Tag Archives: Lajos Simicska

For Viktor Orbán the Hungarian media is still too free

I understand that Viktor Orbán is mighty annoyed with the independent media, which in his opinion remains far too critical of his government. For instance, hard-working journalists have unearthed an incredible number of corruption cases. I know that people like to complain about the quality of Hungarian journalism, and I myself often grouse about articles that are hard to follow or are sloppy. On the whole, however, Hungarian journalists should be commended for working under difficult circumstances for very little money. There are a couple of politicians who decided to specialize in exposing corruption cases, like Ákos Hadházy (LMP), Péter Juhász (Együtt), and lately Bertalan Tóth (MSZP), but the bulk of the corruption cases came to light thanks to the growing number of investigative journalists.

Investigative journalism was a new field in post-communist Hungary. I still recall how feeble the first attempts were in the first half of the 1990s. But by the early 2000s there was a handful of first-rate investigative reporters who were, for example, instrumental in informing the public about the enrichment of Viktor Orbán and his family, which was of course modest in comparison to the situation today. And by now there are at least two NGOs, Direct36.hu and Atlatszo.hu, that are non-profit investigative journalism centers “with the mission to expose wrongdoings and abuse of power through fair but tough reporting.”

Orbán would like to tone down or, better yet, stifle the media’s outcry over what’s going on in government circles. His government’s first move was to transform the public broadcasting system, whose staff even before 2010 had been less than independent from Fidesz influence, into a totally servile government propaganda machine. An incredible amount of money was and continues to be poured into a TV station that practically no one watches. Once the low viewership numbers became obvious, the government started a new channel specializing in sports, which is used as a “pseudo news channel.” Every fifteen minutes or so “government news” is broadcast between sports events. This way there is no escaping the news–news that bears a suspicious resemblance to that broadcast in the Rákosi and the early Kádár regimes. People in the trade swear that by the second half of the 1980s journalists at the state television and radio stations had more freedom than employees of the state television and radio stations do today. Just one example. Journalists stopped people on the street to ask about their reaction to the migrants. When one woman said that she has no problem with them, she was told that they are not interested in what she has to say.

Prior to February 2015 the government had an extensive, loyal media network thanks to Lajos Simicska, Viktor Orbán’s high school friend who owned a TV station, a radio station, a daily newspaper, a free paper distributed at metro stations, and a weekly magazine. The last two publications were also available online. With the fallout between the two old friends, however, Orbán lost Magyar Nemzet and HírTV, both of which were critical for his government, especially since the “state television” (MTV) turned out to be a flop. So, the pro-government gurus moved into high gear and within a year and a half managed to build an even larger network of media outlets. And they haven’t finished their job yet. Friends of the government are buying up popular media properties and transforming them into propaganda machines.

To replace Magyar Nemzet a new pro-government daily was created called Magyar Idők, which is not exactly a favorite of the public. On a list of the fifty most popular online news sites Magyar Idők didn’t make the cut. Mind you, neither did Magyar Nemzet, which in my opinion has become a quite respectable paper in the last year and a half. In addition, several other pro-government internet sites came into being, among them ripost.hu, a tabloid that has a decent-sized readership (179,842/day in July 2016).

chain

The two most popular sites are origo.hu (561,494/day) and index.hu (513,854/day). The former was recently purchased by a cousin of György Matolcsy and has since turned decidedly to the right. Apparently the future of index.hu is not at all assured because the current owner, Zoltán Spéder, is no longer a favorite of the prime minister. There are still a couple of popular independent internet sites like hvg.hu and 444.hu that trounce the official government hirado.hu in readership. Could they be in the government’s crosshairs? Surprisingly, nepszabadsag.hu is not a popular news site, despite the fact that the print version is the most popular nationwide daily paper. But even Népszabadság’s fate is not quite settled yet. There is talk about Vienna Capital Partners selling Népszabadság to the owner of Duna Aszfalt, László Szíjj, who was described by Népszava as a possible front man, along with Lőrinc Mészáros, of Viktor Orbán.

On the television front, government propaganda lost HírTV, but after a lot of finagling Andy Vajna, the former American-Hungarian movie producer who is now the owner of several casinos and a loyal friend of Orbán, purchased the German-owned TV2. Vajna, who is not exactly a poor man, didn’t have enough money for the purchase so the Orbán government gladly lent him 8 billion forints, which most people believe will never be paid back. TV2 was heavily indebted at the time of Vajna’s purchase, and it is unlikely that it will suddenly become wildly popular, surpassing the favorite commercial television station in Hungary, RTL Klub. Only a couple of their shows are attracting a larger audience, while RTL Klub has at least six such favorites.

