Orban’s son-in-law and Russian oligarch reportedly attempted to buy stakes in Spar

Orban’s son-in-law and Russian oligarch reportedly attempted to buy stakes in Spar
Orban's son-in-law Istvan Tiborcz. / bne IntelliNews
By Tamas Csonka in Budapest April 5, 2024

A Russian oligarch and Hungarian premier Viktor Orban’s son-in-law approached Spar separately with bids backed by the government to buy stakes in the Dutch-based retail chain's Hungarian operations over the past year, Vsquare reported on April 4.

The bids were allegedly part of a campaign by the government to force the retailer to allow businessmen close to the semi-authoritarian Orban regime to enter the company. The Hungarian government is on record for pushing for more domestic ownership of key strategic sectors and has allegedly used tactics close to extortion to achieve this aim, a process that has enriched businessmen close to the ruling Fidesz party.

The retailer filed a complaint with the EU about the windfall tax in Hungary introduced in 2022, accusing the Hungarian government of breaking EU law, and called on Brussels to intervene to mitigate the impacts. The government slapped the largest retailers in Hungary with a 4.1% revenue-based tax and introduced a string of unorthodox measures, such as price caps and mandatory discounts.

"We are the second-largest food retailer in Hungary with over 600 stores, but these measures make it impossible to operate profitably in Hungary", Spar CEO Hans Reisch told German and Austrian media a few days later, adding that government measures have cost the retailer €120mn.

Spar paid €76mn in special tax last year, which is expected to rise to €92mn in 2024, pushing the company deeply in the red.

Reisch also said that Orban asked the company to let one of his relatives become a shareholder and announced that Spar is withdrawing assets from Hungary for fear of expropriation as part of a corporate restructuring.

The Austrian CEO openly spoke about the Orban government’s harassment and extortion, adding that the prime minister made the reduction of the windfall tax conditional to granting ownership to his relative.

Vsquare learned that more than a year ago, the Rahimkulovs, one of the richest families in Hungary, headed by oligarch Megdet Rahimkulov, made a bid for Spar, but got rejected. The Russian billionaire had a key role in drawing up a gas trading agreement between Hungary and Russia in 1996 and acted as an intermediary between MOL and Gazprom. He was also the head of a local bank owned by Gazprom at that time.

The site learned from a Hungarian business source that Istvan Tiborcz, Viktor Orban’s son-in-law, was the unnamed Orban relative mentioned by the Spar CEO in connection with the takeover attempt.

Orban’s family circles have done business with the Russian oligarch. Tiborcz’s real estate manager and holding group BDPST Group sold two Austrian hotels earlier this year to a company indirectly linked to Russian billionaire Megdet Rahimkulov.

Vsquare notes that the Rahimkulovs have also been closely coordinating with Orban’s family since making their offer.

Government officials openly threatened the retailer after it went public with the asset grab attempt. Minister for Construction and Transport Janos Lazar said at a conference on March 2 that the "company will pay the price for what it has done in recent days".

Lazar said he had advised the prime minister that the state should just buy up the company as a whole "after the lies".

The company’s board has sent a letter to 14,000 Hungarian employees informing them of the ongoing spat with the government and confirming their commitment to remain a Hungarian retailer. The windfall tax paid by the company came to €8,700 per employee in 2023, they add.