Tag Archives: István Tiborcz

The Tiborcz scandal is not “a mosquito bite”

Prime Minister Viktor Orbán and members of the Fidesz parliamentary caucus launched what promised to be a glorious path to victory. Everything was prepared. After propaganda campaigns against George Soros and the migrants in the last two years, Fidesz was in the midst of a new assault on those NGOs that receive financial assistance from abroad, claiming that they pose a national security risk through their active promotion of immigration. Fidesz’s election law, which favors Orbán’s party, coupled with limits imposed on the opposition parties’ ability to wage an effective campaign, ensured an easy victory on April 8.

But then came a worrisome message from the European Commission’s European Anti-Fraud Office (OLAF). After two years of thorough investigation, OLAF found such serious “irregularities” in the business practices of Elios Innovatív Zrt. that it is suggesting the return of €40 million to the European Union, money that it claims was illegally obtained. Unfortunately for the government and for Viktor Orbán, this is not one of those run-of-the-mill corruption cases that are far too numerous in Hungary. It is special since Elios Innovatív Zrt.’s co-owner was István Tiborcz, the prime minister’s son-in-law.

Although many who follow Hungarian politics are of the view that not even this super-scandal can shake the Orbán government, I’m beginning to think that this time really might be different. No, I’m not suggesting that Fidesz will lose the election, but I believe that this scandal will not just disappear into the thin air without leaving serious scars on Hungary’s governing party.

Although I can put together a logical argument for my hypothesis, I actually arrived at it in a flash of insight. Today I watched an interview with Gergely Gulyás, the latest leader of Fidesz’s parliamentary delegation. It was a terrific interview, the kind one can see in Western Europe and the Anglo-Saxon countries. Egon Rónai of ATV was in great form. He was hard-hitting and refused to let go. Gulyás, who is articulate, smooth, and able to talk himself out of any situation, crumbled in front of our eyes. It became obvious that he had no good way to communicate Fidesz’s message.

There are already signs that Viktor Orbán has ordered a retreat. Let’s start with the infamous “Stop Soros” legislative package against the NGOs. The original plan was to put the proposal before parliament in a great hurry and to vote on it in typical Fidesz manner, that is, within a few days. But first the laws were amended on the recommendation of loyal citizens who were invited to comment on the draft proposal. As a result, certain parts of the bill that previously needed only a simple majority now require a two-thirds majority. Gergely Gulyás appealed to the opposition to support the bill in the interest of national security.

Commentators critical of the government were certain that this move was a trap. Fidesz wants to show its followers that the opposition parties are not good patriots and that deep down they want to fill the country with African and Middle Eastern immigrants. That explanation made no sense to me then and makes no sense to me now.

Last night we learned that Fidesz is not going to bring the bill forward for a vote before the election. The way Gulyás explained it, the opposition parties will not vote for the bill and therefore it is not worth even trying. After the election, when, according to our optimistic Gulyás, Fidesz will have the necessary two-thirds majority, the bill will pass easily. I might add here that Viktor Orbán, in his pep talk to the members of Fidesz MPs during a recent two-day retreat of the parliamentary delegation, told the troops that he isn’t counting on a two-thirds majority.

Well, let’s take a closer look at the issue. If it took Fidesz only a day to discover that they don’t have enough votes, why did they introduce those amendments that made its passage more difficult in the first place? I suggest that the addition of the last-minute amendments was designed not to shame the opposition but to serve as a pretext for “postponing” the vote. Why? One reason is what Gulyás himself admitted — that the pressure from abroad was too great. The German government specifically expressed its disapproval of the bill. The United Nations and the Council of Europe also protested. And we have no idea what kinds of telephone calls came from Brussels and what kinds of warnings Viktor Orbán received. It had to be something pretty weighty if the vote is “postponed.”

Finally, a few words about the possible ramifications of the Tiborcz scandal. What we hear from Fidesz sources is that many leading Fidesz leaders think that OLAF’s unveiling of the massive fraud committed in a crime syndicate of sorts “might be no more than a mosquito bite, but it can also shake the very foundations of Fidesz because, if these accusations are true, they are indefensible.” Some people who were present remarked that Orbán, despite his decades in politics and all his political cunning, is stunned by the assault on him and his family.

