Viktor Orbán and his oligarchs: Impending power struggle?

I am always amused when I read that this or that politician from the opposition loudly demands the resignation of this or that minister. Equally amusing, if you can call it that, are the demands that President János Áder not sign this or that piece of legislation. It is also becoming quite obvious that hoping to get redress from the Fidesz-appointed constitutional court is equally hopeless.

A couple of weeks ago I introduced the readers of Hungarian Spectrum to Miklós Seszták, the new minister of national development. The title of the post was “Another corrupt official: The minister of national development and his ‘businesses.'” After Seszták’s highly suspicious activities as a small-time lawyer came to light, there was the usual choir demanding the man’s resignation. Viktor Orbán’s reaction in such cases is always “no comment.” As if nothing had happened. Seszták stays. Moreover, it seems that he was chosen to perform some very important tasks in the new Orbán government.

Only a few weeks have gone by since his appointment, but Seszták is emerging as one of the newest “favorites” of Viktor Orbán. More than a year ago a video circulated on the Internet showing Viktor Orbán, Miklós Seszták, and Károly Nemcsák, an actor, drinking pálinka and singing an off-color song about the hussars of Fehérvár. Surely, their relationship was closer than is normal between the prime minister and a very ordinary first-time member of parliament. But, of course, no one could have suspected at that time that Miklós Seszták would become one of the new confidants of Viktor Orbán.

What is Miklós Seszták supposed to do in the next few months? It looks as if one of his jobs will be to change the management of some state companies. The number of state enterprises is very large as is, but Viktor Orbán is planning to have even more soon enough. Naturally, Seszták is eager to accomplish the task. He promised quick action on the removal of certain undesirable people at the helm while he also announced further nationalizations. For example, Orbán wants to have the whole Magyar Villamos Művek Zrt. be taken over by the state. Seszták assured the public that “there is money for it.” It looks as if the Hungarian government also has money for the purchase of Bombardier MÁV Kft, some percentage of which is currently in foreign hands.

It didn’t take long to learn that Seszták has another job to perform which began as early as May: every state enterprise received a letter instructing the management to suspend all contracts with outside firms. The reason? Allegedly to ensure “responsible business practices” at the state enterprises. The suspension order was e-mailed, which the not too smart employees of the ministry sent out with all addresses visible. Since someone squealed in one of these companies, by now we know that the number of companies is greater than 100. This employee also said that in the instructions it was pointed out that some of the contracts “that are necessary for the normal running of the business can be renegotiated,” but he added that it is hard to pinpoint exactly what one can consider the “normal running” of a business. The same whistleblower suspects that in most of these companies both acquisitions and R&D have come to a screeching halt.


László Szily, blogger of Cink, who received the information from the whistleblower, immediately asked the ministry about possible personnel changes either at the ministry or in the companies. He received the following answer:

We are in the middle of analyzing the effectiveness of individuals both at the ministry and in the companies. In case we think that the lack of effectiveness is the result of the incompetence of the leadership we will make the necessary personnel changes. At the same time we do not want to decapitate the enterprises. If there are personnel changes, we will announce them in the next few weeks because we don’t want to keep anybody in uncertainty.

MSZP finds it amusing that Orbán picked a man accused of corruption to check on the allegedly corrupt state company managers. Amusing or not, something very interesting is going on. Rumors have been circulating for a number of years that both Fellegi and his successor, Mrs. László Németh, were Lajos Simicska’s people. As for Lajos Simicska, his business empire is vast and, especially since 2010, he has been the greatest beneficiary of European Union subsidies and state orders for road building and other construction projects. What the relationship is between Viktor Orbán and Lajos Simicska, besides friendship, no one knows. Until now everybody was convinced that what is good for Simicska is also good for Orbán. But now, the latest moves undertaken by Miklós Seszták on Orbán’s orders indicate that perhaps Orbán has had enough of Simicska and his friends.

There are further signs that something else  may be afoot that would weaken the power of some of the oligarchs. Yesterday 444, an online news site, received a copy of a bill the government apparently wants to put before parliament. It would introduce a 15% tax on all companies that have been involved in road building in the last seven years. That would mean a tax of 20 billion forints on Simicska’s company, Közgép. All this indicates to me that Viktor Orbán now feels strong enough (especially with his budget in desperate need of a new source of revenue) to turn against his former friends and put an end to their further enrichment and thus political influence. Cracks seem to be appearing in the Fidesz monolithic wall.


