Corruption is at the core of the Hungarian system, and no quick changes are expected. This is what a senior researcher at the Aleksanteri Institute of the University of Helsinki says Katalin Miklóssy.
The finance ministers of the EU countries meet on Finland’s Independence Day to decide whether to cut Hungary’s EU subsidies. The Commission has threatened to cut subsidies by billions of euros due to, among other things, corruption in Hungary.
– It is a daydream and a delusion that Hungary’s promises to the EU would have any meaning, Miklóssy, who is of Hungarian background, tells .
The EU also demands transparency in Hungary’s public procurement, through which the autocratic prime minister Viktor Orbán the close circle has made millions.
Abuse of EU subsidies is part of Hungary’s large-scale corruption. Enormous amounts of support money have gone to the close circle and family of Orbán, who is in trouble with the EU.
– During Orbán’s twelve-year reign, many people close to him, such as some of his relatives and friends, have become immensely rich, says András Pethő in a video interview for .
Pethő is based in Budapest of the investigative journalism center Direkt36 (you will switch to another service) editor-in-chief and one of its founders.
Direkt36 investigates and exposes abuses in Hungary, where the majority of the media has been forced into the government’s mouthpiece during Orbán’s reign.
One of Direkt36’s projects is investigating Orbán’s family businesses.
– Those close to Orbán have become rich because their companies have received really lucrative contracts from the state. Most of these agreements have been financed either partially or entirely from EU funds. This creates a connection between EU subsidies and the enrichment of Orbán’s inner circle, Pethő states.
A childhood friend is suspected of being Orbán’s financial manager
Orbán has claimed for years that he himself has no savings. The claim is interesting because many of the prime minister’s family members and close associates are wealthy.
According to Pethő, it is impossible to estimate how much EU funds have flowed to people close to Orbán. According to him, the fact that the richest man in Hungary is known to give some picture of the situation Lőrinc Mészáros is Orbán’s childhood friend.
The financial magazine Forbes evaluates (you switch to another service) Mészáros’ assets are currently worth more than one billion euros.
Mészáros, who once worked as a plumber, owns around 40 companies in different sectors. The empire includes banks, asset management companies, insurance companies, agriculture, construction companies and hotels.
– Before Orbán’s rise to power, Mészáros was a local small businessman in his home village. Thanks to the huge contracts he received from the state, he has become one of the richest, if not the richest, in Hungary, says Pethő.
Mészáros’ companies have received huge orders from the state. According to Direkt36, public funds have often flowed to the Orbán family through Mészáros’ companies.
– Probably Mészáros is not only a bully. It has not been possible to prove it, but it is considered likely that he is the one who manages the assets of the Orbán family, Miklóssy estimates.
Orbán’s father and son-in-law have made millions of euros from EU-supported projects
Mészáros has connections with, among others, Orbán’s father Győző Orbán to a mining company. The mining company owned by Orbán’s father has been very successful in recent years, says Pethő.
– Based on our research, it is partly due to the fact that the company has supplied materials for large construction projects funded by the EU.
One example of the projects is the construction of Budapest’s sewer network, for which Orbán’s father’s company supplied concrete elements.
The most internationally known economic figures in Orbán’s inner circle are related to his son-in-law to István Tiborcz.
In recent years, Tiborcz’s company obtained a valuable street light trade in several cities by trickery. Vävy’s bid that was more expensive than his competitors won and he earned millions. Part of the wasted money was EU subsidies.
– That’s how he earned his first millions. Today, he is extremely wealthy. He owns, among other things, hotels and real estate, says Pethő.
It is also known that a bank owned by Mészáros has given Tiborcz significant loans.
There is no evidence of Orbán’s role
Orbán’s daughter married to Tiborcz Rachel Orbán is involved in the tourism business and EU subsidies have flowed to him as well. Ráhel Orbán’s friend is the director of the state tourism office that coordinates EU subsidies.
– Of course, my friend has very generously supported Ráhel Orbán’s business. That’s why Orbán’s daughter’s company is one of the biggest, says Miklóssy.
Orbán’s two brothers also have different businesses.
Pethő says that it is not known exactly how many businessmen belong to Orbán’s close circle. He states that they can sometimes be seen in Orbán’s company in the VIP stands of football stadiums, but the actual contact is kept secret.
– There are maybe five to ten people in Orbán’s immediate circle who may be in direct contact with him. Then there are their business partners and subcontractors. It is a large chain and network.
Researching businesses is not easy, because there is no transparency. Direkt36 investigated Orbán’s father’s shady dealings in state projects over the years.
