Tag Archives: Lajos Simicska

Defending “the social order” by force of arms?

Most Hungarian journalists and even opposition politicians find what’s going on in Budapest at the moment highly amusing. The City of Budapest dismantles a dozen advertising kiosks, which workmen hired by Mahir Cityposter, a firm owned in part by Lajos Simicska, then replace with brand new ones. This is not, however, something that one ought to find funny or entertaining. What’s going on is further proof that Hungary is no longer a country of law. The Orbán government can do whatever it wants to those who are in its way. And Lajos Simicska is very much in Viktor Orbán’s way. He must be destroyed.

In 2006 Mahir signed a 25-year contract with the City of Budapest which gave it the right to set up 780 cylinder-shaped kiosks in the busiest parts of the city. Because the investment was substantial, Mahir negotiated a contract that couldn’t be broken before the date of its expiration. I cannot decide whether the contract was disadvantageous from the city’s point of view, but for ten years the city fathers found no fault with it. Last fall, however, they decided that the contract was so shamefully drafted in favor of Mahir that decency and good conscience (jóerkölcs) might be issues here. Sometime in September the city council, with a huge Fidesz majority, voted overwhelmingly to break the contract with Mahir as of October 31. They gave Mahir 60 days to remove all kiosks. If it fails to do so, they said, the city itself will do the job, starting in January 2016.

The inspiration for this late discovery of the foul nature of the contract undoubtedly came from the prime minister, who ever since March has been trying to ruin his old friend Lajos Simicska because Simicska humiliated him, called him all sorts of names, and, above all, was no longer willing to use his media empire in the service of the government. Simicska’s company, Közgép, which previously had received fantastic government contracts financed primarily by the European Union, was put on the government’s black list and, in fact, some of its projects that were under construction have been suspended. The latest chapter in this struggle is “kiosk gate.” We can be pretty sure that István Tarlós, mayor of Budapest, received a telephone call one day and was instructed to get rid of Simicska’s Mahir. Tarlós and 19 Fidesz members of the city council obliged.

Hard at work

Hard at work

It always surprises me how inept opposition politicians can be when it comes to realizing the significance of some of Viktor Orbán’s moves. For example, Csaba Horváth (MSZP) said: “they should conduct this Fidesz in-fighting among themselves and, if it is at all possible, they shouldn’t entertain either the public or the city council with them.” I must say that an unnamed journalist of stop.hu is much more sophisticated politically than Horváth because he captured the essence of this so-called “in-fighting” when he wrote: “Now Lajos Simicska can really see what kind of a country he and his former friend built. If necessary, the government will get even with those who are in the prime minister’s way even if it means disregarding the law. The only difference between Simicska and the average Joe is that the CEO of Közgép became a billionnaire from government investments. While Simicska fights his prestige battles with loose change, Everyman is fighting for his life.”

Mahir Cityposter’s legal defense is in good hands. Simicska hired György Magyar, an able lawyer. As far as he is concerned, the case is clear-cut. Immediately after the city council voted to break the contract, he filed suit against the city of Budapest. As far as he knows, the case will be heard on January 11. Until then, every action taken in this case is illegal. However, a new pro-government website, factor.hu, claims that Mahir’s request for a postponement of the removal of the kiosks was denied on December 12. The only problem is that Mahir’s lawyer knows nothing about this. Perhaps these discrepancies will be cleared up in the next few days. At this point it is useless delving into the details of the case. The immediate reaction of Orbán’s minions is much more interesting and telling.

The very fact that Mahir didn’t take what it is considered to be an illegal action lying down angered those who feel compelled to defend their master. Máté Kocsis, the mayor of District VIII who has been mentioned as the possible next lord mayor of Budapest, suggested police action to ensure the removal of the kiosks. He also threatened the company Mahir hired to guard the kiosks with the withdrawal of its operating license. György Bakondi, chief adviser to Viktor Orbán who made himself ridiculous during the refugee crisis, happily agreed that “public security and social order” might be maintained by armed forces. The word he actually used was “karhatalom,” which has a horrible connotation in Hungarian. After the failed Hungarian Revolution in 1956 the newly installed Kádár regime recruited civilians who were ready to support the new government to patrol the streets, arms in hand. These people were called “karhatalmisták.” Their task was to defend the “social order.” As one newspaper rightly pointed out, Bakondi slept through 27 years. He still thinks he is in the People’s Democracy of Hungary.

