orbán’s son-in-law selling his stake in Elios Innovatív Zrt., the leading installer of LED-technology street lighting. István Tiborcz, the husband of the Orbán’s eldest child Ráhel, became spectacularly successful after his future father-in-law was elected prime minister of Hungary. Perhaps too successful. In the last few years 33 municipalities received generous EU subsidies to switch to LED technology. Seventy-one percent of these jobs were won by Tiborcz’s firm. It was inevitable that sooner or later the media would discover the connection between Elios’s success and the part-owner’s family ties. Article after article appeared intimating that the bidding process was rigged in Elios’s favor. Eventually, the pressure became too great. By late April of this year Tiborcz’s name was removed from the letterhead of Elios.

Tiborcz sold his stake in the company to Attila Paár, an oligarch close to the Fidesz government who established, together with two partners, a business called WHB Investment. Five days later WHB purchased Tiborcz’s share of Elios. I suspected at the time that this was a “fictitious transaction.” Others believed that the plan was to liquidate Elios after 470 million forints were paid out in dividends. According to the latest intelligence, however, Elios’s business is still booming. The firm will update the lighting at the Ferenc Liszt Academy and will install new street lights in Tamási, Cegléd, Sárvár, and Ajka. Lighting some new  stadiums is also on their agenda. The “well-oiled machinery,” as atlatszo.hu called Tiborcz’s not quite honest business practices, will go on. The only difference is that Ráhel Orbán’s husband will no longer be in the limelight.

In describing this “well-oiled machinery” I am relying on the investigative work of Anita Vorák, a member of Direkt36, which is a new investigative journalism center. The five journalists who established Direkt36 all came from Origo after the Lázár vs. Magyar Telekom affair, which made international news. You can read details about it in The Economist and Hungarian Spectrum.

Vorák’s article is long and detailed, but I will try to summarize what I see as the essence of Elios’s business strategy. Of course, Tiborcz’s presence as an owner was invaluable for winning the contracts, but Tiborcz and company needed a few more tricks to achieve a 14% profit margin in 2014. Apparently other firms with the same profile have a profit margin of 5% on average and, in fact, prior to 2014, so did Elios.

István Tiborcz posing with  one of his street lights

István Tiborcz posing with one of his street lights

How did Elios Innovatív Zrt. achieve such a high profit margin? One way was to overcharge the customers, which in many cases wasn’t at all difficult because Tiborcz’s firm had no competitors. But even if there were competitors, Tiborcz’s Elios had a surefire way of hitting the magic figure that would ensure him a winning ticket.

Normally, any kind of public works project requires cost-benefit analyses, which compare possible solutions and offer cost estimates so the government can make intelligent choices. Hungarian municipalities also demand something called a “technical study plan” (műszaki tanulmányterv). These technical descriptions, however, don’t offer a choice; they simply suggest one particular manufacturer or contractor and calculate the cost-benefit of the project for the next fifteen years. Elios had an inside track because its owners had personal ties to the people who prepared the technical study plans.

Cities also have to order a so-called “energy study” (energetikai tanulmány). In most cases one of two firms prepared these studies: Sistrade Kft and Tender-Network Kft. The connection between Sistrade and Elios is quite clear. The owner of Sistrade Kft., Endre Hamar, was a business partner of István Tiborcz between 2011 and 2013. In fact, between January and August 2013 and again between November 2013 and April 2014 he was one of the owners of Elios. Anita Vorák didn’t find such a close link between Tender-Network Zrt. and Elios, but she did learn that in every case the energy studies were prepared by the same man: András Imrovicz. He worked for Sistrade as well as for Tender-Network.

The energy studies prepared by Imrovicz included prices for different types of street lightings, but when Direkt36 compared the prices of the same products given to different municipalities they discovered huge price discrepancies. After a closer study of the figures, the journalist came to the conclusion that the decision about what price to submit depended on whether the project was subsidized by the European Union or not. The idea was to milk the EU cow as much as possible. In the case of Szolnok, where 85% of the cost of LED lighting was paid by the European Union, the cost was 91 million forints more than in Vác, which was paid from domestic sources.

But that’s not all. There is a strong indication that Tiborcz’s firm was aware of the parameters of both the technical and the energy studies. Let me explain why the investigative journalists of Direkt36 think that Elios, Sistrade, and Tender-Network were most likely in cahoots

Based on the studies they ordered, the municipalities came up with a maximum figure that should be spent on a given project. Elios was most of the time uncannily close to these maximums, even when István Tiborcz’s firm was the only competitor. In the case of Vác, 535 million forints was set aside for the LED-lighting project. Elios’s estimate was only 67,000 forints less, which meant a 18 forint difference in price per fictures.

Last December, when an earlier investigative article appeared about Elios, András Schiffer, co-chair of LMP, initiated an investigation by the prosecutor’s office in connection with four cases in which Sistrade Kft. was involved when its owner, Endre Hamar, was still co-owner of Elios Innovatív Zrt. A few days later the CEO of Elios announced that the firm will sue LMP for untrue statements about the firm. Today, after the publication of Anita Vorák’s article, Párbeszéd Magyarországért (PM) also approached the prosecutor’s office for a thorough investigation of Elios. Indeed, there are just too many questions about the business practices of Elios. But given István Tiborcz’s family connection to the Hungarian prime minister, I’m almost certain that the prosecutor’s office will not move a finger. Perhaps OLAF, the European Union’s Anti-Fraud Office, will take a look. After all, there are similar corruption cases practically daily in Hungary. Almost all involving EU money. How long will Brussels turn a blind eye to such blatant corruption and nepotism?