Hungarian prosecutors have ordered an inquiry involving a company once co-owned by Prime Minister Viktor Orban's son-in-law after an investigation by the EU anti-fraud office Olaf, which found a series of irregularities at Elios. Olaf has recommended the European Commission require repayment of €40mn from Hungary.
In a two-year investigation, the OLAF inspected 35 public lighting projects won by the company between 2011 and 2015 in public tenders involving EU funds totalling €40mn. The anti-graft office uncovered conflicts of interest in numerous cases in addition to serious flaws in the bidding process.
Elios won public procurement contracts to modernise street lighting in three dozen municipalities without any competition. The anti-fraud office found evidence of conflict of interest as a business partner of Tiborcz was the owner of a company that “helped municipalities prepare the tender process”. The National Bureau of Investigation launched an investigation against Elios in 2015, but it was dropped a year later after prosecutors found nothing irregular.
The Olaf report's findings are embarrassing for Orban's as it highlights widespread and rampant corruption close to his family. Istvan Tiborcz, who married Viktor Orban's eldest daughter in 2013, was co-owner of Elios until 2015 when he sold his stakes after the first investigations were launched.
Business circles aligned with the ruling party have amassed great wealth over the last seven years via state contracts, mainly EU-funded projects.
Lorinc Meszaros, Orban's friend and the mayor of his hometown Felcsut, became the fifth richest person last year, rising 26 spots in one year as his wealth expanded by HUF100bn. Many see the former gas fitter as the proxy for Orban, because of the fast way he has built up a vast business empire crossing many sectors including agriculture, tourism, construction, property, retail and the bank sectors and the media.
Analysts are certain that the investigation into Tiborcz affairs will be put on ice until the April election, or even later, but the prosecutors had no other choice but to start an inquiry given the strong evidence presented by Olaf, they added.
Opposition parties are calling for the government to release the full report and they fear prosecutors will eventually let the case die. “It was a well-orchestrated plan of putting Elios in the driving seat,” commented Green party opposition politician Akos Hadhazy, who quit the ruling Fidesz in 2013 after he unveiled corruption in the selection of national tobacco shops owners.
Elios sealed its first contract in Hodmezovasarhely, central Hungary, whose mayor at the time was Prime Minister Office leader Janos Lazar, the strong man in the government, who is also in charge of EU fund distributions. Lazar has said the government cannot publish the documents before it is handed over to the European Commission.
The first contract proved to be the company's model for future ones, which came in abundance, Hadhazy added. Local governments signed contracts with Elios even though the first tests showed poor quality of work. Media reports showed dismal lighting conditions in the dark at streets where the new lamps were installed.