What is really frightening is the talk about “public security” and the defense of “social order.” At the moment Orbán and Company want to save the social order from Simicska and they have gone to war against him but, as László Seres pointed out in HVG today, “Who is interested in Simicska? This is a declaration of war. Against all of us, just for your information.” Indeed, whatever one thinks of Simicska, let’s not forget that what is happening to him can happen to any Hungarian.

High-stake battle for the ownership of Hungary’s TV2

I have waited more than a week before tackling the extremely complicated, contested sale of TV2, Hungary’s second largest commercial station. Initially there were just too many questions about this bizarre affair, but in the last few days more documents have become available and a more or less comprehensible story has emerged.

People not familiar with the Hungarian political scene could justifiably ask why the sale of a commercial television station, which airs a lot of soap operas, is such a significant, controversial event. The answer, of course, is that the Orbán government considers the mass media to be of the utmost political importance. Ever since 2002, when Viktor Orbán narrowly lost the election, he has been diligently building, through his oligarchs, a network of pro-government media outlets. From the point of view of the government, TV is critical because this is how most people get their news.

The three biggest stations, the only ones that can be received in the whole country without a cable connection, are MTV, RTL Klub, and TV2. After 2010 the state-financed MTV became a government propaganda station, pure and simple. The two commercial stations were initially “persuaded” to provide as little political news as possible and to concentrate instead on tabloid items. But when the Orbán government came out with a steep advertising tax in the summer of 2014, RTL Klub decided not to play ball. Its fairly lengthy evening newscast now devotes more time to political news, including stories critical of the government. Moreover, RTL Klub’s viewership soared. And it has successfully taken up a fight with the government over the advertising tax.

Already by 2013 RTL Klub was starting to look like a lost cause, which left only TV2 in play for the government. In 2013 TV2’s German owner, ProSiebenSat.1, decided to sell its Hungarian company, which had accrued heavy losses in the previous few years. To everybody’s amazement the station, at least on paper, was sold in December 2013 to CEO Zsolt János Simon and Yvonne Perla Dederick, the financial director. The two executives announced at the time that ProSiebenSat.1 had given them a loan that they were supposed to pay back in five years. The news of the purchase immediately raised questions. Surely, a loan of about 25 billion forints–that was the estimated price of the station–had to be guaranteed by somebody with deep pockets. Although at the time there was no proof, some people suspected that Lajos Simicska, who was still friends with Viktor Orbán, was behind the deal.

The suspicion was pretty accurate. Károly Fonyó, a close business associate of Simicska and owner of Megapolis Média Zrt., was the one who signed the contract with Zsolt Simon and Yvonne Dederick. One of its clauses stated that Fonyó’s Megapolis Média Zrt. had an option to purchase TV2 at any time Fonyó desired.

At this point Simon and Dederick established two companies of their own: D6D Kft. and CCA Vízió Kft. These two companies then created a third (CCA-D6D Kft), which was supposed to run all companies related to TV2. In March 2014 they decided on a new business model: all these companies were merged into one called TV2 Média Csoport Kft. By the time this new company was registered it was July 2014.

Let’s pause for a second and recall what happened in and around July 2014. This was the beginning of Lajos Simicska’s dispute with his old friend Viktor Orbán over the advertising tax. Critical articles appeared in Magyar Nemzet, Simicska’s paper, and Cink.hu described Magyar Nemzet as the new RTL Klub. Most likely it was at that time that Orbán decided to go after Simicska. He no longer trusted his old friend, and he wanted to make sure that Simicska would not, sometime in the future, be able to do with TV2 what he was doing with Magyar Nemzet.

To achieve his aim, he needed the help of Zsolt Simon and Yvonne Dederick, the nominal owners of the station. In addition, he needed someone willing to buy the television station. His choice was his new friend and confidant, Andy Vajna, the former Hollywood producer. During the summer of 2014 Vajna, who already owned a Budapest casino, was in the process of negotiating with the government concerning the ownership of the largest and most profitable casino in the country, which until then had been owned by the Hungarian state. He didn’t seem to have any difficulty convincing the government to part with its casino. The Orbán government was ready to pass on this business venture to Vajna under the most favorable conditions: unlike other businesses, Vajna’s casino is not wired to the Hungarian Tax Office. The price for this fantastic business opportunity may well have been Vajna’s agreement to purchase TV2.

"Will the real owner of TV2 please stand up?" / Budapest Beacon

“Will the real owner of TV2 please stand up?” / Budapest Beacon

On October 15, 2015 Vajna fulfilled his end of the bargain and purchased TV2 Media Group from Simon and Dederick. Simon and Dederick presumably figured that they had structured the new company in such a way that it had nothing to do with the company that Károly Fonyó had an option to purchase.

