Greed might be the undoing of Viktor Orbán and his regime

Today I’m going to look at two corruption cases that might have serious consequences for the Fidesz empire in Hungary. The first is the “seizure” of the profitable retail tobacco market and its redistribution among friends and families of Fidesz politicians. It seems that the government may have gone too far here; there are signs of internal party opposition. We know only about small fry at the moment, but that doesn’t mean that dissatisfaction isn’t present in the highest circles of the Fidesz leadership.

The other scandal is not new at all. For years Közgép, a company owned by Lajos Simicska, a childhood friend of Viktor Orbán, has won practically all government projects financed by European Union subsidies. But it came to light only now that Brussels suspended payments on two very important “operative programs,” one dealing with the environment and energy and the other with transportation.

First, the response of  two party faithfuls to the tobacco shop scandal. On April 26 HVG received a letter from a Fidesz city council member in which he said that in his town the Fidesz members of the council decided who would get the tobacco concessions. At that point the informer didn’t want to reveal his identity, but two days later he was ready to give an interview, name and all. It is a long interview from which I will quote the key sentences.

Ákos Hadházy is a veterinarian in Szekszárd, the county seat of Tolna. He considers himself to be a conservative, but “this tobacconist shop-affair broke something in [him].” The Fidesz members of the council looked at all the applicants and suggested who should get favorable treatment.” Mostly friends and relatives. Hadházy struggled with his conscience. He felt that the way the selection was made was wrong, but at the same time he realized that “many would consider revealing his doubts a betrayal” of his party. Finally he decided that although “perhaps in the short run the party might lose a few percentage points, in the long run these revelations might actually be good for this party.”

In his opinion “the 2010 landslide victory was a fantastic opportunity, but at the same time such a large victory is harmful for a party.” A well functioning opposition is “a basic necessity…. If there is no opposition, sooner or later [the party leadership] will be unable to control [its] own decisions. There will be no reaction when [they] make wrong decisions.” Unfortunately this is what happened in Fidesz’s case.

Hadházy even went further and announced that the problem is that there is no opposition within the party either. The members of parliament are no more than voting machines because after 2014 there will be fewer seats available and naturally everybody would like to keep his job. “One can’t expect negative opinions from them…. If there are no debates within a party … then there are only two possibilities: either [the party] does something fantastically well or something is not right.” Most often decisions are unanimous. Ordinary party members are not consulted. Maybe once a year there is a meeting of the local party members, but that’s all.

corruption2Fidesz is indeed a very disciplined party, but he thinks they “went too far.” Such discipline was fine when Fidesz was in opposition. Then “the para-military structure was acceptable, but when in power the party should have moved in a more democratic direction.” Hadházy believes–I think wrongly–that Fidesz has fantastic “intellectual capital” but doesn’t try to use this capacity and doesn’t listen to them. “This in the long run is a suicidal strategy because the members of the intelligentsia  are the ones who can influence public opinion.”

As far as he is concerned there are two possibilities: the party will not take kindly to his going public and then his political career will be over. If, on the other hand, he is spared he “will be very glad to know that Fidesz is full of real democrats, even if this is not always evident given how decisions are made now.”

The other rebel is András Stumpf of the pro-government Heti Válasz.  Don’t think that András Stumpf is a “soft” Fidesz supporter. He is no Bálint Ablonczy, another reporter for the same weekly, who is a moderate right-winger. Stumpf is pretty hard-core. He aggressively defends the government at every opportunity–for instance, when he appears on ATV’s Start. Even in this critical article he expresses his belief that Sándor Laborc of the Office of National Security hired Tamás Portik to spy on the opposition, meaning Fidesz. Yet it seems that the tobacconist concessions and the amendment to the Freedom of Information Act were too much for him. Not even he believes that the quickly amended piece of legislation has nothing to do with the concessions and the government’s attempt to hide the truth from the public. In Stumpf’s opinion, the amendment is most likely unconstitutional and what the government is doing is “frightening.” If they have nothing to hide, make the documents public.

Moving on to the withheld EU payments, a new internet website,, published an article entitled “Secret war between Budapest and Brussels” on April 30. According to the article, last summer the European Union suspended payment for cohesion fund projects. The apparent reason was that Brussels discovered that there is discrimination against foreign engineers. Only engineers who belong to the Hungarian Society of Engineers can be hired.

