The outside world learned on July 9, via a Reuters report, that the tiny information technology company 4iG had signed a preliminary agreement to buy its much larger rival, T-Systems. T-Systems is owned by Magyar Telekom, daughter of Deutsche Telekom, the largest telecommunications company in Europe.
4iG’s largest shareholder and CEO, Gellért Jászai, announced the deal, prompting a jump of more than 7.5% in its stock price. 4iG’s CEO is the closest business partner of the legendary Lőrinc Mészáros, who, thanks to his childhood friend Prime Minister Viktor Orbán, became the richest man in Hungary within a few short years. The close connection between Jászai and Mészáros gave rise to the quip in Budapest that by now even Mészáros needs a front man.
A year ago Mészáros purchased more than 50% of 4iG’s shares when the company started getting lucrative business deals from the Hungarian government. But soon enough, presumably when the idea was hatched for 4iG to purchase the giant T-Systems with its 1,600 employees, he divested himself of much of his stake in the company and Jászai, who is not directly connected to the prime minister, became the CEO. Currently, Jászai owns 40% of the shares, Mészáros 12%, and Mészáros’s Opus Global about 10%.
This change in company control made it easier for Deutsche Telekom, in which the German government has a 30% stake, to deal with the relatively unknown Jászai instead of Mészáros, who by now is widely regarded as Viktor Orbán’s front man. This way, as Index put it, “Deutsche Telekom was spared from directly dealing with Orbán’s closest ally.”
The deal was negotiated at the highest possible level, not between the CEO of 4iG and the head of Magyar Telekom. On September 17, 2018, Viktor Orbán received Timotheus Höttgest, Deutsche Telekom’s CEO, and Srini Gopalan, his deputy who is responsible for the firm’s European holdings. According to the press release, nothing of importance was discussed at that meeting. The men praised each other’s activities and emphasized the importance of IT technology for Hungary and Europe.
A similar seemingly meaningless encounter of the same business leaders and politicians took place on March 29, this time in the new office of the prime minister. By that time, László Palkovics, the minister of innovation and technology, was also present. Surely, no one can believe that two top German businessmen came to Budapest to discuss the state of IT technology in Europe at large and in Hungary in particular.
Meeting between Viktor Orbán and Timotheus Höttges of Deutsche Telekom, March 29, 2019 / MTI
According to Zoltán Jandó and Bálint Fabók, who wrote a detailed article about the background of the sale of T-Systems, Deutsche Telekom didn’t really want to sell the firm, so, I assume, the German firm needed a bit of encouragement. Until recently, T-Systems had conducted a brisk business with the Hungarian government. According to Bisnode, the European data and analytics company, since the beginning of 2016 T-Systems received 400 billion forints (€1.23 billion) in government contracts. In the last few months, however, orders were hard to come by, with 4iG instead receiving a record number of orders. Perhaps the Hungarian government made Deutsche Telekom’s decision easier by giving preferential treatment to 4iG, thereby demonstrating that holding on to T-Systems might not be profitable in the future.
Gellért Jászai’s company is very small, especially in comparison to T-Systems. The question is where 4iG will get the necessary 125-150 million euros to purchase the affiliate of Magyar Telekom. The company spokesman was vague. He told journalists that, “in addition to our own resources, we have been working on several financial scenarios that include loans, bond issuance, and the inclusion of institutional investors.” That kind of vagueness is suspicious, first because this purchase is substantial by Hungarian standards and second, according to the announcement, the plan is to finish the whole transaction by the end of the year. It is also difficult to figure out how the company could, in a short time, generate enough revenue to pursue further acquisitions at home and in the region, as they are contemplating. I have my suspicions about the source of much of the funding. Moreover, rumor has it that Gellért Jászai’s minority ownership of 4iG is temporary. The majority stake in the company will be back in Lőrinc Mészáros’s hands in no time.
There is one fallout of the purchase of T-Systems by the Jászai-Mészáros concern that is especially worrisome. T-Systems was in charge of several important government projects. For example, it was heavily involved in running the 2018 national election. The firm will be responsible for running the 2019 municipal elections as well. Given the lack of trust in the Orbán government’s handling of personal data and the suspicion that surrounds the breakdown of the Election Office’s website in the middle of tallying the votes in the last national election, it is not surprising that there are some who are convinced that the Orbán government “is preparing the ground for electoral fraud.”