The only problem was that Fonyó’s company had already exercised its option on October 13, two days earlier. Fonyó therefore announced that Vajna’s contract was null and void since his company had not authorized Simon and Dederick to sell TV2. He also announced that the two executives had been fired and that he was anticipating lengthy litigation.

Meanwhile the politicians of the opposition don’t seem to realize that the fight over TV2 might have political consequences for them. They look upon the struggle between Orbán and Fonyó/Simicska over the station as irrelevant. Who cares, they said (at least initially), which oligarch becomes the owner of TV2, Simicska or Vajna? But as things stand now, if Simicska wins the fight, TV2’s news will most likely become more like RTL Klub’s. Magyar Nemzet and HírTV have already become much better. They are moderate right-of-center and critical of the government.

By the way, Magyar Idők, the new slavishly pro-government paper, was financed in pretty much the same way that Orbán designed Vajna’s purchase of TV2. First the government gave János Sánta’s Continental Tobacco Co., together with BAT’s Hungarian subsidiary, the exclusive wholesale rights to all tobacco products in the country. Shortly after Sánta received the government’s gift of a very profitable concession, he was “persuaded” to buy a 49% stake in the new pro-government paper.

Orbán’s stranglehold on Hungarian TV seems to be weakening. Although by definition he still has MTV, he has lost RTL Klub and seems to be in the processing of losing TV2. Fonyó’s case looks pretty strong, although it will probably not be decided in his favor in the Hungarian courts.

Viktor Orbán punishes his adversaries

It is dangerous to cross Viktor Orbán. Sooner or later he will get you, if necessary with the help of crooked judges. Here I will tell the story of three people whom Viktor Orbán has been hard at work trying to ruin. One of his foes was acquired only a few months ago when his old friend, Lajos Simicska, turned against him. The other two are Ferenc Gyurcsány and Ibolya Dávid, who have been on Orbán’s black list since at least 2005. These two did something that in Orbán’s book was unforgivable: they were responsible for his failure to win the 2006 national election.

Ibolya Dávid, leader of the Magyar Demokrata Fórum, became an enemy because of her refusal to run on the same ticket as Fidesz in 2006. She thus deprived Viktor Orbán of those extra votes that were necessary to form a Fidesz government under his premiership.

Gyurcsány’s “crime” was even greater. Orbán noticed early on that Gyurcsány was a talented politician who might be his political opponent one day. And indeed, in 2004 Gyurcsány became prime minister, which was bad enough. But when in the 2006 television debate Gyurcsány decisively beat him, Orbán’s dislike of the man turned into hatred. Orbán was humiliated, and never again was he willing to debate anyone at any time. I’m convinced that from this point on he began assiduously planning the ruination of Gyurcsány, which he has partially managed to achieve by his unrelenting character assassination of the former prime minister, from which he hasn’t been able to recover.

Orbán’s original plan most likely included sending Gyurcsány to jail, and it must have been a great source of frustration that he failed, at least thus far. But if he couldn’t incarcerate Gyurcsány, he could settle for second-best: jailing two officials of the government office that handled the sale of state properties, among them the one that involved a group of foreign businessmen who planned to build a huge casino and wellness complex at Lake Velence, the so-called Sukoro project. Today, in the culmination of a trial that resembled the show trials of the Stalinist period, the two officials were handed very stiff sentences. Miklós Tátrai, the CEO of the company, received four years, and Zsolt Császy, one of the department heads, received three and a half years. They will appeal the verdict.

Tonight, in an interview with ATV, Tátrai revealed that his lawyer had received an informal offer from one of the prosecutors: if Tátrai implicates Ferenc Gyurcsány, he will be acquitted. Since Gyurcsány in no way tried to influence their decision, he naturally refused even to contemplate the offer.

This was obviously a very important case for the Orbán government, and it was one of the first cases sent to a court outside of Budapest, in Szolnok. And the Budapest Appellate Court won’t rule on the case. The next round will be in Szeged. The case may end up in Strasbourg.

Ibolya Dávid, chairman of the right-of-center Magyar Demokrata Fórum (MDF), agreed to a coalition with Fidesz in 1998 and thus received the post of minister of justice in the first Orbán government. I might add that Fidesz, a macho party, makes no effort whatsoever to put women in leading positions either in the party or in the government. Dávid’s experience with Viktor Orbán and the Fidesz leadership between 1998 and 2006 must have been so negative that in 2006 MDF decided to brave the election on its own, despite the considerable pressure on them to support Viktor Orbán. To the great surprise of political commentators, Dávid’s moderate conservative party received  5.04% of the votes and could form a caucus with 11 members. If the MDF leadership had agreed to a joint ticket, Orbán could have formed a government with 107 members. The socialists (MSZP) and liberals (SZDSZ) won 103 seats.