Viktor Orbán is not the only one who is stunned and perhaps on edge. Gergely Gulyás’s miserable performance last night is indicative of the jitteriness of Fidesz bigwigs. He was caught lying when he tried to convince Egon Rónai and ATV’s audience that the Orbán government learned about the OLAF report only this week. But how could that be, he was asked, when the MSZP member of the Szolnok city council received an OLAF document from the government that was dated October 2017? Gulyás had no ready answer. And that document is not the only proof that the Orbán government has been sitting on this report for about four months. There are other less direct clues for the approximate date of the arrival of the report.

I would like to point to two instances which, given this timeline, now make a great deal more sense. One is the complicated story János Lázár told on October 9, 2017, about which I wrote yesterday. I have the feeling that by that time Lázár knew the contents of the OLAF report and that’s why he spent so much time dissecting the exact relationship between the Orbán family and István Tiborcz. My second clue is an interview conducted by Origo, which by then was a government mouthpiece. Tiborcz, who I don’t think had ever given an interview in his life, offered the internet site a lengthy interview about his business activities. The interview appeared on October 30, 2017. In it he told the sad tale of a man whose real calling is business but who is restricted in his financial dealings by the fact that he is now related to the prime minister. This arranged interview was most likely one of the preemptive measures taken at the urging of Viktor Orbán himself.

Meanwhile, Gergely Gulyás wrote a brief note to all Fidesz politicians outlining the official line of communication concerning the Tiborcz scandal. Here are the three simple points. (1) The Olaf report is a “Brussels campaign report and thus an interference in the Hungarian election campaign.”(2) “In 2014, they also timed news concerning the case to come out just before the election. The case was investigated once, but now they are repeating the accusations.” (3) “They try to attack Viktor Orbán despite the fact that during much of the period under investigation the majority owner of the company was Lajos Simicska’s Közgép.”

This is, I’m afraid, a feeble attempt on the part of whoever is in charge of official government lying because right off the bat we can counter that: (1) The report was released in October, not just before the election. (2) The news concerning Tiborcz’s firm didn’t become public until December 2014, while the election took place months earlier, on April 6, 2014. (3) Of the 35 contracts called into question by OLAF, only three were negotiated and signed while Simicska held a majority stake in the company. Moreover, the CEO of the company all along was István Tiborcz.

In brief, Fidesz is floundering. Soon enough, I suspect, Gulyás will have to come up with a new set of instructions.

February 16, 2018

Could János Lázár be the sacrificial lamb of the Elios affair?

The other day, while discussing Péter Juhász’s indiscretions, I noted that a politician must choose his words carefully and be mindful of what information he shares with the public. Overly talkative politicians are normally found in MSZP, where party discipline is lax and individual party leaders often espouse views that contradict official policy. Such speaking out of turn is practically unknown in Fidesz with its stringent party discipline. Spokesmen for the party get their orders, and they faithfully repeat whatever the current slogan is that comes from the propaganda and communication gurus. The monotony that results might be very dull for journalists and political junkies, but it is effective.

One high-ranking Fidesz politician who is something of an exception is János Lázár, who has been in charge of the huge prime minister’s office ever since 2012. From the outside it may look as if Lázár is the person who is actually running the show, but no one should be misled. Viktor Orbán might be gallivanting around and delivering deep “philosophical” lectures to his captive audiences, but practically all decisions, large and small, come from him.

This is also true about decisions regarding the individuals with whom he works. Whether one describes the relationship between Viktor Orbán and his associates as akin to the bond that exists between the godfather and his subordinates in the family or the bond that existed between the seigneur and his vassals, Orbán can move his people around as if they were pieces on a chessboard. János Áder, currently the president of the country, had no intention of leaving the European Parliament, but in the end he reluctantly took the job, and by now there is no way out. Antal Rogán was quite happy as the leader of Fidesz’s parliamentary caucus, but in 2015 he was ordered to head the newly created propaganda ministry. Lázár’s move to the prime minister’s office was very much the same story. He had to quit his job as mayor of Hódmezővásárhely halfway through his term, a job he loved, to oversee the prime minister’s office.

