Tag Archives: Tokaj

From gas-fitter to owner of Chateau Dereszla

Today we are going to make a side trip to Tokaj where, believe it or not, Lőrinc Mészáros, who is considered to be Prime Minister Viktor Orbán’s front man (stróman in Hungarian), is in the process of buying a vineyard. Not just any old vineyard but Chateau Dereszla, a 54-hectare estate owned by Count Patrick d’Aulan, an internationally known vintner with large estates in France and Argentina. Apparently, Dereszla has been a successful business since about 2000, with well-established markets in Poland and Russia. Mészáros’s purchase of the vineyard came as a great surprise to the locals.

Isn’t it interesting that Mészáros decided to follow in the Orbáns’ footsteps, whose very first business undertaking was a vineyard in the Tokaj region? It was a joint venture with Dezső Kékessy, a wealthy Hungarian businessman from Switzerland. The Orbáns’ share in the company (held in the name of Anikó Lévai, Orbán’s wife) that Kékessy formed was relatively small, but they became key business partners due to Orbán’s position as prime minister. Here’s how the deal worked. At that time the largest buyer of grapes in the region was a state bottling company that was close to bankruptcy. First, the Orbán government injected billions into the bottling company to make sure that the Orbán-Kékessy Estate’s grapes could be sold. In two years the bottling company received 4 billion forints in state subsidies. But that was not all. The vineyard that they bought was not worth much. The stock was old, and to make it a successful business a large amount of capital was needed to plant new vines. The Orbán government came to the rescue: the Orbán-Kékessy Estate initially received 41,475 million forints and later, on two separate occasions, an additional 64.5 million forints in subsidies. Thanks to the excellent investigative work of the late Krisztina Ferenczi, all this eventually came to light. There was embarrassment but nothing else happened, except that Anikó Lévai quickly sold their share of the estate.

The pending purchase of Dereszla was a well-kept secret, but by now it is certain that the happy new owner will be Lőrinc Mészáros, the gas-fitter and friend of Viktor Orbán. He has never been known as a connoisseur of fine wines, unlike most vineyard owners whose palates have been refined by years of studying the mastery of wine-making.

In the past, before the communist takeover, Tokaj wine was highly regarded, but it soon “became world famous only at home,” as the saying went. Dereszla was first acquired by a French co-op right after the change of regime. Later it was purchased by the D’Aulan family, who put a great deal of money into the operation, planting new stock and introducing the most modern equipment. Although Russia and Poland are the largest markets for Chateau Dereszla wines, they are also available in the United States. The wines of Dereszla were chosen to be among the representative wines served at government functions and at embassies. In 2012 “Count Patrick d’Aulan was honored with the Knight of Merit by the President of the Republic for his dedication and promotion of the wines of Tokay.”

dereszla

So, d’Aulan’s estate will be added to the growing number of business schemes of Mészáros, who over the last few years has become a billionaire. He has so many irons in the fire that he is sometimes confused about just what he owns. A while back he had no recollection of a business he had established in Russia. More recently, he purchased the Osijek football club (NK Osijek). Mészáros’s purchases run eerily parallel to Viktor Orbán’s interests: agricultural land, real estate (hotels), football clubs, and now vineyards.

Why the sudden interest in Tokaj? Andy Vajna, a Hollywood producer and now a businessman in Hungary with close ties to Viktor Orbán, is also interested in purchasing a vineyard in Tokaj. One, maybe the most important reason, to look for estates for sale in the Tokaj region is that 40 billion forints in subsidies are going to be sunk into the region by the Orbán government. This amount is over and above a 100 billion forint package that was announced in January 2014 by János Lázár. The plan is as follows. The state will buy 1,000 hectares, which will then be parceled out either in the form of 25-year leases or even outright sales for those close to the government and Fidesz. There is also talk about planting perhaps as much as 2,000 hectares with new vines, which would make the wines produced in the region more desirable and naturally more expensive. Here and there one can hear talk of a new bridge across the Bodrog river and new roads.

