The beginnings of one of the oligarchs: Zsolt Nyerges

In the past  here and there I mentioned Zsolt Nyerges’s name, mostly in connection with the acquisition of a formerly foreign-owned radio station. I pointed out at that time that we know very little about Nyerges because this lawyer-businessman makes sure that his activities remain behind the curtain, as it were.

The first time I dealt with this mysterious figure was in my post entitled “The Ministry of National Development and the Building of a ‘National Bourgeoisie'” in which I noted that Nyerges is from Szolnok, the birthplace of Mrs. Orbán, and that after graduation from law school the Orbáns lived in Szolnok for a while. So, I assumed that Viktor Orbán knew Nyerges from Szolnok where apparently the Nyergeses are one of the leading families. Since then I found out that a business partner of Zsolt Nyerges happens to be the brother-in-law of Orbán.

Thanks to the work of Attila Mong, an investigative journalist, today we know more about this mysterious Nyerges. Moreover, I think that once we understand the beginnings of Zsolt Nyerges’s road to riches it will be evident that Viktor Orbán is firmly in control of the financial empire he helped to create.

The foundations of this empire were laid already during the first Orbán government with massive government assistance.

In November 1999 János and Katalin Majoros established a small family enterprise in Szolnok. It was a modest affair with a starting capital of 3 million forints. The couple described the main activity of the company as the manufacture of equipment connected with flour milling. Apparently the Majoroses had neither experience in nor knowledge of milling.  A few months later this company, which most likely existed only on paper, was purchased by Von Holland Zrt. “Zrt.” stands for “zártkörű részvénytársaság” or “closed corporation.” As such, the owners’ identities are not a matter of public record. Von Holland Zrt. allegedly deals with office supplies, computers, and even the wholesale of bottled wines. Von Holland Zrt. put 100 million forints into the Majoroses’ business. Attila Mong, referring to an old article that appeared in HVG (2004), suggested that one of the owners of Von Holland might have been László Tóth, who was a board member at the time of several state owned companies.

When Von Holland got together with the Majoros couple the company’s name, which until then was Majoros és Társa, was changed to Budai Malomipari Kft. (Buda Flour-Milling Co.) In light of later developments this name change is significant. It was also the first time that Zsolt Nyerges’s name could be found among the board members. At that time Nyerges was not yet a businessman. He had a law office in Szolnok.

From that moment on the story really takes off. Although the Majoros couple’s little business was established only in November 1999, by February 2000 the mysterious owners of the brand new Budai Malomipari Kft. were applying for a loan of a little more than a one billion forints from the state-owned Magyar Fejlesztési Bank (Hungarian Investment Bank). In record time they received 1,063,500,000 forints for the purchase of the state-owned Budai Hengermalom Kft. The owners of the Budai Malomipari Kft. with headquarters in Szolnok didn’t put down a penny of their own money and yet they received the loan in record time. Perhaps the presence of Lajos Simicska as a board member of MFB also had something to do with the ease with which this no-name company managed to purchase a very valuable piece of real estate with a functioning flour mill.

I might add that the Budai Hengermalom Kft. was partly owned by Postabank, also state owned, that was under liquidation at the time. Yet there was no tender issued and therefore no competition for this state-owned company. It was simply sold to the start-up company from Szolnok.

But that was not the end of it. This little company from Szolnok received the Budai Hengermalom Kft. free and clear although there was a lien of  2.1 billion forints against it owed to Postabank. Thus, as far as I can figure,  this little company with its mysterious owners received 2.1 billion forints as a gift from the government in addition to a loan of about 1 billion forints without any collateral.

The valuable real estate that came with the Budai Hengermalom Kft. was situated in three different locations. One was the piece of land on which the company’s building stood on Hengermalom út. The second was situated in Nagykáta and the third in Vecsés near the Budapest Airport. The mysterious owners soon enough sold the real estate in Nagykáta and Vecsés for about 1.5 billion forints, and thus they could easily repay the MFB loan of just a little over 1 billion.  The most valuable piece of land alongside the Danube remained in the company’s possession. The owners receive regular rental  income from this property.

The building of the Budai Hengermalom Kft.

All this was achieved without a penny of investment thanks to the generous assistance of the Orbán government.

Reviewing this story of the little family business of János Majoros and his wife that morphed into a major holding, it is clear to me at least that the Majoroses were only a front for a group of people that most likely included Zsolt Nyerges, Lajos Simicska, and other businessmen close to Fidesz. They knew well before November 1999 that their goal was the acquisition of the Budai Hengermalom Kft. and its extensive landholdings. That’s why the modest family business was supposed to manufacture flour milling equipment. They also had to be fairly certain that 1 billion forints would be readily available from the state-owned MFB.

The story of the Budai Malomipari Kft. is most likely a good example of how state property ended up in the hands of pro-Fidesz oligarchs during the first Orbán government.