János Lázár might not enjoy his current job all that much because, in the last year or so, he has been talking about his desire to return to the life of an ordinary member of parliament, representing electoral district #4 in Csongrád County. He likes to talk to his constituents. Despite his arduous job in Budapest, he still lives in Hódmezővásárhely. And according to those in the know, nothing can happen in town without Lázár’s nod. Talking about personal preferences is unheard of in Fidesz circles, and therefore I can’t help thinking that Lázár’s departure from the prime minister’s office might be in Viktor Orbán’s playbook. It is possible that Lázár has already been told that after the election there will be a personnel shakeup and his place will be occupied by someone else.

In any case, there are signs that Lázár is preparing for another role. He, who used to jealously guard his family’s private life, just started a professional-looking internet site on which one can see touching family scenes and where his wife describes life in the Lázár household and her husband as the father of her children. Lázár is extremely popular in his district. He easily won all the elections since 2002, and therefore he doesn’t need this kind of advertising. People suspect that Lázár wants to attract national attention, perhaps even as someone who could replace Viktor Orbán if and when the time comes. Such ambitions, if they are too obvious, are hazardous to one’s health in Orbán’s Hungary. As it is, Lázár might be in trouble over his role as István Tiborcz’s first customer as mayor of Hódmezővásárhely.

Source: lazarjanos.hu

The spectacular business career of Viktor Orbán’s son-in-law began in Hódmezővásárhely, most likely at the request of the prime minister himself. Last November the overly talkative Lázár, replying to a question, admitted that he and Tiborcz “together figured out how to solve the public lighting problem” in his city. At that time, he spent an inordinate amount of time trying to explain that in 2010, when the two met, Tiborcz had no connection whatsoever with the Orbán family. Unfortunately for Lázár, no amount of protestation will change the fact that the romantic relationship between Tiborcz and Ráhel Orbán began in 2008, and by 2010 Tiborcz was considered to be practically one of the family. Or, at least he was part of the post-election celebration, standing alongside the members of the Orbán clan.

I doubt that Orbán is happy with the way Lázár is handling the situation, but there is no good way of downplaying this well documented fraud case. The line that Tiborcz had nothing to do with the day-to-day operation of the firm cannot be maintained for long. First of all, there is Lázár’s own admission of his collaboration with Tiborcz. Second, there is an interview with Bálint Erdei, Tiborcz’s partner in Elios, from 2015 in which he stated that there was a division of labor between them as far as running the business was concerned. He did the “operative” work and Tiborcz was in charge of “the strategic fine-tuning.” Maintaining that it was Lajos Simicska who was responsible for what happened is not a viable option for the government, especially since only three of the 35 contracts in question were signed while Simicska was involved with the firm.

And so, Orbán will have to find someone else to take the fall for this affair. Government propagandists like Gergely Huth of Pesti Srácok only a couple of days ago accused Lázár of trying to drag Tiborcz into the Elios affair and thereby involving Viktor Orbán himself in the scandal. Alfahír, Jobbik’s official news site, heard that some people could see a way out of this sticky situation if they could blame Lázár for the whole thing. EU subsidies are handled exclusively by the prime minister’s office, after all. Will he be the sacrificial lamb?, asks Magyar Nemzet, because stories to that effect have reached the paper.

Today János Lázár held his regular press conference at which Ildikó Csuhaj of ATV asked him whether it is true that to some of his closer friends he complained that “some people want to shove him into the epicenter of the Elios affair.” He called the story “rubbish” (marhaság). It does sound far-fetched, but it may be one way of both stifling Lázár’s political ambitions and shielding the prime minister’s son-in-law.

February 15, 2018

The way the world is beginning to see Viktor Orbán’s Hungary

In the last three days three articles have appeared in two leading English-language newspapers, The New York Times and The Guardian, about the systemic corruption in the Orbán government. The word is out at last: a crime ring, run by Viktor Orbán himself, has taken hold of the Hungarian economy. The beneficiaries are the prime minister and his family as well as a few friends and political cronies.

The foreign press’s new-found interest in the criminal activities of Viktor Orbán was ignited by a short article that appeared in The Wall Street Journal exactly a month ago. It reported that OLAF, the European Commission’s Anti-Fraud Office, had sent a report to the Hungarian government recommending that the authorities take legal action over “serious irregularities” in projects carried out by a company that was controlled by the son-in-law of Viktor Orbán. The very fact that Hungarians had to learn about this damning report from a foreign source says a lot about the lack of transparency in Hungary.