From that point on, Orbán was out to get Ibolya Dávid and MDF. By 2010 he succeeded. MDF managed to get only 2.67% of the votes, and by now MDF is gone. The party was undermined from the inside. Fidesz offered all sorts of enticements, including financial rewards, to people in the MDF leadership who were ready to be secret agents of Fidesz and turn against Dávid. Unfortunately for Fidesz, as a side issue of another piece of Fidesz “dirty business,” which involved spying on the National Security Office, it came to light that Fidesz wanted to pay off a young MDF politician to run against Ibolya Dávid and thus split the party. This was in 2008. The court case has been dragging on ever since. Although Ibolya Dávid and Károly Herényi, the leader of the MDF caucus, were the victims, during the course of the trial they became the culprits. I wrote several articles on UD Zrt., the company Fidesz used to spy on the government, and how Fidesz turned the tables on the MDF leaders. After innumerable court appearances, today the judge decided to “reprimand” Dávid and Herényi, whatever that means. Surely, not even this kangaroo court could find them guilty. So they came up with something called “megróvás” (admonition/reprimand). Both the prosecution and the defense will appeal.

They are supposed to be removed altogether

They are supposed to be removed altogether

And finally, we have the case of Lajos Simicska. In the last few months we have been witnessing Viktor Orbán’s efforts to ruin Simicska financially. Again, I wrote several posts on the subject. The latest is that István Tarlós, the mayor of Budapest, decided to break a long-term contract with one of Simicska’s firms–Mahir Cityposter. In 2006 Simicska’s firm acquired the right to provide the city with 761 large, cylindrical advertising surfaces. The contract was good for 25 years. According to the terms of the contract, Mahir was supposed to pay the city 15% of its profits or at least 45 million forints per year. Now, nine years later, the city fathers came to the conclusion that the deal was tilted in Cityposter’s favor and that if the city itself took over these advertising surfaces it would make between 73 and 125 million forints. Surely, this sudden discovery was inspired by Viktor Orbán’s anti-Simicska campaign.

I should point out that Simicska acquired these large cylinders back in 1994. Simicska, who at that point handled Fidesz’s finances, saw the importance of owning advertising surfaces in cities all over the country to give Fidesz advertisement opportunities at a lower price than that offered to the opposition parties. But that was a long time ago. The situation after the Simicska-Orbán falling out is entirely different.

In brief, don’t cross Viktor Orbán. He is a vindictive man who can now use even the Hungarian judicial system to ruin his adversaries. It is a sad day for Hungarian jurisprudence.

The Hungarian media scene is still in flux

Although the Hungarian government’s only concern of late seems to be how to keep asylum seekers out of the country, I don’t want to succumb to the same tunnel vision. And so today I’m turning to the state of the Hungarian media.

So-called public (közszolgálati) television and radio are by now mere mouthpieces of government propaganda. Magyar Rádió is still, by default, the station that most people who are interested in more than pop music listen to. Magyar Televízió’s M1, a news channel, turned out to be a flop. On the other hand, a few days ago MTV began broadcasting a sports channel that is, not surprisingly, a hit since most Hungarian football games can be seen there and only there. Of course, the government’s media experts made certain that the canned news of MTV can also be heard on the sports channel. So one cannot escape the barrage of propaganda.

Back in May I wrote a post on the new media landscape, which included the purchase of Napi Gazdaság, a financial daily that imitated the look of The Financial Times. Former editors of Magyar Nemzet followed their editor-in-chief and began transforming Napi Gazdaság into a second Magyar Nemzet. As far as the contents are concerned the work has been pretty well completed, but the name of the newspaper doesn’t really fit, nor does its colored paper. A few days ago we learned that the new quasi-government paper will be called “Magyar Idők” (Hungarian Times), and soon enough it will be printed on normal newsprint.

The capital that was originally sunk into the paper was relatively modest, but subsequently János Sánta, the beneficiary of the latest redistribution of the wholesale sector of the tobacco state monopoly, purchased a 49% stake in the new paper. I wrote about the details of this redistribution, which benefited only Sánta’s Continental Tobacco Group and British American Tobacco, in a post titled “The Orbán government in action: Graft and fraud.” Clearly, Sánta was told that it was time to pay his benefactor, Viktor Orbán, for the fantastic business opportunity. The deal was most likely struck way before the government decision was announced.