Passing TV2 to Vajna was not quite enough for Orbán, who would like to have a quality television channel specializing in news. It looks as if there is an attempt to upgrade Echo TV, which is owned by Gábor Széles, a rich man of extreme right-wing political views. Echo TV’s current audience is very small. However, I just read that Ferenc Szaniszló, who had a weekly program and who belongs to what I call the lunatic fringe, was fired and that Echo TV is being reshaped to be a more respectable outlet of news and political discussions serving the government’s needs.

Apparently, Orbán hoped that Lajos Simicska would give up his losing media outlets. In the past, when the two men were still friends, Magyar Nemzet and HírTV received government ads galore in addition to thousands of subscriptions for government offices. Since the blow-up no government advertising money has come Magyar Nemzet’s way. Moreover, the paper isn’t getting much in the way of ads from the private sector either since rich businessmen who are heavily dependent on government orders are afraid to advertise in opposition papers. This is the way the government ensures that papers they consider to be disloyal will starve to death.

Orbán’s aim was the total destruction of Simicska’s media outlets, but so far he hasn’t succeeded. The only victim was the free newspaper Metropol, which used to be distributed at metro stations. One day the Budapest Transit Authority (BKV) broke its contract with Simicska on the grounds that he had received the right of distribution without a tender. BKV immediately signed a contract with Árpád Habony’s Modern Media Group Zrt., whose new publication, Lokál, took its place. I might add that Modern Media Group also received its contract without any competition. Lokál, being a free paper, depends on advertising, and it is chock full of government ads. The government is keeping it afloat.

The picture is grim and, I’m afraid, it can be grimmer still. One can only hope that Orbán, in his insatiable appetite for a servile media, will not gobble up every important outlet, leaving only crumbs for the opposition. If, for example, pro-government owners were to acquire hvg or index, it would be an irreparable blow to the democratic opposition.

September 22, 2016

Two men who put up a fight: Lajos Simicska and Bachar Najari

Among the active members of Hungarian Spectrum there has been a long-standing debate about the most useful attitude toward the Orbán regime’s very existence and future. There are those who get upset when they encounter pessimism regarding the removal of the present Hungarian government. They think that defeatism is counterproductive and take every opportunity to raise their voices against naysayers. Among these people we find some who think that these pessimists are actually Fidesz propagandists whose job is to spread the dogma of Fidesz invincibility. But, to be fair, one doesn’t need to be a Fidesz troll to feel less than optimistic given the state of affairs in the country.

I for one agree that the proverbial Hungarian pessimism can become a self-fulfilling prophecy, which should be avoided at all costs. But, at the same time, we must admit that overcoming the obstacles that Orbán and his minions have placed in front of those desiring change is a formidable task.

Today I would like to hearten those who are worried about Hungary’s future by writing about two men who decided to stand up to the government. The first is Lajos Simicska, Orbán’s friend from high school, who reaped all the benefits of the mafia state until his falling out with the prime minister about a year and a half ago. The other is Bachar Najari, a Syrian-Hungarian-Swiss businessman, the new owner of the famed Zsolnay Porcelain Factory in Pécs. Although for different reasons, both were targeted for financial annihilation by a corrupt regime. It looks as if the powers that be are finding it difficult to destroy them.

Some people believe that Lajos Simicska’s contribution to the creation, development, and final accomplishment of Fidesz was even greater than Viktor Orbán’s. After all, it was Simicska who brought home the bacon. Of course, in the process he himself became immensely rich. But then came the falling out. Orbán, being a vindictive man, decided to ruin his old friend financially.

Simicska’s most important business venture is Közgép, a construction company that specializes in building highways and railways. As such, it is heavily dependent on government orders. Thus, Simicska looked like an easy target. Indeed, right after the blow-up between the two men, the government suspended midstream the highway that was to be built by Közgép. The second move was that the Public Procurement Authority (Közbeszerzési Hatóság), which handles government tenders, “discovered” that Simicska’s firm had cheated on one of its tenders. It was decided that as punishment Közgép would not be able to compete for any government jobs for three years. Simicska went to court and won, both in the lower court and also on appeal.

Trying to ruin Simicska through Közgép was not enough. Orbán instructed István Tarlós, mayor of Budapest, to break a long-term contract with Simicska’s firm, Mahir Cityposter. In 2006 the firm acquired the right to provide the city with 761 large cylindrical kiosks. The contract was to be good for 25 years. Ten years later the city suddenly “discovered” that the contract was not fair. When Simicska didn’t remove the kiosks by a specified date, the city ordered them to be forcibly removed despite a court order to stop the vandalism. Simicska promptly hired György Magyar, a very able lawyer, who said from the beginning that the case was absolutely clear-cut. And indeed, he was right. A few days ago the court agreed with the argument Simicska’s lawyer presented and forbade the removal of the kiosks while the case is pending before the court of appeal. The city will also have to pay 6.8 million forints in court costs. If the city loses, it will have to pay Simicska 600 million forints in damages.