It seems that after almost eight years of brazenly embezzling public funds, 80% of which come from the European Union, the friends and family of the Hungarian prime minister are finally coming under scrutiny. Detailed analyses are starting to plumb the depths of the systemic corruption that has made a small group of people very rich in record time. On the basis of calculations by responsible and usually accurate investigative journalists, Viktor Orbán’s hidden wealth may amount to 300 billion forints, more than a billion dollars.

One of the two Guardian articles by Jennifer Rankin neatly lists all the corruption cases that directly involve the Orbán family, including the growing wealth of Lőrinc Mészáros, which may be only partially his own. The list Rankin came up with is most likely incomplete because sub-contractors do not appear in the databases. Since most of these riches come from the European Union, Viktor Orbán’s anti-Brussels rhetoric is especially jarring. The conclusion is that, as Miklós Ligeti, head of legal affairs at Transparency International, put it, “Hungary is now in the grip of party state capture.”

The article ends with a question: will the European Union have the courage to do something about this theft of EU funds? Between 2014 and 2021 Hungary will have received €25 billion from the European Union, which makes the country one of the largest per capita recipients of the EU’s economic development funds. EU politicians are aware of the wholesale robbery that goes in Orbán’s Hungary, but for political reasons they are avoiding tackling the problem. Ingeborg Gräßle, head of the European Parliament’s budgetary committee who visited Hungary a few months ago to take a ride on Viktor Orbán’s rather expensive choo-choo train, merely says that a new kind of “semi-legal” irregularity is emerging in these post-communist countries, including Hungary. Otherwise, she estimates that in 36% of the cases there is only one bidder for EU-financed government projects, and, let me add, the remainder is most likely fixed. But that’s not all. According to András Inotai, a Hungarian economist, in 2017 5% of the country’s GDP came from EU funding while Hungary’s economic growth during the same period was about 4%. So, all that money is doing mighty little good.


Düsseldorf Carnival 2018

On February 10 an in-depth article appeared in The New York Times by Patrick Kingsley titled “As West Fears the Rise of Autocrats, Hungary Shows What’s Possible.” Hungary is described as “a political greenhouse for an odd kind of soft autocracy, combining crony capitalism and far-right rhetoric with a single-party political culture.” What follows is a detailed description of the process by which Viktor Orbán has managed to achieve his goal of an illiberal state. A former Fidesz official described the present Hungarian situation the following way: “sometimes I feel like I’m traveling in a time machine and going back to the ’60s…. All the characteristics and features on the surface are of democracy, but behind it there is only one party and only one truth.” Viktor Orbán is described as one of the strongmen of the age, alongside Vladimir Putin, Recep Tayyip Erdoğan, and Donald Trump. “Although Mr. Orbán lacks the global profile of those leaders, what he is doing in Europe is seen as part of a broader decline of democracy in the world.”

This is what Hungary looks like from New York and London. But what has been happening since the OLAF report detailing István Tiborcz’s alleged criminal activities was released? First of all, the government has come up with a strategy to divert responsibility from Orbán’s son-in-law to Lajos Simicska, Orbán’s old friend-in-crime, now enemy. This strategy may work on the propaganda level but it will not be sufficient to save Tiborcz from prosecution. But we ought not worry about the future of Ráhel Orbán and her husband. The Hungarian prosecutor’s office has already announced that its investigation of the case will be long and arduous. I have no doubt that after an inordinately long investigation Tiborcz will be found innocent of any wrongdoing. The government propaganda machinery also concocted the story that the European Union’s anti-Orbán forces timed the release of the report to coincide with the national election. It is with OLAF’s help that Soros’s men in Brussels want to remove Viktor Orbán from the seat of power.