I too am convinced that this government would be quite ready to make some “adjustments” in the figures if, for example, the precious two-thirds majority were at stake. Keep in mind that in the last two national elections the two-thirds majority hinged on a single parliamentary seat, which looked too pat to me. The villages are all sewn up; Fidesz doesn’t need to cheat there. But if it looked as if the party were to lose Budapest and some of the larger cities, someone might be inclined to tinker with the software. In any case, it would be better if the electoral system software were not about to fall into the hands of Lőrinc Mészáros, Viktor Orbán’s front man.
Illuminating post but I am bit confused by what is meant bt ‘too pat’ here?
Possibly a difference in UK and American usage?
Too pat means “too much of a coincidence.”
http://gph.is/2o08rPa
Also this would not be the first time Deutsche Telekom is involved in international M&A deals. It is hard to imagine they don’t get the picture of this fishy deal. On my (conspirationalist) behalf, I have no doubt there are kickbacks or other deal-sweeteners involved that are intended the Germans play along in this most suspicious transaction (just as it was the case with Paks II), hidden from the public.
Re: something ‘fishy’…
‘Fishy’…it’s the word alright as a Magyar minnow swallows the German technological whale.
Anybody who doesn’t believe that having control of technology and its systems especially by those close to Fidesz cannot affect the course of everything in Magyar society would be fooling themselves. This looks as if it will turn out to be a disaster just like the Fidesz takeover of various media was. The implications don’t look very good.
Look for 4ig and its software to be more and more of the pernicious kind to further the aims of the Fidesz state. Its the whale that will just kill all the little fish who get too close to its ravenous mouth. This is having chomping power we’re talking about.
Orban knows how the German business people think. He knows them better than they do themselves. They are pretty simple and naive people, one sometimes wonder who they could be successful globally. I guess the main reason is that their engineers are good and the products sell themselves; everybody else are mostly clueless corporate drones, especially the top managers. No wonder Orban plays them like a piano.
Some/many of the German top managers are ruthless criminals actually – just think of the Diesel scandal where all of Germany’s car companies were involved in falsifying pollution data.
Didn’t matter for them that their gasoil engines are massively polluting the air and killing people.
The same goes for the chemical giants.
And the worst are the large banks like Deutsche Bank who helped (and probably still do …) ruthless dictators in hiding their money.
Actually that’s the only principle these people have:
Many of the owners took their money elsewhere and live outside Germany – where the air is still good …
Money counts!
PS:
I’m not a communist but I believe that capitalism has to be checked by politics on all levels.
And I know that capitalists in the USA and GB e g are even worse, especially the really rich ones – of course there are exceptions, but not enough.
I suspect that most of us who are not involved in the business world, and even those who are, have no idea of the level of intrigue and corruption in every single transaction made by the Fidesz business venture.
In Malta, Daphne Caruana Galizia lost her life because of her investigation into corruption at the highest levels of government.
Even if the EU knew for certain about the electoral cheating as orchestrated by Orbán, would they do something about it anyway? I doubt it.
Holy Mozy! The aforementioned gizmy is jussst too maaach for mee to handle. Kindly provide backup.
Ah Jahhh ! Glaub schon ! Ist ‘the ungarishes’ voting herpes… Krach !!! Geműűűtlich!
When I read about this transaction first I was flabbergasted!
Fidesz honchos obviously know no borders anymore – in a democratic state the ruling people would at least try to avoid any open connection like this.
But actually this is nothing new – we know that there is no more independency between the branches of government, the media and now …
Everything is part of the “State” – just like in Communist times.
For Andy:
Orwell lässt grüßen!
But please work on your “Tschurman” – it hurts … 🙂
In Orbánistan, slaves, officially called citizens, can choose whatever they want. It always comes out 2/3 for Orbánistan. … and psst for the German industry it does not matter … and psst this is the lobby for our politicians. Have you read Niccolò Machiavelli, nothing seems to have changed … sorry for Orbánistan …
Don, it never matters – the German industry is not special there. Just look at the relationship between USA and China – all Apple products are produced by Chines slaves. And you should have seen my wife’s reaction when on one of our trips to the USA I took her to a Walmart – filled with cheap plastic crap from China, Vietnam, Bangladesh etc … I still remember the good old days: 20 years ago in our vicinity in Hungary there was a clothes factory outlet – I’m just wearing one of those indestructable Lanzky jeans they sold at a very good price, made in Hungary to a high standard. A few years later they closed just like other clothes factories in Hungary because they couldn’t compete with the Asian production costs. With the automobile industry Hungary’s advantage are the costs for transportation imho – if that changes the German companies will look for other, cheaper places. It’s all very efficiently calculated – compare e g the fact that BMW and Mercedes produce some cars in the USA. Of course the more expensive ones (some of which are even exported …), while the cheaper ones are produced in Hungary, Slovakia,… Read more »
Ralf I called the German industry in particular because this piquant aspect might influence von der Leyen so much, if she is chosen, that the fight for a united state of Europe might be left behind.
