Hungary's rampant corruption makes international front page news

By bne IntelliNews February 13, 2018

Hungary made it to the front-page of the New York Times on the wealth accumulation of the Prime Minister's son-in-law and the Guardian has also run two stories on the rampant corruption around the entourage of Prime Minister Viktor Orban, who is depicted as someone using the EU as a cash register, Hungarian media reported on February 12.

The New York Times in an article called "Taking an ax to democracy as Europe fidgets" leads readers through the transformation of Hungary into an illiberal state from 2010, when Fidesz swept into power with a super majority.

“First, he moved simultaneously to curb the Hungarian media and the judiciary. Next came the erosion of the country’s checks and balances, which has helped Mr. Orban share the spoils of power with close friends and important businessmen”, the NYT wrote.

The restructuring of the electoral system helped the incumbent party to retain power in 2014 with another two-thirds victory even with fewer popular votes than in 2010 and even less than in 2006 when Fidesz lost a tight race against the Socialists.

The story covers in detail the conspicuous accumulation of wealth by the prime minister’s entourage, including the latest story, the Olaf inquiry affecting Istvan Tiborcz, who married Viktor Orban's eldest daughter Rachel in 2013.

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 EU's anti-graft office found serious irregularities and uncovered conflicts of interest in numerous cases, where the company's officials helped to prepare the tender documents for towns with mayors of the incumbent party only to see Elios seal the contracts later.

OLAF suspects organised fraud

The government has not made the report public, but its contents were posted last week by news website 24.hu. The latest reports revealed that OLAF suspects an organised criminal activity in EU-funded public procurement projects involving the co-ordinated work of local government officials, advisors and Elios officials and called on Brussels to recoup €40mn Hungary was given for the project.

The New York Times story also referred to a sound recording where Elios officials speak of the projects 18 months before the first tender was launched. The first and biggest contract won by Elios to install LED lighting in towns across Hungary was awarded by Hodmezovasarhely in 2010, at a time when Janos Lazar, now Prime Minister Office leader, who oversees the distribution of EU funds, was the mayor. Elios was given the contract despite the fact it had no previous experience of public lighting projects.

PMO leader admits meeting Tiborcz in private

Lazar was caught by reporters talking to Tiborcz in a restaurant in November. Later at his weekly press conference, but well before the Olaf report became public, he admitted that they met and said that “we have devised together on how to modernise public lighting at Hodmezovasarhely, a wonderful programme”.

On Monday, Lazar said the release of the report was a political act which “is meant to tie in with the campaign”. He argued that Kozgep – a winner of numerous state contracts before its owner, Lajos Simicska, fell out of favour of the PM in early 2015 – was the principal owner of Elios.

As the news has made international headlines, the government media could no longer keep the story in secrecy and sought to put all the blame to Lajos Simicska, while remaining in silence about the involvement of the PM's son-in-law.

Corruption and crony capitalism

The NYT also quotes from a study by the Corruption Research Institute according to which oligarchs and cronies closely linked to Orban, such as the mayor of Orban's home village and proxy Lorinc Meszaros, PM's close advisor Arpád Habony, Istvan Garancsi, a friend, and owner of numerous businesses and the PM's favourite football team,  and Lajos Simicska, former treasurer of the Fidesz party, won 5% of state and EU funds to a value of about €2.5bn, a sum that raises eyebrows even in America, 444.hu writes.

On Monday, the Guardian ran two stories about Hungary, one elaborating on the enrichment of the Hungarian PM's supporters, who are profiting greatly from EU projects and the other story with reactions from EU official on that similar theme.

“Mr Orban has been bashing the EU for years; at the same time his inner circle is getting rich through EU funds,” the Guardian quoted Andras Petho, a journalist who co-founded Direkt36, an independent site for investigative journalism, mostly on topics of Hungary’s new crony capitalism.

The Guardian story takes readers through the sights of Felcsut, the home village of the prime minister, which has attracted huge investments since 2010, partly from of EU funds, such as the heritage train and the 4,000 capacity stadium a stone throw from his home, which could accommodate the entire village more than twice over.

Hungary is on course to receive €25bn from the EU in the seven years to 2021, making it one of the largest per-capita recipients of the bloc’s economic development funds. European Union officials are increasingly worried that funds are going to Orban’s family, friends and supporters, who are winning EU-funded infrastructure contracts with little competition – a red flag for anti-corruption campaigners, the Guardian wrote in its other piece on Hungary.

Fidesz on the defensive

The latest corruption scandal has caused disarray among Fidesz politicians. In Zalaegerszeg, where Elios installed the LED lamps, local councilors voted first to release the Olaf report. A day later the voting was repeated in what may have been an unlawful act, according to opposition parties. Government politicians argued that “they were too tired and pushed the wrong button”, but media reports said they were scolded from the party headquarters and were forced to reverse their votes. 

One political analyst said the OLAF report could be the "atomic bomb" that has not exploded yet, hinting that more details could be revealed that could be damaging to the ruling party.

The latest scandal offers opposition parties, divided and obsessed with internal problems,  a chance to steeer public discourse and get their message across to undecided voters as the report highlights widespread and rampant corruption close to the family of Viktor Orban. Opposition parties are hoping to gain leverage and win the support of undecided voters, some 2.5mn of the 8mn eligible. 

The ruling conservative party is widely expected to win for the third straight time as it boasts the support of more than 50% of decided voters.  

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