Symbiotic relationship: the Orbán government and         Lajos Simicska’s Közgép

I think that it is something of an indictment of the Hungarian opposition’s political acumen that the Nyerges-Simicska business empire’s intimate ties to the Orbán government only recently became widely known. It shows how slowly MSZP politicians react to opportunities that can be described as unintended gifts of the ruling governing party, Fidesz.

Viktor Orbán in 2002, shortly after the lost elections, bemoaned his foolish failure to build an economic empire around his party that would supply him with ample money to conduct effective political campaigns. This piece of information was available already in 2002, and the two governing parties, MSZP and SZDSZ, should have tracked Fidesz’s efforts to gather a powerful business group  that would serve Viktor Orbán’s political goals.

Of course, it is possible that MSZP’s financial wizard, László Puch, had no intention of  revealing the financial wrong-doings of Fidesz because the socialists were just as guilty of illicit financial machinations as Viktor Orbán’s team.

In any case, although it came to light only recently that Lajos Simicska, an old friend and confidant of Viktor Orbán, was actually the majority owner of  Közgép, a company that seems to win a disproportionate number of government and municipal orders for large construction projects, a lot of details about the Nyerges-Simicska empire were available much earlier. I wrote once about the relationship between the Ministry of National Development under Tamás Fellegi and the business circle of Zsolt Nyerges and Lajos Simicska. That was in late 2011, but reporters began investigating this business duo and their friends already in 2010.

I found the first news items about the relationship between Fellegi, Nyerges, and Simicska during the early summer of 2010. Even in hindsight the description of the setup was pretty accurate. Fellegi, who was a business partner of both Zsolt Nyerges and Lajos Simicska,  was placed at the head of the ministry responsible for the dispersion of subsidies received from the European Union.

For a few days after Figyelő wrote a long detailed article on the Nyerges-Simicska connection and even mentioned the “mysterious Közgép” a few articles appeared on the topic. Mostly summaries of the original article. No investigative journalists set out to uncover further details of the close connection between Fellegi, the new minister, and his former business partners although clearly this connection was of the utmost importance in finding out in whose hands the subsidies from Brussels end up. Yet the topic was dropped.

It took journalists another year to revisit the story. The occasion was the resignation of Tamás Fellegi from his post as head of the Ministry of National Development. Wild theories were put forward about the reasons for and the significance of this resignation. One bizarre theory was that animosity had developed between Fellegi and Simicska which ended with the defeat of Fellegi. Another was even more fanciful. According to this version, Viktor Orbán was helpless in checking the activities of the Ministry of National Development that served the interests of Simicska against the wishes of the prime minister. According to this scenario, Orbán’s only reliable ally in the economic sphere was György Matolcsy. Now, with Fellegi’s resignation at least Orbán had the opportunity to handpick someone who would be loyal to him.

Anyone who is even the slightest bit familiar with Viktor Orbán’s personality and his leadership style should immediately know that the above scenario is total nonsense. After all, if Orbán didn’t like the way Fellegi handled the “oligarchs” he could have sent him packing. But instead he named an unknown woman with only a high school education to replace Fellegi. Mrs. László Németh is considered to be a pawn in the hands of the “oligarchs.” The new minister immediately hired Attila Nyerges, brother of Zsolt, to be her chief adviser. I might add here that Attila Nyerges is a veterinarian, so I don’t think that his advice has much to do with his original profession.

It would be nice to know the real reasons behind Tamás Fellegi’s resignation but unfortunately we can only guess. Perhaps Fellegi became tired of serving the demands of a few powerful businessmen. It is also possible that Viktor Orbán wasn’t entirely satisfied with Fellegi’s attitude toward the Nyerges-Simicska business group. The third possibility is that his negotiations with Russia and China were not as successful as Viktor Orbán had hoped. In any case, today the Ministry of National Development has closer ties with the Simicska group and Közgép than ever before.

Although the Orbán government doesn’t hide its intentions about enriching “Hungarian capitalists,” the perhaps far too aggressive practices of Közgép may backfire. The Democratic Coalition (Demokratikus Koalíció) already asked Brussels to investigate, and at the very least the Orbán government’s brazen discrimination in favor of Hungarian businesses might run afoul of EU rules.