Meanwhile Árpád Habony, Orbán’s mysterious adviser, and others are working on new projects. They want to come out with an online news site, but nothing has materialized yet. On the other hand, they put together Lokál, a free paper that is supposed to replace the very strongly pro-Fidesz Helyi Téma that went bankrupt a few months ago. According to Origo, this new paper seems to avoid political topics altogether and concentrates on the activities of Hungarian celebrities.

It has also been widely reported that Andy Vajna, formerly producer of the Rambo and Terminator movies, who was rumored to be interested in buying TV2, is now thinking of starting a cable television station of his own. There is no question in whose service Vajna’s station will be if it materializes. Andy Vajna, who left Hungary as a young boy in 1956, has made a spectacular career for himself in Hungary. His latest coup is that he will run five of Hungary’s eleven gambling casinos. His life in and out of Hungary certainly deserves a post or two.

Heti Válasz only last week published a very critical article about Andy Vajna's  financial affairs

Heti Válasz only last week published a very critical article about Andy Vajna’s financial affairs

These accomplishments are not, however, enough for Viktor Orbán. He wants to get rid of all of the media outlets still in the hands of Lajos Simicska and his business partner, Zsolt Nyerges: Magyar Nemzet, HírTV, Lánchíd Rádió, Heti Válasz, and Class FM, the only commercial radio station that can be heard everywhere in the country. An unlikely person has surfaced as a potential buyer of a couple of print and online publications: Mária Schmidt, the court historian and director of the House of Terror. Apparently, Schmidt is interested in buying Heti Válasz and perhaps Origo.

Mária Schmidt is a very rich woman. She inherited quite a fortune from her husband, who died unexpectedly in 2006. Népszabadság learned that she recently established a company called “Médiaháló” (Media Net) and is looking for newspapers to buy. She put out feelers to Magyar Telekom, which apparently has been wanting for some time to get rid of Origo. The other paper she is interested in is Heti Válasz. But Lajos Simicska, despite his recent troubles at the hands of Viktor Orbán’s government machine, is not ready to sell any of his media holdings. I don’t know how long Simicska will be able to maintain his unbending attitude because, as things stand now, Viktor Orbán has made sure that Simicska’s firm, Közgép, will not be able to bid for any government contracts in the next three years. Simicska is ready to fight the decision and, if necessary, go to the European Court of Justice, but that takes time. And who knows what other “misfortunes” will befall Simicska in the interim.

Whether Origo will land in Mária Schmidt’s lap is not at all certain because another newly established media firm, Brit Média Befektetési Zrt, already started negotiations with Telekom months ago. The company’s majority stake belongs to B’nai B’rith International, based in Brussels. András Jonatán Megyeri is a minority owner. Megyeri at one time worked for TV2 and Viasat, a high-speed internet company. He is a religious Jew who serves as the volunteer cantor of the Bét-Sálom Synagogue. A couple of weeks ago his new company invested 40 million forints in KlubRádió, which is still in dire financial straights. Mária Schmidt versus B’nai B’rith International, I’m curious whom Magyar Telekom will choose. I’m sure that opponents of Viktor Orbán are keeping fingers crossed for Brit Média.

The chief of the Hungarian tax office resigns

Today’s been a busy day in Hungarian politics. In the last week or so it was hard to find timely topics, perhaps because Viktor Orbán was on a secret vacation on Croatia’s Mljet Island. He went to the same spot last year, traveling alone and amusing himself by watching football games. But now there is so much news that I don’t know where to start. After some hesitation I decided to write about Ildikó Vida’s departure from the Nemzeti Adó- és Vámhivatal (NAV/National Tax and Customs Office).

Vida was the president of NAV, which turned out to be a hub of government corruption. More than a year ago one of NAV’s employees went public with folders full of documents implicating NAV’s top leadership in tax fraud. I wrote about the case at least twice in November-December 2013: “Tax fraud scandal in Hungary” and “The plight of a Hungarian whistleblower.”

It was not only this brave employee of NAV who noticed that something was amiss in the tax office. Certain American companies also realized that their competitors could undersell them with the effective help of NAV, which “overlooked” their games with value added tax claims. The American businessmen went to the U.S. Embassy to complain. After ascertaining the accuracy of their reports, the U.S. embassy was instructed to call the Hungarian government’s attention to the widespread corruption in NAV as well as in other government and pro-Fidesz institutions. The Hungarian government, despite numerous American complaints, did nothing. It was at that point, in October 2014, that Napi Gazdaság, then owned by Századvég, a political think tank with close ties to Fidesz, revealed that the Americans had informed the Hungarian government that six officials and/or businessmen suspected of corruption had been put on a blacklist of sorts: they were barred from entering the United States. Six of them decided to remain silent, but Ildikó Vida, head of NAV, openly admitted that she was one of them.