– There are no official statistics on subcontractors in Hungary. Only the main contractors of the projects can be found out from public databases. There are no subcontractors. Finding them out requires hard work, says Pethő.
The share of Prime Minister Orbán in the business of his close circle is not known. Orbán himself denies that he participated in them in any way, but this can be suspected.
– Orbán says he is not involved in making business decisions, but of course we don’t know what happens behind closed doors. We don’t know what is being discussed at Sunday lunches or dinner tables, Pethő states.
“Hungary’s promises are cosmetic”
The EU therefore demands from Hungary anti-corruption measures and transparency in public procurement, in which Orbán’s inner circle has been closely involved.
Miklóssy says that the reforms Hungary promised to the EU regarding the development of the rule of law are in reality mostly cosmetic.
The promises are related, among other things, to closer cooperation with the EU anti-fraud agency Olaf. In addition, Hungary has promised to establish a new office to investigate corruption, which however has no jurisdiction.
Miklósssy estimates that Hungary’s promises to strengthen corruption investigations cannot be fulfilled because the leadership of the country’s prosecutor’s office and many courts are under the control of Orbán’s national conservative Fidesz party.
– It is a daydream and a delusion that Hungary’s promises to the EU would have any meaning.
According to Miklóssy, the West does not necessarily understand the pervasiveness of corruption in Hungary. He says the whole system is corrupt. Channeling EU money to certain districts is only part of the whole.
– The whole should be seen as a pyramid. It means that the system extends really widely, i.e. basically to all Fidesz supporters. There are about three million of them.
The majority of citizens have supported the system in the elections, because there are so many beneficiaries.
The goal is to only store chains without Hungarianization
In Hungary, during Orbán’s 12-year reign, the dance of corruption and Hungarianization has been going on. They connect to each other.
In the post-communist transition period, companies and assets were sold to large international investors and companies. Orbán’s administration has systematically taken ownership back. The administration has done it by any means, says Miklóssy.
In 2010, after rising to his second term as prime minister, Orbán declared that the state would take over four strategic sectors, i.e. energy companies, the media, the banking sector and retail chains.
– With the exception of foreign retail chains, all other sectors have already been successfully brought under Hungarian ownership. The store chains are still a work in progress, Miklóssy states.
With his strategy, Orbán has been able to lower the price of energy, suppress almost all independent media, and the vast majority of banks are also controlled by the state. As far as shopping chains are concerned, “Hungarianization” is underway.
The goal of the Orbán administration is to increase the market share of Hungarian shops. The market share of foreign chains has recently been driven down by various means.
The means have been special taxes imposed on foreign chains. Last year, chain taxation was increased by one and a half percent.
It was possible to enact the law without the direct stamp of a “foreigner’s law” because the largest chains are foreign-owned and the law was enacted to apply to those with the largest turnover. Foreign chains are also prohibited from operating in shopping centers.
The price regulation that started in February is a hard blow to international chains. The price ceiling is set for six essential foodstuffs, i.e. chicken and pork, eggs, potatoes, flour and sunflower oil.
Hungarian companies are also being pushed into the arms of Fidesz
Successful Hungarian-owned companies are also pushed to the backers of Fidesz. The question is about rewarding those who are loyal to the party.
Miklóssy says that very successful Hungarian-owned small and medium-sized companies have been taken over by Fidesz.
– For example, technology companies can be forced to ensure that Fidesz representatives get access to dividends or receive voting power and ownership in companies that are doing well.
If the owner does not want to sell his company, the administration has various ways to force it. For example, distorted tax and accounting attacks have been used for coercion, says Miklóssy.
– The Fidesz authorities always find something if necessary and also blackmail companies owned by Hungarians if they do not agree to the otherwise required arrangements.
Attempts have also been made to get various companies under national control by blocking loans.
Foundations, on the other hand, are Orbán’s administration’s key means of transferring funds. For example, the shares of the state-owned oil company MOL have been directed to foundations, because they are not subject to as strict control as state entities.
However, Fidesz-minded oligarchs are not safe if they do not remain obedient to the administration, Miklóssy reminds. Many critics of Orbán have gotten into trouble in Hungary.
– The property of the oligarchs is only safe if they are ready to serve the government when the situation arises and hand over part of their property if ordered to do so.
The EU Commission will state its position next week on whether the frozen billions of subsidies from Hungary should be released. According to preliminary information, the Commission would take a strict line and demand more actions from Hungary.
However, Miklóssy does not believe that the EU finance ministers will significantly cut Hungary’s subsidies at their meeting on December 6. He estimates that otherwise the union would run into too many problems with Hungary.
– If money is cut significantly from Hungary, it will turn into a much more difficult country than we have ever seen in the EU.
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