Any company from any country came to Hungary by economic reasons only. They did not come for a political party, a governing system or for sustaining Hungarian economy. By this it is logical that they are not revising their decision by other than reasons worsening their own economic situation. So the Mercedes plant in Kecskemét is not enlarged, because they don’t sell enough cars to do so, but not because Orbán abolished the democratic rights of their employees. And believe me: as important the Hungarian plant is for Audi (the strike earlier this year showed this), as soon as Orbán threatens the production, as for example in the Bige case, Audi would move the factory from Győr elsewhere very fast.
Istvàn
Quite right. The primary business of business is business, not that there aren’t some ethical and political, but secondary elements too. And let’s face it, if the Hu voters are so far from resolving their own problems, why would outsiders take on the onerous task?
Ethical questions also can be solved for example by not changing workers contracts after the implementation of the slave law. A lot of foreign owned companies stated in public not to do so, also the foreign owned company I am working for does not make use of that law. This is also a way to demonstrate what ethic values are.
” the Orbán government “is preparing the ground for electoral fraud.”
Wrong!
It is preparing for MORE electoral fraud.
Re: “MORE electoral fraud!”
Exactly, for electoral fraud by means of the digital system, OV&Co don’t need to own the company, nor have top positions, just arrange that sufficient sub-top positions are occupied by “reliable” people [minions].
I suspect that OV&Co have done so since 2010 and may be even some remain from the 1998-2002 period.
The full take-over seems to me essential for data privacy/protection, which OV&Co now could change into a true “national big brother is watching/listening/reading you” system.
add: possible Hungarian “NBBiWLR” system analogous to developments in China and by using Chinese experience and technology…
Friday morning, while the internet was up and working, it was impossible to get any foreign news online for several hours.
All Hungarian news and daily papers were instantly available, but no BBC, no Guardian, nothing from abroad.
This felt pretty scary and I wonder if the new CEO of 4iG was delivering a sales pitch and a demonstration to Orbán about how effectively he could interfere with the media- “See how I can cut out all foreign news at the drop of a hat, with nobody the wiser cause we can just say it was a technical issue, beyond our control”. Just like the blackout while the votes were being counted.
It may or may not have been such, but very strange that national news was available, but nothing from “the outside world”, like the days of communism.
Guys, There’s another major issue here, a commercial one, ie. about the money. Remember how the regime started another, state owned telecom co five years ago, the great idea of the budding dictator was to give it all the state and local gov. accounts … ie. to make it another big misappropriation outlet. It didn’t work because it was a crude and brazen attempt to subvert the market. As with many other “projects” the Orbàn mafia hasn’t dropped it, but imo, with much more money now they have “refined” the concept and brought it up again. There will be some fig leaves: there will be tenders, intermediaries, etc (see also Marty’s 5.26 comment https://hungarianspectrum.org/2019/07/11/observer-laszlo-biges-chemical-empire-attacked-by-the-orban-mafia-state/), but the result will be the same: a monopoly, a state sponsored cartel will bag all the gov and semi gov related services at set higher prices and the resulting extra profits will be channeled to the Orbàn mafia/state. The protests and law suits eventually initiated by much weaker position players like Telenor and Vodaphone will take years to run/close and in the meantime the taxpayers money will flow in. Even if the international bodies/courts impose fines or other sanctions the latter will be paid with… Read more »
I agree with both Observer and my name sake Istvàn’s comments relating to the motivating role of profit. Deutsche Telekom is as it should be concerned about its bottom line. After thinking about what they wrote I noticed somethings concerning relating to Magyar Telekom Telecommunications when I looked at this table of “principal” subsidiaries of Deutsche Telekom see http://report.telekom.com/annual-report-2018/notes/summary-of-accounting-policies/principal-subsidiaries.html (the data is as of December 2018). The first thing is the relatively high number of employees in Hungary, 9,166 and the relatively small profit being generated 241 million euros. The second interesting thing about Magyar Telekom Telecommunications is that from December 2017 to December 2018 is that it’s “total comprehensive income” declined significantly going from 121 million euros to 79 million euros. Of all 4 of the Deutsche Telekom subsidiaries with significant non-controlling interests Magyar Telekom Telecommunications was the only one that showed a decline in total comprehensive income. Deutsche Telekom controls 59.72% of the shares. Just quickly looking at the 2018 Deutsche Telekom 2018 annual report leads me to believe it simply be that Magyar Telekom Telecommunications was a relative weak link in the global operations of Deutsche Telekom. Another interesting aspect of this is that even after the sale it… Read more »
I think the opposition was starting to get too successful for Orban’s liking (they managed to agree on candidates in several cities) so naturally the Viktator wants to make sure he cannot lose. He cannot accept even the slightest defeat. The only way he’s ever going to be swept out of power will be through violence, as was the case with Ceausescu.