Viktor Orbán’s first business venture in Tokaj 16 years ago was small potatoes in comparison to Mészáros’s purchase of a thriving winery with an established name. Then, the Orbáns were satisfied with a few hectares of third-rate wine produced from old stock that should have been replaced decades before. They were content to sell their inferior grapes to a state bottling company that produced cheap wine. Mind you, that was only an interim solution while they waited for government subsidies to be able to plant new vines. The money at that time came solely from the Hungarian government because in 2000 Hungary was not an EU member. Now it is really free money: the subsidies come from the hated European Union. Unless Brussels gets tired of doling out money to countries that refuse to cooperate in solving the refugee crisis or that have a proven track record of corruption.

May 28, 2016

The Orbáns and Hungarian gentleman farmers

I just raced through Krisztina Ferenczi’s new book, Narancsbőr (Orange peel). Since I usually read her articles about the Orbán family’s dubious financial dealings, I was familiar with most of the details. Ferenczi’s earlier book was about the Orbáns’ brief encounter with viticulture in Tokaj. They got burned when it came to light that Viktor Orbán as prime minister used his influence to receive a substantial state subsidy for their newly acquired vineyard. It was only through a clever legal trick that Orbán’s skin was saved. Since then he has been super clever and has avoided any kind of business venture that may get him into a tight spot as a possible recipient of subsidies either from the European Union or from the Hungarian state. It is true that his wife, Anikó Lévai, owns some agricultural land in Felcsút, but officially at least it is leased to János Flier, the former electrician I was talking about yesterday and one of Orbán’s likely front men in Felcsút. Lévai claims that the subsidies she is entitled to actually go to Flier. When Ferenczi asked Flier about it, he replied: “You ought to ask her how it is exactly” (Tőle kellene megkérdezni, hogyan is van ez). Flier is obviously not the sharpest knife in the drawer.

So, the Orbáns who got burned with Tokaj are now very careful. And yet the incredible wealth Orbán’s two close friends in Felcsút, Lőrinc Mészáros and János Flier, amassed made the inhabitants of the village more than suspicious. They are convinced that Viktor Orbán is an active business partner in the growing Mészáros-Flier estates. Perhaps he is the majority owner of them.

Ferenczi found many signs that this is probably the case. She talked at length with people who work on the cattle ranch owned by Mészáros, which Viktor Orbán visits frequently. It seemed obvious to them that Orbán is not just a casual visitor there. “He had something to do with the enterprise.” It also came to light that the charolais cows of Orbán’s new son-in-law are also part of the herd of 3-4,000 animals which, by the way, are kept, according to Ferenczi, under terrible conditions. I might also add here as a footnote that in the past at least the people who worked there officially received only 65,000 forints a month; the rest, 35-45,000 forints, illegally changed hands under the table.

Yesterday an article about the new stadium in Felcsút appeared in The New York Times with a picture of the half-finished stadium right next to the Orbáns’ country home. It is perhaps the best picture I have seen of the two together and leads me to believe that the modest abode the Orbáns built in 2003 will not be there for long. If the stadium is a “jewel box,” as Orbán once described it, the peasant adobe house 20 feet away is a jarring eyesore. And that leads me to the very good possibility that the Orbáns have a very much more elegant dwelling in mind: the former country house of the Hungarian Habsburgs nearby. The building was badly damaged during World War II, but it looks as if the Orbán family has plans to rebuild it in its earlier splendor. Viktor Orbán’s father, Győző, who apparently besides his quarry also has a real estate business, purchased the whole remaining estate a few years ago.

Who were the Hungarian Habsburgs? The founder of the Hungarian branch was Archduke József, the much beloved palatine (nádor) of Hungary (1776-1847), who became a patron of art and an important promoter of the development of Budapest and the country in general. It was he who acquired a large piece of land in Alcsút and built a beautiful palace there. He and his family settled in Hungary for good. The last Archduke Joseph (1872-1962) who played a role in Hungarian politics was actually born in Alcsút. By all indications some of the remnants of Archduke Joseph’s estate are in the hands of the Orbán family and, according to some information Ferenczi received on the spot, work has already begun. The site is off limits to strangers. It is guarded by security personnel as well as by a kuvasz named Nárcisz (Daffodil). Orbán admitted that the family has a ferocious dog called Nárcisz, but, he added, “it is in Felcsút.” I guess he didn’t want to say that the animal is actually guarding part of the Archduke Joseph’s estate owned by his family.