NAV

U.S.-American relations hit an all-time low when the Hungarian government demonstrated its unwillingness to cooperate with the Americans in ferreting out corruption. The Hungarians claimed that they couldn’t investigate unless the Americans revealed the seven names, which they knew full well the U.S. authorities were forbidden by law from doing. Viktor Orbán himself got involved when he “instructed” Ildikó Vida to sue André Goodfriend, the U.S. chargé d’affaires in Budapest, threatening to fire her if she didn’t.

But it seems that, despite the belligerence of the Hungarian government, behind the scenes the Állami Számvevőszék (State Accounting Office) quietly began an investigation. They found “serious deficiencies.” That happened in March, and with their revelation the guessing game began. Would Ildikó Vida step down? And if so, when? Well, the guessing game is over. We learned today that Vida gave notice on May 20 and that today was her last day on the job.

She is not going out with a whimper, as her farewell letter to the employees of NAV attests. She talks about “five years of constant struggle” against “ideas entertained by the government concerning the organization and the personnel of NAV.” As usual, the government didn’t bother to discuss these plans with the management. In her opinion, these government plans “endanger the budgetary interests and the functioning of the organization. These were the circumstances that resulted–despite the prime minister’s request to the contrary–in my resignation.” Since in the last two months the government didn’t get around to appointing a new NAV chief, Vida asked one of the deputy chairmen, Árpád Varga, to take over her job as of tomorrow.

The secret of her departure was kept pretty well, except that János Lázár, who doesn’t always know when to keep his mouth shut, two weeks ago talked about a reorganization of NAV for which one needs new leadership. More importantly, from Lázár one learned that the government has far-reaching plans for NAV. These plans are still in a preparatory stage: the government doesn’t know in what ways they will change the method of tax collection; they don’t know what kind of organization will adjudicate tax disputes between taxpayers and NAV–the ministry, an independent organization, or an entirely new office. Everything is up in the air.

But this is how things go in the Orbán government on every level. A month ago Lázár, at a forum for architects, admitted that “the state is in dreadful shape. It is too large. It’s immovable and weighed down.” Confusion reigns on every level of the bureaucracy, mostly because for Orbán loyalty is more important than expertise. They got rid of everybody who served in the administration in the eight years prior to 2010. I suspect that by now Viktor Orbán himself realizes that something must be done and that’s why Lázár announced that far-reaching personnel changes are expected to take place sometime in the fall. Many assistant undersecretaries can say goodbye to their cushy jobs.

We most likely will never know whether Viktor Orbán really entreated Vida to stay, but it is unlikely given the administration’s determination to reorganize NAV. Moreover, Ildikó Vida is a close friend of Lajos Simicska. She followed him as chairman of the tax office after Simicska resigned in August 1999. Given the acrimonious relations between Simicska and Orbán, I suspect that Vida’s days were numbered irrespective of her troubles at NAV. The list of recently sacked friends of Simicska is getting longer and longer.

Viktor Orbán’s new enemies: large landowners

Today I’m returning to Viktor Orbán’s so-called interview with Zsolt Bayer on Echo TV last Friday because the prime minister uttered a few sentences that might have an impact far beyond the fortunes of Lajos Simicska, the object of his ire.

I should emphasize that during the conversation Lajos Simicska’s name was never mentioned, but it wasn’t necessary to name Orbán’s old friend. Everybody in the audience knew whom they were talking about.

Zsolt Bayer wanted to know why the two old friends fell out. We know from Simicska himself that he disapproved of Orbán’s pro-Russian turn in foreign policy. Moreover, although in the past he had been supportive of Orbán’s domestic agenda, he was not willing to follow Orbán on a road that would lead to a Putin-style autocracy. Naturally, Orbán had to offer another explanation for his quarrel with Simicska. He could have come out with an explanation that might even have rung true. He could have said that Lajos Simicska, who has several media properties, became furious at the government’s plans to introduce high levies on advertising. Hence the fight. Indeed, Simicska made no secret of what he thought of the advertising tax. But Orbán didn’t choose this route. Instead, he came up with an utterly implausible story.