Perhaps Simicska’s savviest move to date has been to form a consortium with the Italian company Itinera, which has been described in the Hungarian media as “a big gun.” Itinera has been “active in large-scale infrastructure projects and civil construction for more than 75 years in Italy and around the world.” Közgép together with Itinera presented a bid for a 27 km-long section of the M4 highway between Berettyóújfalu and the Romanian border. Their bid was 58 billion forints or approximately 188 million euros. Two other consortiums were also eyeing the job: (1) a consortium of three Hungarian companies whose bid was 84 billion forints or approximately 268 million euros and (2) a French-Slovak-Czech consortium that bid 87 billion forints or 272 million euros.

The difference in price is staggering. It seems that Simicska with this offer wanted to show the fair (admittedly, probably on the low end of fair) price of road construction and to highlight the graft that is normally built into these bids. In the case of the Hungarian consortium it was as much as 26 billion forints or 80 million euros. In this particular case almost 3 million euros per km would end up in someone else’s pocket. Of course, it is still possible to find fault with the Közgép-Itinera tender if Viktor Orbán so desires, saying that price is not everything, but apparently the Közgép-Itinera bid is also best in every other category, including environmental considerations. The consensus is that it will be very difficult to award the project to anyone else.

 

Now we can turn to the case of Bachar Najari, the Syrian-Swiss businessman with a Hungarian wife who also speaks fluent Hungarian. How Najari ended up owning the Zsolnay porcelain factory is a long story, which I pretty well told in a post titled “How to ruin a businessman with government help.” The upshot of the story is that one of Viktor Orbán’s oligarchs, Attila Paár, decided that he would like to own the factory because many of the vintage buildings in Budapest that will be restored or even rebuilt will need the famed terracotta tiles Zsolnay was famous for in the last decades of the nineteenth century. Najari had managed to put the formerly city-owned factory on solid financial footing, and it looked as if from here on it would be a profitable enterprise, especially with the impending sale of roof tiles. There was a fairly large loan which had been taken out by the city earlier from the Hungarian Development Bank for which Najari offered a certain amount of money to settle the account. The bank declined the offer and instead sold the debt for half of what Najari had offered to Attila Paár. Meanwhile, the city of Pécs decided to help Paár along by setting up a bogus company to which it recruited more than half of the workforce of Zsolnay. These workers are actually on paid vacation and no one knows who pays them. The situation was compared by one of the workers of the factory to a gangster film from the 1930s.

gangsters

Najari decided to fight. First he managed to get back his stock, which had been placed under sequestration. He used his own money and made good on the debt he inherited when he bought the factory from Pécs and also paid 90 million in local taxes, although it was a disputed item. Therefore there was no more reason for the city, which owns 19% of the stock, to take over the factory. Then the Kaposvár court refused to register Pécs’s new porcelain manufacturer, called Ledina Kerámia. Finally, the court in Zalaegerszeg turned down the request for a liquidation of the Zsolnay factory. A few days ago the city of Pécs “sold” the nonexistent Ledina Kerámia to an unnamed off-shore company. The city claims that the sale, for 3 million forints, “will ensure the jobs of those workers who were enticed to leave Zsolnay because it was to fold soon.”

Meanwhile work is being done at Zsolnay. Najari refused to be intimidated, and it seems that he managed to foil the attempt to rob him blind.

Although it is not easy, these two cases show that a person can win as long as he has the means and the determination to stop the Orbán regime’s unscrupulous, illegal activities.

September 19, 2016

Another government shake-up: Greater confusion guaranteed

János Lázár has been the focus of a great deal of media attention of late. His often provocative behavior and his less than diplomatic comments about fellow politicians and important oligarchs made a lot of political observers wonder when Viktor Orbán will deem it necessary to shove his currently number one man into the background. The discussion over Lázár’s political future gained intensity last fall with the appointment of Antal Rogán as chief of the Prime Ministry’s Cabinet Office, nicknamed Viktor Orbán’s propaganda ministry, which was created especially for Rogán. Some people believed that the creation of this new office weakened János Lázár’s position. There were also reports that Lázár was not too keen on the idea of placing another center of power inside the Prime Minister’s Office.