In addition, the domestic reaction to the indecent enrichment of certain friends of Viktor Orbán and Fidesz might also cause trouble for the governing party. A few days ago opposition LMP MPs and activists chained themselves to each other and sat down just inside of the main gate of Közgép. Eventually the police carried them away and kept them crowded together in small cells for hours. Shortly after their release they received a fine of 100,000 Ft each (US $425).

Fidesz compounded its problems when, during the incident, the party bigwigs decided to send Gabriella Selmeczi, the party spokeswoman, to Közgép to defend an allegedly private company. What an admission that Közgép may in fact be a Fidesz company! That was a big mistake.

LMP members of parliament and activists at Közgép

By now it is an open secret that the country is governed not only by Viktor Orbán but also by Lajos Simicska. Or at least this is what a lot of people claim.  And the more this belief spreads the more difficult it will be to convince the population of the opposite. Especially when it was also revealed that despite the serious recession in the construction industry, Viktor Orbán’s father’s business, a stone quarry, is doing splendidly. Its chief business partner is Lajos Simicska’s Közgép!

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31 comments

  1. Yup sending Gabi was a big mistake. Everybody (including man in the street) are talking about this. But also I understand that the police was very friendly to LMP.

  2. “I think that it is something of an indictment of the Hungarian opposition’s political acumen that the Nyerges-Simicska business empire’s intimate ties to the Orbán government only recently became widely known.”

    I only get this far in the piece when I remembered what you had written earlier…that MSZP and Fidesz previously had a business understanding on how to cut up the spoils. Well, since Kozgep was already growing by leaps and bounds prior to 2010 could we not assume that opposition politician were now reluctant to ‘cut-up’ one of their cash cows? Let’s just slip over to the question of the high cost of building highways in Hungary: has anyone questioned THAT?

    I’m afraid most of these politicians are tainted; and just waiting for their turn to be first at the trough.

    So let’s forget the presumption of innocence, the lack of ‘political acumen’ and just face the god awful truth–with very rare exceptions, they’re all heartless thieving bastards.

  3. Éva: on 27 June PM Orbán relived Mariann Vízkelety as administrative state secretary of the Ministry of National Development. Vizkelety is a close confidant of Orbán, had been one of his closest allies during the opposition years of 2002-2008. She was the last person in the Ministry’s leadership who was not directly Simicska’s man. That period is now definitely over. Simicska has effectively dismissed the PREMIER’S MAN from the ministry!

    Vízkelety’s successor comes from the Ministry of Regional Development, which is under the total control of Zsolt Nyerges, a lieutenant of Simicska. The sucessor is Imre Farkas, a trained army officer who graduated in Leningrad!!!! If you think this is a story from Moldova or Belarus you are not far off the mark.

    I had to point these out Éva, because recent developments confirm a daunting recognition that there is NO POLITICAL FORCE left in this country which can curtail the power of Simicska and his gangsters.

  4. The one thing I would be very interested in is the share structure of Közgép and what sort of company it really is.

    Is it a ‘private’ company with a single ‘owner’ or is it a joint stock company and if so who holds its shares. In the U.K. that would be very easy to find out from ‘Companies House’ but in Hungary I would not know where to begin.

    I would also be very interested in its (Kozgep’s) stock holdings in other companies and who else has shares in those. Has it any ‘Off-shore’ subsidiaries? Is it perhaps owned by a foreign holding company and who owns that?

    What this has to do with is the internal cash flows. I cannot see how the Nyerges-Simicska business group is providing or rather recycling its cash into the party hierarchy and into Fidesz its self.

    To do this one would need to be a Hungarian speaking investigative journalist. It is how the money flows within Kozgep and its subsidiaries/partners/sub-contractors.

    When the time comes to wind it up, how will this be done so that its ‘owners’ walk away well bank noted leaving others to deal with its debta and its unpaid taxes?

  5. Odin’s Lost Eye: What this has to do with is the internal cash flows. I cannot see how the Nyerges-Simicska business group is providing or rather recycling its cash into the party hierarchy and into Fidesz its self.

    Offshore companies outside the EU. Seychelles comes to mind.Btw Fidesz is “against” offshore companies.

  6. Off topic:

    In today’s “smashes palm against face” news from Budapest: Matolcsy is going on holiday when the IMF arrive in Budapest this week!

    http://index.hu/gazdasag/magyar/2012/07/15/hazit_adunk_a_vakaciozo_matolcsynak/

    Well, I suppose the argument will be: “We were waiting at the table for months, waiting for the IMF to come. And look! They come when our Finance Minister is on holiday! This clearly demonstrates the lack of committment from the IMF.”