Orbán explained that there was a very simple explanation for the strife between the government and the media owners. These media oligarchs are also large landowners, whose interests will suffer under the provisions of the new law on land use (May 1, 2014), which prescribes that only 20% of all arable land can be in the hands of landowners who own or lease more than 1,200 hectares of farm land. No one who has followed the Simicska story could possibly believe a word of this, but why then did the prime minister come up with such a tale? Népszabadság suspects that Orbán used the occasion to announce his newest targets, owners or co-owners of large landholdings.

It is not easy to find one’s way in the labyrinths of EU agricultural policy and its implementation in Hungary. One thing is sure, a lot of money is spent on agricultural subsidies. Hungarian farmers will receive 350 billion forints in SAP (single area payment) subsidies every year between 2015 and 2020. A large landholding is considered to be anything over 1,200 hectares. There are 525 such agribusinesses in the country. Until now they received 20 billion forints per annum in SAP subsidies, but from here on they will get nothing. Those whose holdings are between 1,037 and 1,200 hectares will get 5% less than before. All the “savings” will be given to those who raise livestock or who grow vegetables, agribusinesses that are more labor intensive. According to the estimates of the ministry of interior, such a restructuring may result in 50-70,000 new jobs, something most experts doubt.

It is true that Lajos Simicska and some of his fellow oligarchs, like Zsolt Nyerges, Sándor Csányi, and Tamás Leisztinger, do have very large landholdings and that until now they received enormous sums of money from Brussels. Just last year they pocketed close to 16 billion forints in subsidies. But moving against the large landholders may have some serious consequences. Currently, about half of all available land is in the hands in agribusinesses cultivating more than 1,200 hectares, an arrangement that currently serves the market adequately. Government interference in that structure might result in dislocations in the market place. Moreover, farmers of small- and middle-size holdings are chronically short of capital, so this government policy might hurt the efficiency of Hungarian agriculture.

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There is another problem. Since Hungarian law forbids the concentration of very large landholdings in one hand, the majority of the 525 large farms are actually owned by smaller farmers who jointly cultivate large tracts. With the elimination of these “collective” farms, thousands of small farmers might be hurt. Moreover, these farms, which are well equipped with agricultural machinery, often perform tasks for really small farmers who can’t afford expensive machinery for their plots.

Apparently, as is customary in the Orbán government, policy makers are not worried about any of this. If these owners have to leave, some new ones will come. But, as experts rightly point out, these newcomers might not have the expertise, the knowledge of the market, or the equipment necessary to continue farming in an efficient, market-friendly manner.

Such a restructuring of Hungarian agriculture is no insignificant matter. These 525 large farms produce one-fourth of Hungary’s agricultural output and employ 50% of all agricultural workers. They produce 40% of the livestock and almost half of all sowing seeds. So, if something goes wrong with this great plan, and I’m almost sure that it will, there can be serious consequences. It is a well-known fact that a larger concentration of landholdings usually results in greater efficiency and hence lower prices. As it is, Hungarian farmers complain that they are unable to compete with foreign products, which can be sold at lower prices even with the cost of transportation.

Of course, this is not the only problem with the law on landholdings. After taking a good look at the law, the European Commission decided that there were some serious deficiencies in it. From the relatively short article on the subject, it looks as if one of the objections of Brussels centers on the non-Hungarian ownership of land. That was pretty well expected from commentaries on the law by people familiar with the position of the European Union. What seems to me of greater significance is that the European Commission has problems with the very definition of the word “farmer” (gazdálkodó). It is so narrowly defined that very few people could ever qualify for the position. Moreover, the law seriously interferes with the freedom of property owners who can sell their lands only to “farmers,” i.e., only to those who themselves would cultivate the land. Such undue interference in civil property transactions, in my opinion, is unacceptable. Otherwise, it’s a jolly good law!

Viktor Orbán explains what went wrong

If I hadn’t already known that Viktor Orbán is in serious political trouble, I would certainly have discovered it last night while watching an interview he gave to Zsolt Bayer, one of the founders of Fidesz and a foul-mouthed racist who thinks he is a journalist. The interview was aired on Echo TV, a far-right television station catering to Jobbik supporters and to those Fidesz voters whose political views are practically indistinguishable from the ideology and racism of Jobbik.

After his falling out with Lajos Simicska, a former friend and financial wizard of Fidesz, Orbán no longer wants to use HírTV, Lánchíd Rádió, or Magyar Nemzet, all Simicska businesses. László Kövér indicated that the party considers these media outlets to be mouthpieces of the opposition. Fidesz politicians have been advised to keep away from them. In the meantime the government, behind the scenes, is creating a new “independent” media empire.