  1. It is a sign of uncivilized behavior to accuse a lawyer for something the client did. A lawyer’s job is not to arrest his clients, prosecute, or inform on his clients. It is not the job of a lawyer to provide confidential or other information against his or her own clients. The job of lawyers is to represent the interests of their clients to the best of their ability. Be they companies or persons the interests of the client come first. If in Hungarian politics this is as acceptable avenue of attack, it only shows they do not understand basic concepts of law.

  2. Kraken wrote: ” The job of lawyers is to represent the interests of their clients to the best of their ability.” This is true but only true to the extent that the representation of their interests is done within the law, A lawyer who fails to advise his or her clients of the extent and limits of the relevant body of law or advises a client to act fraudulently or otherwise illegally is engaged in malpractice and may be liable under criminal or civil law. A lawyer who advises a client to create a company under fraudulent circumstances and/or assists in the creation of that company is likely engaged in malpractice and can and should be held liable, whether under criminal or civil law..

  3. An, thank you for that reference. When I read the word “Amway”, I almost lost my lunch. The idea that the new Minister for National Development was an attorney for Amway — a notorious “multi-level marketing” operation (read: pyramid scheme) with far right political and religious leanings — says too much about this regime. The thing about pyramid schemes is that eventually, they have to collapse when there are no more patsies left to join the bottom of the pyramid and put cash into the system, but unfortunately this can be held off while many, many people get milked of their assets. Is Hungary Inc. now a pyramid scheme? If so, who is on top of the pyramid, Orban or Simicska? Are these true believers or do they have plans in place to bail out before either the cash stops flowing or the political/commercial system collapses out of public mistrust?

  4. “If so, who is on top of the pyramid, Orban or Simicska?”
    or Laszlo Puch?

  5. GW: As I understood from the story, he wasn’t an attorney for Amway, but a legal rep for these fake companies,which were most likely going around Amway’s own rules of distribution (“foreign companies were not allowed to partner-up with Amway Hungaria Kft.)”. So it was probably a local scam to get Amway products to Russia and the Ukraine.. with or without the knowledge of Amway’s Hungarian subsidiary. I doubt Amway HQ had much to do with this (I’m noting this just to try to be accurate. I feel the same way about Amway as you do).

  6. Regardless where the additional teas are coming from, they will be all used buying up everything in site. Hungarians state (some proudly) that there wasn’t any Communism in Hungary, they admit, it was only socialism. No problem, it does not matter what you call it, there will be total government monopoly and ownership soon, except this time the people will have no individual rights and protection of their private property. The new “Tákolmány” (Kludge or Junk) as it is NOT a Constitution, unlike the previous two Constitutions, does not protect private ownership and it took away the responsibility of the Government to provide any social
    benefits whatsoever. In Hungary, the people, who can still think or reason and know something about human rights (not a large number) could realize, that Fidesztan is becoming worse than any Communist country in the World today, except North Korea. Rejoice, it will not be so for long, because they will catch up with Kim Young-un’s “Democratic People’s Republic of North Korea” and they can live happily after. After all they elected the stadium building viktor to be their prime MINIster with a ⅔ majority. Enjoy!

  7. Correction in the first line: The spelling software wrote over “taxes” to be “teas”, my apologies of not noticing before I sent my comment!

  8. An, with Amway,in the US there are often many parallel business pyramids running alongside the “official” Amway product line, selling cds, dvds(previously audio cassettes and videos), books, and seminars with sales “secrets”, inspirational or motivational messages, etc.. The extent to which these products are parasites on the multi-level sales system out of the center[s control or actually a symbiotic design feature encouraged from above (in that they are excluded from the corporate accounting and, thus, taxation), is far from clear. It would not be surprising to learn that some people have discovered a similar parasitic model in Hungary, using the combination of Amway’s opaque but top-down structure of multiple vendors at multiple levels and loopholes in corporate and customs law to obscure movements of goods from the state.

