Közgép

How do European Union funds end up in the hands of the Orbán family?

The European Union has been, wittingly or unwittingly, enriching members of the Orbán family. Today, in what is undoubtedly only one story of many, I’ll focus on Viktor Orbán’s eldest daughter, Ráhel.

The last time Ráhel, Rasi to her family and friends, was in the news was more than a year ago when she got married with great fanfare to István Tiborcz, a 27-year-old businessman with a law degree. In 2008 Tiborcz and a friend started a small business dealing with electrical and energy supplies. In 2009 the business had a modest profit of 8 million forints on which they paid 2 million in taxes. Two years later the annual profits of the groom’s business were over 2.5 billion forints.

Ráhel is in the news again. This time on account of her spending a year at the École Hôtelière de Lausanne in Switzerland where she is working toward “an Executive MBA in Hospitality Administration.” Why the interest in Ráhel’s studies? The reason for all the fuss is the high tuition fee she has to pay for the two semesters she is spending in Lausanne. The cost is 60,000 Swiss francs or 15 million Hungarian forints. Because of the recent focus on alleged widespread corruption among Hungarian politicians, this tuition fee prompted questions about the source of the money. Journalists pointed the finger at Rasi’s father, Prime Minister Viktor Orbán. How can he plop down 60,000 Swiss francs?

I, who followed the research done by Atlatszlo.hu at the time of the wedding and reported about the sudden enrichment of István Tiborcz, couldn’t quite understand why Hungarian journalists assumed that it had to be Orbán who footed the bill when Rasi has been married for over a year to a young man who since 2010 has become quite wealthy.

Ráhel became tired of all the questions and accusations and decided to speak up on her Facebook page. She said that she and her husband are paying her tuition, not her father. I’ll bet she regrets that decision now because her Facebook note prompted Atlatszlo.hu to look into Tiborcz’s more recent business affairs. And what they found is not pretty.

The happy couple

The happy couple

Of course there is nothing wrong with being a successful businessman, but István Tiborcz’s success most likely has nothing to do with his business acumen. Before Viktor Orbán became prime minister he owned a very modest business. The meteoric rise in his fortunes can be compared only to that of Lőrinc Mészáros: from 8 million in revenues in 2009 to 3 billion in 2011.

How did he achieve this incredible feat? In 2010 one of Közgép’s divisions purchased the majority of shares in Tiborcz’s business and used it as yet another of its conduits for EU cohesion funds. The customers of E-Os Innovatív Zrt., as the business was renamed, were almost exclusively municipal governments with Fidesz mayors. They contracted with E-Os to do work that was funded by cohesion funds from Brussels.

For reasons that are unclear, in 2012, according to publicly available information, Tiborcz’s business was renamed Elios Innovatív Zrt. and Közgép no longer had a majority stake. Two companies bought out Közgép, one of which, Green Investments, was owned by a former partner of István Tiborcz, Endre Hamar. The change in ownership had a decidedly negative impact on the company’s revenues. In 2012 Elios Innovatív Zrt. grossed only 20 million forints. Three weeks after the 2014 national election, however, Tiborcz bought out his former partner Endre Hamar, and from there on business boomed.

Tiborcz’s firm installs street lighting. Atlatszo.hu lists 2.9 billion forints worth of contracts with different municipalities: Hévíz, Balatonfüred, Kecskemét, Szekszárd, Dunaújváros, Sopron, Hatvan, Kalocsa, Bicske, just to mention a few. Most of these revenues (2.1 billion) were the result of a tender issued by the Nemzeti Fejlesztési Ügynökség (National Development Agency) and financed by the European Union. Local governments could apply for grants to reduce their energy costs; if successful, they received large sums of money to have the appropriate work done.