Speculations over Lázár’s future flared up again when a week ago he announced the retirement of Mrs. László Németh, undersecretary in charge of financial services and postal affairs. Her appointment as minister of national development in 2010 caused quite a stir. She was an absolute unknown without much educational background. But she was Lajos Simicska’s close friend and business partner. Through her Simicska pretty well controlled the whole ministry of national development. In 2014 Orbán, who was obviously already thinking of loosening Simicska’s influence over financial matters, replaced her with Miklós Seszták. Surprisingly, this was not the end of Mrs. Németh’s career. Orbán found a place for her in the Prime Minister’s Office. Mrs. Németh hasn’t yet reached the official retirement age of 65, and therefore I assume that her “retirement” wasn’t exactly voluntary. But Fidesz will find a job for her somewhere else.

Mrs. Németh’s “retirement” is probably not related so much to the Orbán-Simicska fallout as to the so-called Spéder case, about which I wrote earlier. The case is very complicated, but the most likely explanation for Viktor Orbán’s ire and his decision to unseat one of his formerly favorite oligarchs was Spéder’s less than subservient behavior toward his benefactor. Certain financial transactions were made that, in Orbán’s opinion, hurt his government’s interests. It was Mrs. Németh who was supposed to keep an eye on Spéder, which she failed to do. At least this is the most likely charge against her.

But what does all this have to with János Lázár? Quite a bit. First of all, a week ago Lázár announced that Zoltán Spéder is his friend, whom he is not going to abandon. According to rumor, the police have taken, among other things, taped telephone conversations between Simicska and Spéder, which were most likely recorded by Spéder. Whether this rumor is true or not, most likely in Orbán’s head there is a connection between Simicska, Spéder, Mrs. Németh, and perhaps even János Lázár.

In record time Mrs. Németh was replaced by Andrea Bártfai-Mager and was given the title of government commissioner, a position that carries ministerial rank. Bártfai-Mager is a member of the National Bank’s Monetary Council, so György Matolcsy, chairman of the bank, may well have recommended her for the job. Most significantly, Bártfai-Mager will not be under the supervision of the head of the Prime Minister’s office, János Lázár, but will report directly to Prime Minister Viktor Orbán.

Mrs. László Németh and her replacement, Andrea Bártfai-Mager / Source: 444.hu

Mrs. László Németh and her replacement, Andrea Bártfai-Mager / Source: 444.hu

With these changes Lázár will lose power over important sectors of the government edifice: the affairs of the Hungarian Development Bank and 18 state-owned companies associated with it; the Hungarian Postal Service, which unlike its American equivalent is an important financial institution; and the integration of the credit unions, which used to be handled by Spéder. Lázár will end up looking after such things as public administration, rural development, EU subsidies, national policy, and heritage conservation.

Although strictly speaking it is an entirely different matter, I should mention in passing that it also looks as if the troublesome issue of the House of Fate, a kind of Holocaust Museum Orbán style, which was most likely Lázár’s idea in the first place, will be taken out of his hands. The task of doing something with the brand new, impressive building, which has been standing empty for well over two years, will be assumed by Zoltán Balog’s already overburdened ministry of human resources.

There is widespread consensus in Hungary that Orbán is heading a government that functions very badly. He himself seems to realize its shortcomings. But his usual fix is to change the government’s structure. He makes ad hoc decisions on structural changes, decisions that by now have resulted in a bloated government and total chaos. Dozens and dozens of government commissioners and over one hundred undersecretaries with all sorts of special jobs have only increased bureaucracy. The talk is always about efficiency and reducing the number of civil servants, but the number of political appointees keeps going up.

Now, it seems, Viktor Orbán has come up with yet another reorganization of the government. The announcement, which was totally unexpected, came from János Lázár this afternoon at his regular Thursday government “info.” He said very little about the details, not because he tried to be secretive but because I suspect he himself doesn’t know much about the impending changes.

So, what’s in the offing? I think Index put it best: “Orbán turns everything upside-down: he is creating two little governments.” Yes, this is the gist of it as far as I can ascertain. As it stands now, once a week the ministers and their undersecretaries get together for what we in English would call a cabinet meeting, presided over by Viktor Orbán. In Hungarian it is called “kormányülés” (government meeting). It is here that final policy decisions are made.

Now, in addition to this group, Orbán will create two “cabinets.” One will be called “gazdasági kabinet” and the other “stratégiai kabinet.” These cabinets will have wide decision-making powers. The idea is that these cabinets, whose membership will vary depending on the subject matter discussed, will allow government officials to focus on important questions in greater depth.

Such an arrangement might make sense if these “cabinets” had only an advisory role, but I don’t see how the decisions of the weekly meeting of ministers and those of the lower-level cabinets can be brought together into a cohesive whole. I’m convinced that the chaos and confusion that now exists in the Orbán administration is nothing compared to what will happen when two mini-governments compete with the real “cabinet.” I don’t know whether such an arrangement exists anywhere else in the western world or whether Viktor Orbán’s latest brainchild will have the dubious distinction of being a unique addition to his illiberal state.

July 7, 2016

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.