Why did Orbán use the far-right Echo TV instead of the new state television’s news channel, M1? Although M1 is a flop, it still has a wider audience than Echo TV. The only explanation I can think of is that Fidesz is sending a message to Jobbik supporters, who most likely prefer Echo TV above all others, that Fidesz is no less radical than Jobbik is.

It was a long interview, a little over 45 minutes, and a lot of topics were covered, but what I personally found most interesting was the discussion about “the confusion” in the party and the government. I assume Bayer was addressing the party’s lack of direction and the resultant slide in its popularity. He introduced an idea he had written about earlier, that Fidesz has lost its “soul.” Naturally, Viktor Orbán doesn’t believe that there is any intrinsic problem with his leadership. The “confusion” is not in Fidesz or in the government but in the heads of his right-wing supporters. The reason for this confusion is the government’s loss of the media that in the past explained the policies of his administration and directed public opinion in the proper way.

So, if I understand it correctly, Orbán more or less admits here that without a Fidesz-created servile media he and other Fidesz politicians would be nowhere today. They needed Magyar Nemzet, Heti Válasz, and HírTV, which were financed by Fidesz operatives such as Lajos Simicska. Try to imagine a similar situation in a truly democratic country where the president’s or the prime minister’s success depends on the existence of a secretly financed media empire. And once, for one reason or other, something goes wrong and the owner of that media conglomerate withdraws support, the whole government and the government party are suddenly heading toward oblivion. Because this is what seems to have been going on in Hungary for more than a decade. At least since 2002.

Perhaps I should add here that a large chunk of that money came straight from Brussels. Even during the socialist-liberal period Lajos Simicska’s companies received plenty of government projects. There is also a strong possibility that Simicska was not the only Hungarian CEO who secretly worked for Fidesz. Of course, after 2010 the government coffers were opened wide to Fidesz-supporting entrepreneurs who surely paid the party back for favors received.

At the time of the Simicska-Orbán confrontation the majority of commentators were convinced that Lajos Simicska would come out the loser. After all, the power and purse strings of the state are in Viktor Orbán’s hands. He is the one who can destroy Simicska’s business ventures. In the past, it was Viktor Orbán who made sure that huge government projects landed at Simicska’s concerns, and now those orders will go elsewhere. Of course, this may be true in the short term, but what if the “confusion” in the heads of the Hungarian people remains because there are no longer industrious scribblers who try to point their minds in the “right direction”?

Orbán obviously realizes how important it is to create another servile Fidesz media, and I’m sure they are furiously working on it. Orbán specifically mentioned Gábor Liszkay’s purchase of Napi Gazdaság as a first step toward rebuilding a government-servile media conglomerate, but it will take time, if it’s even possible, to make a second Magyar Nemzet out of what used to be a financial paper. And second, there is a good possibility that by now a lot of Fidesz supporters can no longer be so easily swayed. It is enough to read the comments in Magyar Hírlap following the article that describes the interview. Keep in mind that this is a far-right paper. Here’s a tiny sample. “Something was broken. This is not the same Fidesz any more. There is too much senseless arbitrariness. Too much János Lázár.” This is not a left-wing troll writing here. I’m sure that he used to be a true believer. Another reader realizes that “if there is no media on the right, just on the left, then there will be big trouble. By now all media are anti-Orbán and anti-Fidesz.” Of course, there are still many who are glad that Viktor Orbán explained so clearly what the real trouble is, but another reader suggests that perhaps the prime minister should have mentioned some of the mistakes he and his government made. It will be difficult for the government to pick up where they left off.

Another topic I found fascinating was Viktor Orbán’s evaluation of his tenure as prime minister between 2010 and 2015. There seems to be a new twist in his interpretation of his own role as well as the accomplishments of his government. Until now we have been told that in April 2010 a revolution occurred, a revolution in the voting booths. Now, however, he sees the whole four years following the election of 2010 as a revolution, which he considers a fantastic accomplishment. After all, there have not been too many “victorious” revolutions in Hungarian history. Now the gates to a “polgári Magyarország” (a prosperous Hungary with a well-off middle class) are open. “We just have to enter them.” But one must be vigilant because “the opposition wants [to stage] a counterrevolution,” and therefore they are doing everything in their power to prevent the establishment of that long-sought “polgári Magyarország.” What followed was even more bizarre than his description of the opposition as a bunch of counterrevolutionaries. “We have been victorious and that the opposition is attacking us is an excellent sign. They would like to take our place because now it is good for us and bad for them.” A true democrat is speaking here.