Otherwise, all eyes are on Hódmezővásárhely, where István Tiborcz’s business career began. To recap the story: Orbán’s future son-in-law needed money and a contract to establish his business credentials, which he didn’t have. Both were provided through the good offices of the prime minister. Orbán convinced his favorite oligarch at the time, Lajos Simicska, to put some money into the young man’s firm. As collateral, Simicska demanded a share of the business. After two years, Tiborcz and his business partner paid the loan back and Simicska retired from this business venture, which he had never actually run. As for the needed contract, János Lázár, today chief-of-staff of Viktor Orbán but then still mayor of Hódmezővásárhely, suddenly had a burning desire to install new public lighting.

The sleepy little town is now all over the media as a result of the details of the project, which came to light thanks to 24.hu. So, Lázár felt that he had to give a press conference right on the spot. After a general denial of any wrongdoing, he offered a description of the town’s business venture with István Tiborcz. Lázár’s fairy tale about the bidding process and the details of what happened afterward is especially amusing if one reads old articles on the town’s internet news site called Vásárhely Hírek. While there, I also decided to read up on the special election campaign for mayor, which is in full swing at the moment.

The election will take place on February 25. Of course, the scandal around István Tiborcz also touches on the town and the election. There seems to be some anxiety in Fidesz circles about the outcome, although a couple of weeks ago I was certain that the independent candidate, Péter Márki-Zay, who lost his job after he declared his candidacy and was so maligned by his pro-Fidesz parish priest, had not the slightest chance of making a decent showing. But in the last few days commentators have pointed out that the Hódmezővásárhely election is a unique case in the sense that neither Jobbik nor the left-of-center parties have put up candidates and therefore Márki-Zay is facing the Fidesz candidate, Deputy-Mayor Zoltán Hegedűs, alone.

The town was planning to distribute 10,000 forint vouchers to pensioners sometime in March, just before Easter, but, behold, the decision was made to disburse them before the election. The prime minister also invited Hegedűs for a cup of coffee in his office in the parliament, and Defense Minister István Simicskó paid a visit to town to make sure that everybody knows that the old military barracks will be renovated and the Hódmezővásárhely shooting gallery will be the very first one to open in the whole country.

Political observers often complain about Hungarians’ indifference to corruption, which they tend to view as a fact of life. Perhaps there is hope. If Márki-Zay makes a good showing in a town where the deceased Fidesz mayor received 61% of the votes, followed by Jobbik with 17.1% and MSZP-DK-Együtt with 15%, it will give us a clue about public sentiment. A Márki-Zay win could have a measurable effect on the national election on April 8.

February 12, 2018

Mafia-like criminal network around the Orbán family

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.

Momentum’s “gift” to the Prosecutor’s Office: “Accomplice, Accomplice” / Source: Magyar Nemzet / Photo: Balázs Székelyhidi

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.

February 7, 2018

Surprise, surprise! OLAF found “serious irregularities” on Orbán’s home turf

On January 12 The Wall Street Journal reported that, after a two-year investigation, the European Union’s Anti-Fraud Office (OLAF) is recommending legal proceedings over “serious irregularities” found in a company that was co-owned by the son-in-law of Hungary’s prime minister, Viktor Orbán, between 2011 and 2015.

I have been following the rising fortunes of István Tiborcz, the 32-year-old millionaire businessman who married Orbán’s eldest child, Ráhel. A couple of journalists began investigating Tiborcz’s business dealings in the summer of 2014 after Ráhel Orbán boasted on Facebook that she and her husband don’t need her father’s assistance in paying her lofty tuition fees in Switzerland because they “stand on their own two feet” financially. It was this comment that inspired András Becker and Babett Oroszi, two investigative journalists from Átlátszó, to look into Tiborcz’s business affairs. After a few months of hard work they produced a thorough article, published shortly before Christmas 2014. On the same day I wrote a post titled “How do European Union funds end up in the hands of the Orbán family?” The two journalists found that Tiborcz’s firm, Elios Innovatív Zrt., bid and won, more often than not without any competition, 2.9 billion forints worth of government contracts, mostly financed by the European Union. In addition to serious irregularities in the bidding process, OLAF also found “evidence of conflict of interest.” As we have known since 2014, Endre Hamar, a business partner of István Tiborcz, was the owner of a company that “helped municipalities prepare the tender process.”