There are strict EU guidelines that the Hungarian authorities must follow. The most important rule is that the firm that prepares the technical details must not in any way be connected with the successful bidder. However, as Atlatszo.hu discovered, most of the tenders Tiborcz’s firm won were prepared by his former partner, Endre Hamar, who owned another company called Sistrade Kft. It is likely that Hamar and Tiborcz acted in collusion, making Tiborcz’s bid fraudulent. In fact, Atlatszo.hu notes that the arrangement was so bizarre, and presumably illegal, that Hamar was still an owner of Elios Innovatív Zrt. at the end of April 2014 when the firm signed the contract with the city of Héviz.

Atlatszo.hu did a yeoman’s job in trying to make sense of the company’s shifting identity and ownership structure. Unfortunately, many questions remain. One that baffles me is the role of Simicska’s Közgép. I find it more than a little odd that Simicska’s Közgép shows up to support the fledgling business of István Tiborcz, already known to be Ráhel’s boyfriend, only to withdraw from the firm after its spectacular growth. Közgép is not, as far as I know, active in venture capital or private equity. And, as the next year’s revenues showed, Tiborcz’s company was not ready to stand on its own.

I think it would be high time for Brussels to take a harder look at some of the businesses–and individuals–that profit from its largesse. Let’s not forget that in this case we are talking about the daughter and son-in-law of the prime minister. Surely, the goal of the EU convergence program is not to make the Orbán family rich.

The asphalt tax: Lajos Simicska is not taking it lying down

A few days ago 444 reported that the government is planning to levy extra taxes on companies that have received large government contracts for road construction over the past few years. The reason for these new taxes is a large fine that the Hungarian government is expecting from the European Union. Apparently, ever since 2007  Hungarian governments have insisted that only construction companies that had asphalt mixing plants close to the job sites could bid for contracts. The European Union objected to this constraint which, in their opinion, restricts free competition.

The argument between Budapest and Brussels has been going on for some time, and it looks as if the Hungarian government has reconciled itself to the fact that it will have to pay a heavy fine, perhaps as much as 100 billion forints. Although the current Hungarian government spends money quite freely, it either doesn’t have the money for such a fine or doesn’t feel like paying it from funds it would rather spend on stadiums or the purchase of private enterprises. In any case, the government came up with a splendid idea: let the companies pay for something that is clearly the Hungarian government’s fault.

Although the public usually hears only about Lajos Simicska’s company Közgép, the firm that receives most of the government orders, there are others. Apparently, there is a company called Duna Aszfalt that lately has become a true competitor to Közgép. In addition, there is a French company called Colas, the Austrian Strabag and Swietelsky Magyarország, Magyar Aszfalt, and Hídépìtő Group. Each of these companies has had more than 100 billion forints worth of government orders and thus would be obligated to pay a 15% tax on its gross income.

According to an article that appeared in HVGKözgép was the greatest beneficiary of the Orbán government’s largesse. Since 2007 it won bids for projects to the tune of 132 billion forints, which would mean a retroactive tax of 20 billion. But in the last two years Duna Aszfalt–which is in fact situated in Tiszakécske–has grown tremendously. In 2012 it received government work amounting to 28 billion forints, whereas in 2013 this amount was 54 billion and its profits almost quadrupled. The two owners received 1.8 billion forints in dividends. It was Duna Aszfalt that built the road from Makó to the Serbian border.

road construction

Soon after the first report of the possibility of an extra levy on these companies, the Hungarian government denied any such plan. The denial, however, was carefully worded. On HírTV János Lázár said only that “in the last few months the topic has not even been mentioned in cabinet meetings.” That is not a categorical denial of the existence of such a plan, especially since Lázár during the same interview admitted that Brussels “has formulated doubts and misgivings concerning road construction worth about 500 billion forints.” He added that “it was probable that Hungary will have to pay a significant fine.” For the time being Lázár couldn’t say how and to what extent this fine will affect the companies that were the beneficiaries of the contracts, but he claimed that the “Hungarian government will defend the Hungarian people and the Hungarian companies.” He added that “this defense will not be extended to foreign companies.”