Completely off topic. I just read a long essay in Hungarian by TAMÁS GÁSPÁR MIKLÓS which is an interesting reassessment of János Kádár. Its a sort of Marxist reassessment I guess. It can be read at https://merce.hu/2019/07/08/tgm-kadar-janos-komolyan/
Istvan
Careful with TMG references. He has uttered a lot of nonsense and got a lot of things completely wrong. He hasn’t outgrown his youth instincts and has been trying to make a brand out his pugnacious bombastics (sic).
Oh I am not an apologist for Kadar, but the TMG essay is interesting in that TMG seems to have become forgiving of Kadar primarily because he views his past rule within the context of current Fidesz rule. TMG just turned 70 and he probably is too old to build anything, least of all a revived form of the new left in Hungary. I am actually older than him by the way, so I am not attacking him on the basis of his age.
Kadar is a huge reason why ordinary people don’t hate communism that much in Hungary and actually like Orban’s autocratic deal offered to them.
Many people liked the Kadar system – which must be noted survived because of Western loans.
In a way, the West maintained that system too just as the EU is now financing Orban’s entrenchment of its power. But while Karad indebted Hungary in foreign exchange Orban does it in HUF (which Hugary can print) and apparently decreased the FX government debt compared to GDP. So the current system is much more resilient than Kadar’s was obviously (producing basically nothing marketable).
Marty
Big difference is that Hu was “the merriest barracks” in the Soviet camp then, but the saddest one in Europe now (save for Bulgaria ). This is the main reason for the acceptance of the Kadar regime.
The style of the article below in a pro-government website could have come straight from a 1944 Nazi or from a 1952 Stalinist propaganda brochure.
‘Because the opposition party MEPs voted against Orban’s candidates for positions in the European Union, the opposition parties DK, Momentum and MSzP are not Hungarian “organizations”, but alien. They are not opposition, but enemies.’
“ANY method is permitted for the defense against them”
https://pestisracok.hu/tenyleg-nem-szabad-hazaaruloknak-nevezni-ezeket-hiszen-nem-azok/
Something similar in English – from the Very Fake No News Agency:
@V4Agency
The events at the @Europarl_EN on Wednesday were unprecedented, according to #Hungarian #government spokesman Istvan Hollik. The pro-migration Hungarian opposition is completely going against the will of the Hungarian people and the national interest.
Almost unbelievable – if you don’t agree with O1G you’re not a Hungarian!
I really would want the EU to take stronger measures against the Fidesz government – since we can’t throw them out at least take away the money they’re used to get from the EU!
“if you don’t agree with O1G you’re not a Hungarian!”
Already in 2013 Orbán himself said so: either you are for FIDESZ or you are no Hungarian. This totalitarian idea is neither new nor surprising, but there seems to be a need to repeat again and again.
Ceterum censeo:
Fascism it is folks!
The number of Slovak citizens who lost their citizenship because they chose to become citizens of other countries since 2010 (when the law against dual citizenship took effect):
became Czech citizens: 681,
German: 675,
Austrian: 456,
British: 329,
American: 143,
Hungarian: 117.
https://hvg.hu/vilag/20190714_Kozel_haromezren_vesztettek_eddig_el_a_szlovak_allampolgarsagukat
The deputy director of Orban’s Veritas Institute of History was connected to the Communist secret services.
Details by Krisztian Ungvary:
https://atlatszo.hu/2019/07/14/ungvary-krisztian-a-diktatura-banalitasa-marinovich-endre-es-az-allambiztonsag/
Endre Marinovich’s reply:
‘only in 1965 – 1966’
https://blog.atlatszo.hu/2019/07/marinovich-endre-eszrevetelek-ungvary-krisztian-tanulmanyahoz/
Peter Boross asked Mr Marinovich to become one of the leaders of Veritas:
https://d357ur41rhr3vp.cloudfront.net/wp-content/uploads/sites/2/2019/07/Boross_P_2019_jul_2.pdf
Sounds a bit like a re-run of the Origo story.
Typical tiszta magyar – can’t use any foreign language, but “reißt sein Maul sehr weit auf”! 🙂