That article was so hard hitting and so thoroughly researched that in February 2015 Csaba Molnár, DK member of the European Parliament, turned to OLAF in connection with the shady business affairs of István Tiborcz. By March even the Hungarian police had begun investigating Elios’s business transactions. The Orbán family council must have realized that the situation was serious and that the best thing was to get rid of Elios as quickly as possible. By May 2015 Tiborcz “sold” his company to one of his father-in-law’s oligarchs. In July Csaba Molnár announced that OLAF had found the information he provided sufficient grounds for investigation. In fact, as it turned out, the irregularities were so serious that OLAF is suggesting the return of €40 million to the European Union, money that it claims was illegally obtained.

The Wall Street Journal noted that these “allegations could prove embarrassing for Mr. Orbán, an outspoken critic of the EU in recent years.” Indeed, every effort is being made in the pro-government media to minimize the significance of OLAF’s findings regarding the possible misappropriation of funds by Tiborcz’s company. Magyar Idők published an editorial shortly after the appearance of The Wall Street Journal article that tried to give the impression that there is a direct connection between the forthcoming national election and OLAF’s suggestion of an investigation by the appropriate Hungarian authorities into Elios’s business affairs.

The best that Zoltán Kovács, the communication wizard, could come up with was that “it has been possible ever since 2004 to use EU resources for the development of public lighting.” Moreover, he continued, “the objects of the OLAF investigation are tenders that were initiated during the tenure of the Bajnai government.” In brief, it was Viktor Orbán’s predecessor who was responsible for the current prime minister’s son-in-law’s allegedly fraudulent business practices by offering an opportunity to develop public lighting in Hungarian cities. Gordon Bajnai couldn’t resist and wrote the following comment on his Facebook page: “Perhaps we should have been more careful and indicated on the application forms that applicants are obliged to follow the seventh and government spokesmen the eighth of the Ten Commandments. Of course, we thought that it is enough if it is in the Bible.” In case some of you need a refresher course, the seventh commandment says “Thou shalt not steal” and the eighth, “Thou shalt not bear false witness against thy neighbor.”

As for the alleged connection between the forthcoming election and the OLAF investigation, the Hungarian government seems to be exceedingly well-informed about all the alleged recent decisions and moves of OLAF. Magyar Idők claims that in the last few months OLAF rushed to complete the work on this particular case. They were in such a hurry that “they neglected to ask for the comments of the concerned party.” In brief, the announcement was timed to coincide with the start of the election campaign. OLAF is giving the opposition an opportunity to use the case against Fidesz and the Orbán government.

Ottó Gajdics, editor of Magyar Idők and a particularly distasteful character on the far-right Echo TV, took upon himself the task of writing an opinion piece on the OLAF investigation. In his interpretation, the real culprit in this affair is the opposition. “They pounced on the object of their hatred” and “in their usual sly ways, they entrusted their foreign agents” to do the dirty work. But, he continued, one ought not to be terribly worried about this whole affair. It will take months for the prosecutor’s office to investigate the case. It is “in our interest not to allow anyone to take advantage of these investigations in this base political game.” Indeed, I am sure that Mr. Gajdics is right. The prosecutor’s office, a veritable Fidesz bastion led by Péter Polt, will do its utmost to see that nothing comes of the investigation. Viktor Orbán and his son-in-law have nothing to fear.

January 15, 2018

“The struggling young couple”: István Tiborcz and Ráhel Orbán

I haven’t written anything about the financial affairs of the Orbán family lately, although news of the shady affairs of the father and brother of the prime minister crops up often enough. Today I’ll return to the financial affairs of Viktor Orbán’s son-in-law who, though barely 30 years old, has most likely already amassed a considerable fortune.

István Tiborcz’s first business venture ended rather abruptly when OLAF, the European Commission’s Anti-Fraud Office, announced that it was going to investigate his company, Elios, which had won tenders for the installment of LED lighting in scores of Hungarian cities. The lighting project was largely financed by the European Union. The Tiborcz-Orbán “family firm” realized that, in this instance, the brazen expropriation of EU funds would not be tolerated. So Tiborcz in a great hurry “sold” his firm to a businessman with very strong ties to Fidesz. Tiborcz then went into the real estate business. As he explained to Origo a few days ago, he, as a member of the prime minister’s family, is limited in the kinds of financial activities he can pursue. He claims that for the past two years he has been buying real estate only from private individuals, no state property.