  7. Ron … you wrote ** “Odin’s Lost Eye: What this has to do with is the internal cash flows. I cannot see how the Nyerges-Simicska business group is providing or rather recycling its cash into the party hierarchy and into Fidesz it’s self.” **

    No that is why one must look at the various intercompany movements of money. It is often done very indirectly through intermediate companies and can be quite a paper chase to track down. Some of the cash goes in ‘fees’ some as dividends , some goes as loans. etc

    Although off shore companies are disapproved of officially by Fidesz they are very useful to shift the ‘Grandees of Fidesz’ shares into their banks in Lichtenstein/Zurich/ and from there into where ever. These are very well hidden.

    If you consider the size of the Eu’s Grants, if Nyerges-Simicska could distribute say 20% to themselves and Fidezsz and their grandees (free of tax) I dare say that you can see how pleased they will be.

    Within Közgép there will be ‘skimming’ -Buying 1st class concrete from a ‘subsidiary’ and getting 3rd class stuff-. The bridges, road ways will fail in about 5 to 8 years time but who cares Nyerges, Simicska, et al will have sold out Közgép and be in the clear. The Grandees will be well in the clear.

  8. Turkmenbasi :
    Simicska has effectively dismissed the PREMIER’S MAN from the ministry!
    recent developments confirm a daunting recognition that there is NO POLITICAL FORCE left in this country which can curtail the power of Simicska and his gangsters.

    So, to sum it up, it is not even Orban who runs the show. He has been slowly, systematically but clearly bought out, and the country is run by those who Orban pretends to be saving from. Not a surprise although.

  9. Ron :
    I cannot see how the Nyerges-Simicska business group is providing or rather recycling its cash into the party hierarchy and into Fidesz its self.

    Let me guess, you did not see the money orders?

  10. Some1 :

    Turkmenbasi :
    Simicska has effectively dismissed the PREMIER’S MAN from the ministry!
    recent developments confirm a daunting recognition that there is NO POLITICAL FORCE left in this country which can curtail the power of Simicska and his gangsters.

    So, to sum it up, it is not even Orban who runs the show. He has been slowly, systematically but clearly bought out, and the country is run by those who Orban pretends to be saving from. Not a surprise although.

    Orban not running the show? What utter nonsense!
    He runs the show…as far as it is run in Hungary. The really big
    shew is run by our friendly Prez Pyutin…

  11. During the Horthy years, enermous ecomic power was concentrated in the Chorin and Weiss families. Many of their factories supplied the military equipment for the Hungarian Army and exported military equipment to Germany. Was that a similar relationship as the Orban – Simicska Group ?

  12. Louis, have you seen any material on this? It wouldn’t be surprising if certain groups during the Horthy era enjoyed unlawful preferences? Chorin was actually Horthy’s personal friend. He even supported him during his excile in Portugal.

    (Would Simicska finance Orban in excile?)

  13. Chorin was the chairman of…Salgotarjani Koszenbanya Rt.,Rimamuranyi es Salgotarjani Vasmu RT, Magyar vasotvozet Rt, Unio Banyaszati es Ipari Rt, Bauxit Trust Rt, Magyarovari Timfoldgyar, Banvolgyi Szenbanya Rt, Ipari Robbanoanyaggyar Rt, Magyar Keramigyar Rt, Solidit Betonepito Rt, Salgotarjani Uvegyar Rt,Acetic Vegyimuvek Rt, Klotild Elso Magyar Vegyiipari Rt,Hungaria Magyar Villamossagi Rt, Kozponti Gaz es Villamossagi Rt, Rackeve Zsilvolgyi Muselyem gyar Rt, Metallochemia Kogaszati Vegyiparimes Femkereskedeli Rt, among others plus about a dozen banks and savings banks. Until 1941 he was the Chair of the GYOSZ (Hungarian Manufacturers Alliance.
    He was married to the daughter of Manfred Weiss (Csepel Muvek, etc.)where “A második világháború idején a WM harckocsikat és terepjárókat is előállított, valamint Me 210 típusú repülőgépekhez is készítettek motorokat.”