With due respect to the journalist of, I can’t believe that this is the real reason for the suspension of billions of euros. Instead, I recall that about a year ago Ferenc Gyurcsány’s Demokratikus Koalíció turned to the European Anti-Fraud Office (OLAF) to call attention to the fact that Közgép, Simicska’s company, had received an incredible number of government contracts, all financed by the European Union. The suspicion is that Közgép through Lajos Simicska is actually owned by Fidesz. Or at least a substantial percentage of  its profits ends up in party coffers. I remember that sometime during the summer of 2012 OLAF’s investigators took possession of Közgép’s computers. I suspect that the suspension of funds has more to do with Fidesz government corruption than with discrimination against foreign engineers.

By now opposition politicians are openly accusing Közgép of being a front for Fidesz. Gábor Scheiring (PM) said that “the essence of Lajos Simicska’s firm … is financing Fidesz from its profits.” Gyurcsány considers “Lajos Simicska  the most notorious and most influential person in Fidesz and the business establishment built around it.” László Varju, the party director of DK, in one of his press conferences talked about the need to investigate the possible “role of [Közgép] in the financing of the government party.” If it could be proven that Közgép and Simicska are just a front for Fidesz, Orbán might find himself and his party a lot poorer.


  1. The suspicion? Közgép’s sole role has been to syphon-off EU monies for Fidesz, but in order to look legit it also builds stuff, although most of the time it hires subcontractors to carry out actual construction works.

    Közgép is a Fidesz party finance vehicle, but there remains also enough to reach the coffers of Simicska, Orbán and others. It is not a company that could live off from private works and never intended to do so.

    I also strongly believe that Orbán amassed a vast fortune through his die-hard friend Simicska.

    In addition, it is very interesting that one of the biggest power group within Fidesz is the Nyerges clan, which is from Szolnok. Zsolt Nyerges (another lawyer like Simicska and most of the Fidesz top people) and his brother, who is at the Ministry of National Development handpicked the minister herself , Ms. Nemeth (she is known for a CV which has huge holes in it as well as for the fact that she never gives an interview, quite strange she being formally responsible for the proper spending of hunders of billions of HUF, oversees one of the biggest sub-budgets).

    The Nyerges-group also manages MVM, the central electricity trader/distributor/system operator, many of their former colleagues got top positions there overseeeing also hunderds of billions of revenue where it is possible to syphon off monies smartly.

    Szolnok is known for one thing only: it is the town where Orbán’s wife, herself a lawyer is from and the involvement of Nyerges-clan was her idea.

    Thus I would not exclude the possibility that the Orbán family directly receives huge amounts from the Közgép group as well as from the Nyerges-lead and influenced parivate and public companies. Orbán’s family anyway receives a lot since Orbán’s father owns mines from which all state companies like MÁV, the national railways, etc. purchases stuff (stones, gravel etc.).

    To naively think that Közgép and other Fidesz-related companies are legitimate businesses is to display unbelievebly incompetence. They were used for private and party gains from the get go.

    But OLAF is also a toothless enterprise and they will never get to Simicska, he is rumoured never to use a phone or internet. He gives orders orally and uses fronts (stróman) and is a savvy lawyer. Plus they will at most start a never-ending legal dispute. Don’t count on them.

  2. Is it this the honest brave moderate image of orban that can win elections?

    Many emigrant Hungarians in America enthusiastically support Obama, while still vouch for a very different guy in Hungary.

    Blind Hungarian patriotism can impact one’s judgement.

    After “Out with Russians” in 1956, every Hungarian must cry “Out with the Fidesz” in 2013.

    Almost worse than the Soviets.

  3. Közgép and the tobbacco swindle are just the tips of the iceberg.

    The wall of silence is just unbelievable. Hadhazy is perhaps the very first after three years, whereas Fidesz dealt with all issues from the first day like it dealt with the tobbacco concessions and there are thousands of Fidesz politicians all over Hungary who were involved in similar deals, decisions. The Sicialian Mafia has more pentitos than Fidesz. They must do something well.

    There are so many other stories, it’s insane.

    But as the campaign guru of Fidesz said: if voters can choose between the corrupt and the dumb they will choose the first. Sure, they steal a lot but they brought down utility fees and pensioners will get a nice increase just before the election. Politics is dirty and voters accept that, especially the fanatic plurality which Orbán needs in this new election system.

  4. I also feel that best route for FIDESZ losing is its own self destruction. The sad part is that Simicska et. al. sensing that fundamentally MSZP is more interested in participating in the system than dismantling it, has started again the old practice of sharing the corruption amounts 75:25 with the opposition. So, while the Trafik scandal is the perfect political opportunity for the opposition because it exposes the core beliefs and practices of the Govt in such a clear way, this morning in Index it was reported (via Magyar Nemzet) that Laszlo Puch’s (the Simicska of the MSZP) relatives also won concessions for tobacco stores!

