The Fidesz robber barons. Part II

Today I’m continuing the story of Fidesz’s mafia methods as perfected by Lajos Simicska, the financial wizard of the party. I will pick up the story at the time of the campaign that preceded the election of 1998, which Viktor Orbán with the help of József Torgyán, chairman of the Smallholders Party, won.

For the campaign Fidesz needed money. Lots of money. Enter Gábor Princz, chairman of Postabank, which was a state-run bank. The name of the bank accurately reflected its structure. Its branches operated at post offices and thus could reach a wide clientele. Princz ran the bank in a totally irresponsible manner and handsomely paid politicians on both sides for expected favors. He was also very generous when it came to support of the media and organizations connected to culture. Eventually, Postabank went bankrupt, but before that happened Princz used his bank’s assets to support Fidesz’s election campaign. Gábor Kuncze, chairman of the liberal SZDSZ, calculated that Postabank lent and/or gave 800 million forints to Fidesz. Since a few months later there was no Postabank, it is unlikely that Fidesz ever had to pay this money back.

If Princz thought that his generosity toward Fidesz would save him, he was wrong. One of the very first moves of the Orbán government was to remove him from his post as head of the bank. Princz moved to Austria for a while where he felt a great deal safer. Meanwhile, the government began to take care of the immense debts that Postbank had managed to accumulate. Eventually, they calculated the amount of money which according to their experts was needed to put things in order: 152 billion forints. Naturally, Princz himself doubted this figure, which was not surprising. But even people like Imre Tarafás, at the time head of the Állami Pénz- és Tőkepiaci Felügyelet, the organization that supervised bank and monetary transactions, in his report for the year 1999 claimed that the government spent far too much money trying to straighten out Postabank’s accounts. Tarafás was asked by Orbán to resign. When he declined, the government created a new office with a similar mandate and abolished Tarafás’s organization. Tarafás was not the only one who had doubts about the financial needs of Postabank. In 2006 it came to light that at the time KEHI, the government financial supervisory body, also noticed several very shady real estate deals in connection with the consolidation of Postabank. However, István Stumpf, head of the prime minister’s office, suspended any further probe into the matter. But it looks as if about 50 billion forints disappeared in the process of cleaning up the books of Postabank.

Once Fidesz won the election Viktor Orbán began building his political and financial power base. Corruption now became systemic and centralized. The Fidesz government established a number of entities that siphoned large sums of money from the public coffers. First, they set up something called Országimázs Központ (Country Image Center) whose duty it was to conduct a propaganda campaign lauding the outstanding performance of the country under Fidesz leadership. The man in charge was István Stumpf. This body handed out large contracts to two business ventures, Happy End Kft. and Ezüsthajó Kft. (Silver Ship), to stage large state events. One must keep in mind that the new millennium and the Hungarian Kingdom’s 1,000-year anniversary gave plenty of opportunity for lavish celebrations. Just the New Year’s Eve extravaganza, which by the way was a flop, cost, at least on paper, 3.75 billion forints.  Several more billions were spent on celebrations all across the country, including the smallest villages, during the Hungarian millennium year. It seems that altogether the Országimázs Központ spent almost 13 billion forints on such events, and more than 90% of that amount was received by Happy End and Ezüsthajó.

Hyde and Hyde

Hyde and Hyde /

It would be too long to list all the phony overpaid providers who were naturally members of the Fidesz inner circle or at least people with close connections to Fidesz. It is almost certain that some of the money paid out to these firms ended up in Fidesz coffers handled by Lajos Simicska.

The really big corruption cases, however, were connected to government investments, especially highway construction. Here the key organization was a state investment bank called Magyar Fejlesztési Bank (MFB, Hungarian Development Bank). The bank was supposed to give out loans for promising business ventures.

When Lajos Simicska left APEH, he got a job at this state investment bank and came up with a fiendishly clever scheme. Road construction was not handled directly by the government but by a company called Nemzeti Autópálya Rt., which was created by MFB specifically for this purpose. The beauty of the arrangement was that the rules and regulations that applied to projects financed by public money were not applicable here. For example, no competitive bidding was necessary. The next step was to designate a company to be the beneficiary of government orders. The chosen company was a leftover from the Kádár years called Vegyépszer. The name is typical of the many state companies that existed in the socialist period. But the name of this company indicates that it didn’t have anything to do with construction. Judging from its name, once upon a time it had something to do with chemicals. But that really didn’t matter because it wasn’t Vegyépszer that was going to do the work but hired subcontractors. Suddenly Vegyépszer received orders to the tune of 600 billion forints. From nothing it became as important a company between 1998 and 2002 as Lajos Simicska’s Közgép is today. I might add that Vegyépszer went bankrupt last year.