    Just check the name on the web or Records from Hungarian history books and extant Gyosz data. An examples: http://www.huszadikszazad.hu/1910-marcius/gazdasag/chorin-ferenc-dr“, ” ↑ Encyclopaedia Judaica CD-ROM ed., Version 1.0. Shaker Heights, Ohio : Judaica Multimedia, c1997″, “http://hu.wikipedia.org/wiki/Weiss_Manfr%C3%A9d_Ac%C3%A9l-_%C3%A9s_F%C3%A9mm%C5%B1vek”

  14. Louis, Yes, I knew all these from the Wikipedia.

    I was wondering if you have anything on Chorin. Was he unlawfully preferred by the government, like Simicska today or was he a self-made millionaire … or inherited the family business or married the right girl, etc.

  15. As usual Louis is telling only half truths:

    The Weiss empire was built before WW1! The German wiki has info: http://de.wikipedia.org/wiki/Manfr%C3%A9d_Weiss

    Anyway what is he trying to tell us – that Horthy was friends with “some” Jews (if they had converted e g) because he needed their expertise ?

    Maybe Louis should find out something about the discriminatory laws on Jews – he seems good at digging …

  16. Louis Kovach, I said this before but et me repeat, you should give back your USA citizenship. You stand for everything that no Americans stand for (except the KKK probably). You will not find a single republican or democrat who would support the hogwash of the war criminals you and Orban’s buddies try to bring back to life. WHat are you doing in the USA anyway if you despise so much what they stand for, while embracing the backward thinkers of Hungary?

  17. “Ferenc Chorin Jr in 1926, he was elected vice president of the Association of Hungarian Industrialists. He established the Hungarian Employment Center in 1922, serving as its president until 1933. In 1928, he became a member of the Upper House. He was made a “secret Government senior adviser” (Titkos fotanacsos)
    Through his marriage to the daughter of Manfréd Weiss, the leading Hungarian industrialist of the time, Chorin came to play a decisive role in the Hungarian economy by the end of the 1920s. He maintained an increasingly close relationship with Miklós Horthy. From 1932, Chorin served as vice president of the Hungarian Mercantile Bank of Pest and was also a member of the so-called Committee of 32 that in effect was the country’s legislative body in the years of the Great Depression. After 1941, Ferenc Chorin Jr. was forced to resign his various posts because of his Jewish origins.”
    Oh no, just because Horthy made him an upper house member, a high level govt. advisor, a member of the Committee of 32 he did not have any favors with the government. The massive defense contracts were awarded without any influence from his other activities. You guys have shown fewer connections between Orban and Simicska than existed for Chorin and Horthy.
    Typical leftlib…if you have no answer attack the messenger….

  18. Louis again:

    Whatever happened in Hungary 100 years back (or in the USA or wherever …) is no excuse for what’s happening today in Hungary …

    Why do you never comment on the topic but try to divert to whatever you found on wiki ?

    This is one of the basic logical fallacies indeed – look here: http://www.nizkor.org/features/fallacies/ – I call it “Kindergarten-Logik”:

    He did the same thing last week – now why am I being punished …

    You have not said one single word (!) on Közgép etc – really strange …

  19. OK Kozgep….what is there to comment on innuendos, without actual presumably illegal cases. You can file a suit regarding the Hengermalom case if you have real evidence, something other than hearsay.

    The same mentality drove the nameless reports also to the nazis or the communists, there were rarely facts involved, most of it was due to sour grapes, jealousy, or hatred of fellow men.

  20. Louis Kovach :
    OK Kozgep….what is there to comment on innuendos, without actual presumably illegal cases. You can file a suit regarding the Hengermalom case if you have real evidence, something other than hearsay.
    The same mentality drove the nameless reports also to the nazis or the communists, there were rarely facts involved, most of it was due to sour grapes, jealousy, or hatred of fellow men.

    Jealousy and hatred are bad. You’re right. Amen to that.

    The mill factory flipping case is based on public records. The problem is that the best you can do is report it to the commissioner in charge of investigations of privatisation deals. That would be Gyula Budai. Good luck with him investigating his FIDESZ buddies.

    Not even the a parliamentary committee would matter. Orban and his wife (Aniko Levai) were investigated for their dealings during the first Orban government. Wifey bought land where the government spent huge money on development two months later – prices shot up ten fold. Tokay land deals, developed again with government help, yaddi-yadda. The transcripts of the hearings are all there on the parliament’s website in beautiful pdf. Nothing happened.

    When you critisize the corruption in your government – that is not jealousy.

  21. Just a theoretical question. Did anybody report the case to Budai? I do not mean sending him a copy of a copy of a blog, but some relevant info, which can be investigated?

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