All this sounds innocent enough, but if we take a closer look at Tiborcz’s business dealings it seems that the son-in-law may have received quite a bit of coaching from the master at hiding his wealth, the Hungarian prime minister himself. When Tiborcz established his first real estate firms, he hid behind two friends who were registered as the owners of TRA Real Estate Kft. and BDPST Zrt. By now these two companies own eight high-priced pieces of real estate, among them former aristocratic mansions and valuable commercial property in Budapest and elsewhere. Some of these properties were jointly owned by wealthy Turkish businessmen or sold to characters like Ghaith Pharaon, the now allegedly deceased Saudi businessman of dubious reputation. Tiborcz hid so well that, as far as the Hungarian media was concerned, his ownership of these companies couldn’t be ascertained. Until now.

To the surprise of those who have been trying to find out more about TRA and BDPST, István Tiborcz gave an interview to Origo, which is now owned by the son of György Matolcsy, Orbán’s right hand and president of the Hungarian National Bank. The title of the article is misleading when it claims that “We investigated: István Tiborcz is owner in the real-estate development company.” After reading the article, one can be absolutely certain that the journalists of Origo investigated nothing. For one reason or other, István Tiborcz went to the pro-government internet site to offer the information, which he had tried to hide at least since the summer of 2015.

People who have been following Tiborcz’s business ventures and his secretive behavior as far as his business affairs are concerned couldn’t figure out what got into him. Why did he feel compelled to open up suddenly? On October 30, the very same day the Tiborcz interview appeared, the internet edition of Heti Válasz  came out with an article from which one could learn that András Bódis of Válasz had been pursuing the case of BDPST’s ownership for some time, without much luck. The “CEO” of the company, a certain Judith Tóth, didn’t even bother to answer Bódis’s inquiries. In fact, Tiborcz was so reluctant to divulge his own involvement in the company that BDPST initially gave up the idea of a capital raise when the Registry Court (Cégbíróság) made it clear that it would not register the firm unless the ownership of the company was released. After some hesitation, Tiborcz decided that he needed the stamp of approval of the Registry Court and relented.

It is hard to fathom why Tiborcz felt compelled to give an interview. One reason may have been his fear that Válasz would come out with some juicy story about its efforts to discover more about Tiborcz and his firm. The other reason might have been that, simultaneously with the Válasz project, Átlátszó was digging into the young couple’s purchase of a luxurious eleven-room, three-story house with servant’s quarters and a swimming pool in the most expensive part of the Kútvölgy section of Buda. The listing price of the property was 360 million forints (about $1.35 million). Therefore, in addition to his admission that he is the majority owner (meghatározó tulajdonos) of BDPST, he casually mentioned that he bought a house as a business venture that is in such bad shape that it is practically falling apart. So, before he does anything with it, the house must be completely renovated.

The modest living room

I’m afraid that truthfulness is in short supply in the extended Orbán family. As Antónia Rádai of Átlátszó found out, the purchaser of the property was not BDPST but István Tiborcz. Therefore, it is unlikely that this luxury property was purchased for resale. As for the state of the house, which he described as “life threatening,” I have my doubts after taking a look at some pictures that appeared when the property was being advertised for sale. It is, however, apparently true that men are working furiously on the building, even through part of the recent long weekend. I suspect that it is still not up to the standards of the demanding young couple.

A bathroom in a house which is falling apart and needs immediate propping up

The interview was really touching. Tiborcz spoke about the struggling firm, which is still not quite profitable. Here and there they make money when they manage to sell a piece of property, but the road ahead them is long and the work is hard. This sob story naturally was spread far and wide by the government propaganda outlets. Of course, let’s not fool ourselves. The majority owner of a company that has yet to turn a profit doesn’t buy a house that costs over a million dollars. We don’t know the full story of Tiborcz’s investments, and I doubt that we ever will.