The question is how much of that money was returned to Fidesz. After the defeat of Fidesz in 2002, an old high school friend of Orbán, Simicska, and Varga told Debreczeni that the reason for Orbán’s electoral defeat was that “the boys were not satisfied with the customary 10%, they wanted 20% of everything.”

Of course, this is a very brief summary of exceedingly complicated financial transactions. I suggest that those who know Hungarian read the book. It is full of details about the functioning of MFB, which acted as a never ending source of government funds and also was involved in selling state properties to friends of Fidesz politicians under highly questionable circumstances. Some of the beneficiaries of these unsavory deals involving large state farms are still members of Viktor Orbán’s inner circle: Sándor Csányi, István Töröcskei, Zsolt Nyerges, and, yes, Lajos Simicska.

As for Fidesz’s current favorite company, Közgép, which gets almost 100% of government investments financed by the European Union, it belongs to Lajos Simicska himself. Or whoever stands behind him in the shadows.

To be continued


  1. Personally I dont doubt the accuracy or veracity of the above account and I am sure gathering the sources for the above infromation would be no mean feat, but (to use Shakespeare’s speak): “pray” where doest thou obtain such details?

  2. Eva: “and more than 90% of that amount was received by Happy End and Ezüsthajó.” and later on in the article “I might add that Vegyépszer went bankrupt last year.”

    The key word is here “bankrupt”. None of persons could be touched, because the Companies quickly were liquidated within a few months. And were liquidated just before MSZP came into power.

    Please note a normal “quick” liquidation take at least one year to completed. A normal not so fast two years at least. Difficult ones take a least three to four years to complete.

  3. The comments should reflect a united support for the explorations of this blog into the crimes of the Hungarian leaders.

    We should also display solidarity with the abused masses of Hungarians.

  4. The Jerusalem Post published a piece of misinformation on Hungary, written by the propaganda insider czars.
    The former MSZMP member, the wondering Hungarian patriot, the current anti-communist regime member, the mini-oligarch deserves our total rejection.

  5. The Orban government disbanded the department of the Hungarian IRS dealing with the largest fraud cases in 2013.

    Another former tax agent reveals details:

    Let me add that the VAT fraud is EU-wide. This bureaucratic form of tax invites gangsters.
    The US alternative, the sales tax is much better. The only advantage of the VAT is the 1 to 3 month interest-free loans the national budgets get.

  6. Meanwhile on Planet Hungary …

    The FIDESZ utility wars (Rezsi Wars) is raging on. The government is in the hallways of the condominiums.

    A new amendment to the to the recently passed utility law (two weeks ago, go figure) will require the elected representative of the condominium committee to post a well readable sign within the first 15 days of each month about the details how the utility bill changes. How much they saved last month and how much they saved since January. Failure to post the sign carries financial penalties.

    Please stop laughing. This is not a joke. The FIDESZ requires the condo committee to post government propaganda in the hallways.

    By the way the utility tells explicitly the utility companies what colors they have to use on the bills and what character fonts (Ariel) they can use and what size. As you can see in the second link the colors are described as RGB codes (codes used for monitors) so they have nothing to do with printing, but hey, computers are complicated. Don’t judge the FIDESZ experts …

    Condo reps (“Házmester”) were very important during the communist regime. They were required to report to the police regularly on the tenants.This country has a great tradition of spying for the government. Looks like the FIDESZ is tapping into this unique expertise.

    This utility lowering mania started to look like the Stahanovist production movement in the fifties. Some envision a competition where people will open all there windows and crank up their heating equipments to save even more on heating bills.

  7. tappanch :
    Orban has ordered the Supreme Court to make a decision on the loans denominated in foreign currencies, and the Court delivers within a month:

    Hungary: a country of negligible political culture. What bureaucrat of a developed country would ever begin a government action with, “I initiate…” There is no “I”: there is, however,
    “The Office of…” etc. etc.

    Just a tell-tale sign of the personalized nature of government in ‘modern’ Hungary.

  8. This Burnett was a real kind of Nazi – but that happened more than 150 years ago, so what’s the relation to today’s Hungary ?
    “Burnett’s openly racist attitudes towards Blacks, Chinese, and Native Americans have blackened his name today. Burnett’s period in the Oregon Provisional Legislature helped facilitate the exclusion of Blacks from the state until 1926. One of his Oregon proposals was to force free Blacks to leave the state, and to institute floggings, every six months, of any who continued to remain.[10] Also, his open hostility to foreign laborers influenced a number of federal and state California legislators to push future xenophobic legislation, such as the Chinese Exclusion Act thirty years after his departure from the governorship. Burnett was also an open advocate of exterminating local California Indian tribes, a policy that continued with successive state governmental administrations for several decades, where the state offered US$25 to US$50 for evidence of dead Natives.”

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