  5. NWO:

    And this is the most disheartening thing of all–that the predilection for thievery is so advanced in the average Hungarian’s outlook. It is unforgivable because dignity and conscience–regardless of the ‘great’ Catholic church–has no part in daily life.

    That Orban may be psychological ill is one thing, but that so many willingly follow him (for their own gain) without the slightest consideration of the welfare of the rest of society, is truly disgusting.

  6. Guys, the Puch thing is ridiculed even in Index.

    There has been more than 5000, that is more than five thousand tobbacco licenses issued and out of those they could tie not more than two to Puch or any other Socialist.

    I mean this is not the return of the times of the 70-30 split. It’s more like Fidesz teases the Socilaists with such petty issues.

    With Közgép (today’s news is the cheap obtainment under very favourable terms of a giant Balatonfüred plot located right on the lake shore, hitherto used by sailors, where Simicska and his friends will build a hotel which like almost all of them will go insolvent, but Közgép is interseted to build it, syphon off 1/3 of the budget, so it does not care what will happen to it), Nyerges at al, we talk literally about hundreds of billions of HUF.

    You cannot name any business to MSZP out of those hundreds of billions.

    Sure, I also think that any MSZP functionary would sell their mother if they could (whereas at Fidesz everything is centrally planned and approved), but it is a bit early to be afraid in practice. I guess Fidesz’ media campaign about corrupt communist politciains worked after all – when in fact..

  7. The Blikk Demographic is one the regime needs to watch out for. Blikk performs the same function as The Sun in the UK, ie it’s a tabloid, read mainly by the working class, dealing normally with reality tv stars wearing very little clothes but occasionally also wandering into the world of rabble-rousing politics when the need arises. The latest right-wing woman-batterer, Fidesz representative Balogh is presently getting a (no pun intended) bashing in the paper and the Trafik business is also being covered.

    The masses being roused out of their apathy is what the Fidesz Mafia fear the most and it may well just take one or two more examples of country-wide theft adequately reported to achieve something that all the academic debates and EU tellings off have not.

  8. Funny, even the Puch relatives are actually Fidesz local representativs.

    So no MSZP or Socialist licensees. All Fidesz.

    No exceptions out of 5.445 licenses — not a bad management efficiency. Each and every licensee was background checked.

    And please don’t trust Magyar Nemzet (even if it was Index which relied on the Fidesz mouthpiece).

  9. @NWO
    “this morning in Index it was reported (via Magyar Nemzet) that Laszlo Puch’s (the Simicska of the MSZP) relatives also won concessions for tobacco stores!”

    It turned out this was another lie in Fidesz’s Pravda (aka Magyar Nemzet).

    1. This Puch is not a Socialist, on the contrary, he is a local Fidesz guy.
    2. He is not even related to the Socialist Puch.

  10. Here is the missing piece of the agricultural puzzle.
    The EU will give 225 euro support for every hectar of agricultural land in 2014.
    The Hungarian government will give “top-up” money in addition.

    So any good friend of Orban’s, who gets the official limit of 1200 hectars of state land,
    will be paid a gift of 270,000 euros (81 million forints) yearly by the EU, even if s/he does nothing with the land. Plus the Hungarian subsidy, plus the profit from the produce of the land.

  11. Altogether, Fidesz gives away 265,000 (fact+plan) hectars to friends, family and clients, yielding almost 18 billion forints of EU money YEARLY.

  12. Tappanch, you are right, it seems every penny counts. Well, this is a tiny bit more.

    I am pretty sure at least 10-15% of this income must be paid back by the winners of these agricultural land lease tenders to Fidesz (and the decision makers).

    Fidesz does not care about these scandals, the election system is rigged and the opposition is their pockets.

    And guess what? Half the population has no idea about the tobacco licenses. Internet is not read widely, especially not in the countryside.

    Fidesz will win anyway, they can do whatever they want.

    And the courts are on their side, all these licenses and land leases will be upheld and enforced.

    A new government may come but the guys will have their money, it will be plenty enough to wait until a new government commits suicide and Orbán returns.

  13. Cheshire cat I think it is too strange that Eva should spend her precious time to make contacts for readers of her blog, so I just created an email account for the sole purpose of just writing it down here:

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