The remnant of the Habsburg Palace, Alcsútdoboz Source: Wikipedia Commons

The remnants of the Habsburg Palace, Alcsútdoboz
Source: Wikipedia Commons

As I was reading about the landholdings of Viktor Orbán and Anikó Lévai it occurred to me that this unexpected yearning to be “lord of the manor” (földesúr) is typical of Hungarians who may have achieved great wealth or fame in some other endeavor but think their life is not fulfilled without having some land and preferably a sizable and elegant palace to go with it. One of my favorite Hungarian novels is Kezdetben volt a kert (In the beginning there was the garden) by Anna Lesznai, first wife of Oszkár Jászi. The book is largely based on her own family’s story. The grandfather, a well-known Jewish doctor who amassed a fortune, feels that his life is not complete without owning land. He buys a large estate somewhere in the Uplands (today Slovakia) only to realize that this kind of life is not for him. But then comes his son who finds it very much to his liking. The assimilated well-off Jewish family becomes like their non-Jewish noble neighbors next door. Many of these Jewish gentleman farmers eventually received nobility in the second half of the nineteenth century.

I also read stories about 1956 refugees who made it in the United States or in western Europe and who after 1990 went in search of neglected manor houses and country estates in Hungary. Now they are gentleman farmers. A favorite hobby investment was viticulture. Neglected old vineyards were bought up in Tokaj, and with some state subsidies the new owners planted new vines and are currently trying their hands at producing quality Hungarian wines. A good example of this kind of 1956er is Dezső Kékessy, earlier a business partner of Viktor Orbán. He has a vineyard in Tokaj and also bought a country estate.

In her book Ferenczi recalls a film in which Anikó Lévai talked about her ardent desire to return to the soil. After all, she came from peasant stock. Her father finished only six grades. We don’t know how much land her father had, but she referred to him as a “kulák,” a rich peasant. She hoped, she said, that once her husband retires from politics, she could perhaps start “a somewhat larger organic farm.” I learned while researching this post that the Habsburg archdukes had a “model farm” (mintagazdaság) in Alcsút. Perhaps one day on the old Habsburg lands Anikó Lévai can run an organic farm.

The Fidesz robber barons. Part III: The Orbán family’s enrichment 1998-2002

Today I will return to József Debreczeni’s book on “The Fidesz robber barons.” This time the topic will be the enrichment of the Orbán family, which included Viktor Orbán’s father, Győző, between 1998 and 2002–that is, while he was prime minister.

Debreczeni, who for years  taught high school history before he became a politician and subsequently a writer on politics, notes that although political corruption has had a long history in Hungary, the highest political dignitaries did not dirty their hands with money grubbing. Not so Viktor Orbán who, as investigative journalists discovered, systematically exploited his position for financial gain.

Just to put things in perspective, here are a couple of figures. In 1998 Orbán and his wife had 5.5 hectares of agricultural land. Four years later they had 11.5 times more. In 1994 the couple purchased an apartment for 563,000 forints in downtown Budapest. In 2002 they purchased a villa in the most elegant section of Buda for 75 million forints, which they enlarged and renovated to the tune of tens of millions.

Viktor Orbán’s father Győző–which by the way is the Hungarian equivalent of Viktor–had two smallish quarries worth 98 million forints. Four years later, he was worth 666 million forints.

The Orbáns were involved in two separate business ventures. Neither is pretty.

Their first business venture took them to Tokaj. Dezső Kékessy, a wealthy Hungarian businessman from Switzerland who left Hungary after the 1956 revolution but returned to Hungary after 1990, was looking for business opportunities. Tokaj seemed like a good prospect. During the socialist period Tokaj, which had had a very good name before the second world war, lost its luster due to the general deterioration of viticulture in Hungary. The stock was old, so vineyards could be had for relatively little money. Kékessy and Orbán met and became friends and eventually business partners. Well, that’s not quite precise. On paper Kékessy’s business partner was Orbán’s wife, Anikó Lévai. I might add that Orbán eventually named Kékessy ambassador to France.

The Orbáns’ share in the company that Kékessy formed was relatively small, but the Orbáns naturally became key business partners due to Orbán’s position. First, he made sure that the grapes the company produced found a market. There was an ailing state company in Tokaj that was still the major buyer of grapes in the region. Since the head of the state bottling company was appointed by Orbán, they had a ready market for their grapes. In fact, in 2000 the state company bought grapes only from the Orbán-Kékessy vineyard. Orbán also made sure that the state bottling company had money to buy their grapes.  In 2000, the government financially strengthened the ailing company with the injection of 1.5 billion forints. In 2001 another 2.5 billion was invested in the company. And it kept buying the prime minister’s grapes, even though there was a glut in the wine market.