  9. damiendae,

    I suspect that the answer to your question depends upon how much information Orban has about the oligarchs compared with how much the oligarchs have about him. I could well imagine that it is a relationship with a very firm equilibrium, but we are simply not party to enough information to know this for certain. It will probably require that some significant insider makes a dramatic break with the system before we do know,

  10. KDNP is still the source of the most trusted cadres of Orban.

    KDNP is practically a faction within the Fidesz power conglomerate that is even more loyal to Orban than Fideszniks, whose ranks got diluted. Given that KDNP is really a non-existent entity created for pr/segmentation purposes anybody who entered KDNP and not Fidesz is a self-selected conservative/loyalist.

    It does not matter which oligarch is winning or losing. The point is, the oligarchs are those who are winning and Orban naturally.

    And don’t forget the main issue among these bizarre stories, that the democratic opposition is dead, it cant even utter a word any more, nobody listens to it, nobody cares. The opposition is out of the discource, it disappeaered for all practical purposes. Jobbik. however is here and it is obviously very strong, wherever I go.

  11. I am slightly confused about part of Eva’s post, I am unclear who is being referenced as an oligarch. The essay seems to indicate that Miklós Seszták is an oligarch. I don’t see it that way, for example in relation to the MVM group the oligarch would seem to be Csaba Baji CEO of the group and possibly the biggest beneficiary of the Paks Nuclear Power Plant deal. Miklós Seszták is simply the political operative for Fidesz, cutting the deal in which Csaba Baji will make the real money.

    There is no question that Fidesz operatives will get a cut, but the real money will be made by the behind the scenes people like Csaba Baji.

  12. gybognarjr
    July 9, 2014 at 9:04 pm
    The new “Tákolmány” (Kludge or Junk) as it is NOT a Constitution, unlike the previous two Constitutions, does not protect private ownership and it took away the responsibility of the Government to provide any social benefits whatsoever.

    I don’t think that any “real” Constitution would have any bearing on anything as the Constitutional Court that would decide between “disputes” between the Fidesz government’s doings and the Constitution is stacked by the friends of Fidesz by now.
    Just recently (as stated before) the Court decided that the nationalization of private tobacco shops, and the redistribution of contracts were constitutional, as anyone was able to submit a tender. I am not sure that taking away one livelihood and then giving it away by the dozens (literally) to the friends of Fidesz MPs is aligned with the constitution, but apparently in Orban’s Hungary it is.

  13. “Cracks seem to be appearing in the Fidesz monolithic wall.”

    Hmmm…. the truth is at the moment the Oligarchs still need Orban and Orban still needs the Oligarchs for their mutual benefit. However, Orban has such a fear of being toppled from within (and realistically that an internal coup is the only way he can be disposed) and also such an inferiority complex that it is not beyond the realms of possibility that he will start to turn against those closest and most powerful.

    The Oligarchs belong on a completely different intellectual plain compared to the incompetent morons like Lazar and Szijjarto that Orban feels most comfortable surrounding themselves with. I also believe that if they are completely ruthless and unemotional- if they believe their own selfish interests would be served from collapsing the regime I have no doubt they would have the means and inclination to do it. But at the moment I am not sure they see any viable alternative to the Thug in Chief.

  14. damiendae,

    You wrote: “I am wondering what would happen is Viktor Orbán alienated all the Hungarian oligarchs. Would he stay in power long?”

    The short answer is ask Putin how things went after he alienated some of the Russian oligarchs, putting the biggest one in prison for a decade and chasing many others into exile (while impoverishing some of them).

  15. googly
    July 10, 2014 at 1:58 pm
    You wrote: “I am wondering what would happen is Viktor Orbán alienated all the Hungarian oligarchs. Would he stay in power long?”

    The short answer is ask Putin how things went after he alienated some of the Russian oligarchs, putting the biggest one in prison for a decade and chasing many others into exile (while impoverishing some of them).

    You are right. Certainly Putin did not suffer. In fact just like a medieval lord, his position has been strengthen by the “terror” he introduced. Putin current worth is approximately $75 billion!

    Kim Jong-un did not keep the richest around either, instead replaced them with his group. t the same time he only worth $5 billion.

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