November 2, 2017

Hungary as the Orbán family’s private estate

It was almost a year ago that I wrote a post about the then newly launched real estate business of Prime Minister Viktor Orbán’s son-in-law, István Tiborcz.  The young man, when he was barely out of law school, set out to become an entrepreneur. He became part owner of what would soon become a thriving, highly profitable business specializing in LED street lighting technology. His family connection to the prime minister practically ensured his success. One city after the other signed contracts with his firm to modernize its street lighting with funds that came from the European Union. All went well until OLAF, the EU’s anti-fraud office, started to investigate. Tiborcz quickly sold his share in the business and moved on to safer pastures. He and his foreign business partners, like the Saudi Gaith Pharaon and the Turkish Suat Gökhan Karakus, began buying up run-down but valuable pieces of real estate. They especially liked stately mansions.

One of their first purchases was the Schossberger Mansion in Tura, about 50 km from Budapest. Although Tiborcz tried to hide his presence in the company, within a few days 444.hu learned that he was one of the new owners of the mansion. Angelina Jolie so admired the mansion that she used it as one of the sets for her movie “In the Land of Blood and Honey.” Although the purchase price was low (280 million forints), fixing up the place will be a very expensive undertaking. Ten years ago the estimated price was 6 billion forints or $203 million. After seeing a 10-minute video tour of the interior, I’m convinced that the cost of renovating and modernizing the place will be much higher than this old estimate.

Of course, we have no idea of the size of Tiborcz’s stake in this business venture, but it is most likely substantial because sometime in the spring of 2016 Győző Orbán, father of the prime minister, showed up and spent a whole day looking around. As a young man from Tura told the reporter from Bors, “it took a long time because he was shown everything inside.” As far as the locals know, the new owners want to use the former mansion as a luxury hotel.

Work began in March 2016, first on the ten hectare park that surrounds the mansion. By September the workers began refurbishing the interior as well. The mansion, which used to be open to the public as a tourist attraction, had to be closed. Some of the locals were sorry that the castle will be transformed into a luxury hotel, but others were convinced that the Orbán connection will do miracles for the sleepy little town of 8,000 inhabitants.Until now Tura was forgotten by the Orbán government. As a local man told HVG’s reporter: “We will have something here only if Viktor Orbán wants it.”

It looks as if Viktor Orbán, now that his son-in-law is part owner of the Schossberger Mansion, wants it. Tura has hit the jackpot. According to estimates, in the next year or two perhaps as much as 20 billion forints’ worth of investment will arrive in Tura.

In May several online news sites reported that a 2.7 MG geothermal power plant will soon be built. It will produce electricity for 800 houses and will also eventually heat greenhouses on 11 hectares. The water temperature of the geothermal well is 129°C. After this incredibly hot water is used to generate electricity, it cools down to 70°C and will then be used to heat the greenhouses. The water, once it has finished its heating cycle, will be returned underground, an EU requirement. The power plant will cost 5.5 billion forints, half of which will come from the European Union and the rest from a consortium of domestic investors.

Tura until now couldn’t offer much to visitors, but its fortune will soon change thanks to the Orbán family.

By late June work began on the power plant. It is being built by KS Orka Renewables Pte Ltd. of Singapore using technology from Iceland, where 90% of the buildings are heated geothermally. The first greenhouses, which will most likely be ready within a year, will occupy 5.5 hectares at a cost of 2.3 billion forints. Again, half of this sum will come from Brussels. Later, other greenhouses will be built, occupying another 5.5 hectares. Altogether the greenhouse project will cost 4.5 billion forints. The greenhouses are expected to produce 6,300 tons of tomatoes, most of which will be for export. The hope is that the greenhouse businesses will be able to amortize the initial investment over six or seven years. The investors project an eventual annual profit of about seven billion forints. In addition, the greenhouses are expected to employ 170 people. It sounds like a terrific project, assuming the projections are halfway realistic.

But surely, it cannot be a coincidence that Tura suddenly became the recipient of all this largess. The investments were declared to be “priority projects,” meaning urgent and important for the national economy. I should add that most of the money comes from three banks: Eximbank, MKB, and Gránit Bank. The first bank is state owned; MKB is apparently owned by someone close to Fidesz and Orbán; and 49% of Gránit Bank belongs to the Hungarian state. Thus, projects that will make the Schossberger Mansion business venture of Orbán’s son-in-law more viable are being financed mostly by the Hungarian state. It is easy to become a millionaire this way.

January 3, 2017