Tokaj wine region / Wikipedia.org

Tokaj wine region / Wikipedia.org

The Fidesz government also offered what amounted to a “friends and family” package. István Stumpf, who headed the prime minister’s office in those days, had a large, extended family in the region, some of whom owned vineyards. In 1998 the Stumpf family managed to sell only 5 million forints worth of grapes, but after cousin István became an important man in the government they did exponentially better. In 2000 their sales were 17.7 million and in 2001 30.6 million. Two Stumpfs were actually employees of the bottling company, and it was their cousin in Budapest who approved pumping billions into the state company.

But that wasn’t all. The Orbán-Kékessy company asked for state subsidies for the improvement of their vineyards. The owners got together to discuss business matters, often in Viktor Orbán’s apartment. It was during one of these meetings that Orbán warned his business partners to be cautious about the subsidies: “we shouldn’t be the ones who get the most.” Obviously he was worried about someone discovering his interest in the company. So they didn’t get the most, only the second most. In 2001 570 people received subsidies for vineyard improvements. Only two got over 40 million forints. The first received 44,636 forints, and the second, the Orbán-Kékessy concern, 41,475. In addition, on two other occasions their company received an additional 64.5 million forints in subsidies.

The other setting for the growing Orbán empire was Felcsút, the village where Orbán spent his early childhood. Of course, nowadays we hear mostly about the Puskás Football Academy and the huge stadium for 3,500 in a village of 1,800 inhabitants. But twelve years ago the expansion of Orbán’s holdings was still in its infancy. Here too, the launch of the Orbán empire was shady. In 2001 the Orbáns purchased 54 hectares of agricultural land for half the price of what land sold for in those days in the County of Fehér. Anikó Lévai purchased the land from Sándor Bognár, the head of a large state farm in the vicinity (an Orbán appointee). Two weeks after Bognár sold the land to the Orbáns, the state farm without competitive bidding was privatized. And who became the majority owner of the farm? Sándor Bognár.

But that is not the end of the story. Felcsút and five villages around it received a 2.7 billion forint state subsidy for water control. Apparently flooding is not a problem in the area. In fact, these villages receive less than the average amount of precipitation. The ministry in charge put the Felcsút application in thirtieth place on their list of ranked applications. Sándor Pintér, minister of the interior, stopped the discussion and made the documentation of the parliamentary commission a state secret. Against the recommendations of the ministry he placed the Felcsút project at the head of the list.

After Felcsút received this subsidy, the puzzle of the low price of the land that Sándor Bognár sold to the Orbáns was solved. It turned out that Bognár had purchased the land from two sisters who had additional acreage, which now the local government purchased on the government subsidy for the purpose of building rain collectors. The sisters received 10 million forints for about three hectares, seven times the average price of land in and around Felcsút. This is how the two sisters got compensated for selling their land for half price to the Orbáns and the Hungarian taxpayers footed the bill.

As a result of the large government investments in and around Felcsút, real estate prices have skyrocketed. The land the Orbáns bought for 5 million is today worth 34.4 million. It is also possible that the status of this land might be changed from “agricultural” to “land for development.” In that case it could be worth 400 million forints.

And finally, a few words about Győző Orbán’s business ventures. Dunaferr, a steel plant, was in those days still a state company. After Orbán took office the management of the company was changed. Soon thereafter Dunaferr signed a five-year contract with Győző Orbán’s quarry to supply gravel and concrete for Dunaferr. He was the low bidder but later it turned out that the contract didn’t include transportation costs that were separately billed. These costs had to be considerable because Orbán’s quarry was a great deal farther from Dunaferr than the company that had supplied the materials previously.

It turned out that the elder Orbán also supplied material for road construction as a subcontractor. His son later denied his father’s business connection with Vegyészgép, which received the construction job without competitive bidding. But Viktor Orbán didn’t tell the truth. Győző Orbán, in anticipation of the large order from Vegyépszer, managed to get the rights to quarry rock and gravel. Once his son warned him about the dangers of getting state orders, he passed these rights on to one of his men, who established a new company called Femol Kft.

As the saying goes, the apple doesn’t fall far from the tree.