That is clear enough. The Hungarians will not have to pay or will have to pay less while the Austrians and the French will pay through the nose. Therefore, it might seem surprising that Magyar Nemzet today wrote a scathing article against the government’s plan in defense of the construction companies. One must keep in mind, however, that Lajos Simicska and Zsolt Nyerges, his close business partner, have a stake in the newspaper. The publisher of Magyar Nemzet is Nemzet Kft, which used to be called Mahir Kft; this was Simicska’s first business venture.

The title of the article is: “How will a 100 billion forint tax become a 1.2 trillion deficit?” The article claims that if the companies have to pay such a large amount, their own future business activities will be in jeopardy. The contention is that the companies’ profit margin is nowhere near 15%. In fact, the spokesman for Strabag talked about a 3% profit margin on road construction. The author thus calculates that the loss to these companies would be unbearable. Moreover, these companies haven’t even received all of the money the government owes them: “in brief, the money that the government wants to collect is nonexistent.” The consequences will be serious, the article warned. There will be liquidity problems that will result in these companies not being able to pay their workers and their subcontractors; they wouldn’t even be able to buy material. In brief, their current projects will come to a screeching halt.

And that’s not all. Even the slightest delay might mean that these firms could not finish the construction jobs before the December 31, 2015 deadline, in which case the country would have to pay back all of the subsidies received from Brussels. That would mean a loss of 1.2 trillion forints. Further, the article warns about possible bankruptcies, which may result in the loss of 90,000 jobs. Problems in the construction sector could seriously affect Hungarian economic growth. In the first quarter of 2014 GDP was 3.5%, and the construction sector contributed 0.5% to that figure. As a result, it can easily happen that Hungary’s deficit may exceed 3%. If that happens, Hungary could be placed under the excessive deficit procedure, which would mean a suspension of all EU subsidies.

The construction lobby is pushing hard, using Magyar Nemzet to describe the worst case scenario if the “asphalt” tax is imposed. It may persuade the government to go light on Hungarian companies, as Lázár already intimated the government would. But I don’t know what Brussels will think if Hungary implements a two-tiered tax: one for domestic companies and the other for foreign companies. Such a solution would definitely restrict free competition, which was Brussels’ objection in the first place.

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 / varanus.blog.hu

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

Brussels’ suspension of payments for most of Hungary’s cohesion projects

It was on May 1 that I first reported that 444.hu, a new Internet website, published an article according to which sometime during the summer of 2012 the European Union suspended payment for cohesion fund projects. The apparent reason was that Brussels discovered that there was discrimination against foreign engineers. Only engineers who belong to the Hungarian Society of Engineers could be hired.

I expressed my doubt that the only reason for the suspension of billions of euros was discrimination against foreign engineers, although I do know that such discrimination within the EU is strictly forbidden. I suspected that Ferenc Gyurcsány’s Demokratikus Koalíció, which had brought Lajos Simicska’s Közgép to the attention of the European Anti-Fraud Office (OLAF) , might have had something to do with the suspension of funds.

At that time the government offered only a couple of soothing assurances that all was well. One government official even insisted that the requisite membership in the Hungarian Society of Engineers was not really discriminatory because, after all, foreign engineers could join the society. The Hungarian government seemed to be quite sure of itself.

By now, however, the Orbán government seems to be in a total panic. There is still no resolution of the European Union’s suspension of payments for 13 of the 15 operative programs financed from Brussels, and in the worst case scenario Hungary might lose somewhere between two and four billion euros in EU grant money.

Let’s look at a few of the details. I should note here that I feel sorry for those journalists who don’t speak Hungarian and have to rely on information that is available on government sites because very often the English version of the press releases bears no resemblance even to the government doctored news in Hungarian. The August 12 press release on “Action plan to avoid losing EU funds” is a good example of this practice because it says not a word about the suspended funds. The Hungarian version published on the Office of the Prime Minister’s site is more informative.  János Lázár, the new head of the Nemzeti Fejlesztési Felügyelet (NFÜ, National Development Agency), announced at his press conference that “the European Union raised concerns with several large development programmes” and that  Lázár “has already asked European Commissioner for Regional Policy Johannes Hahn to assure completion of related negotiations at the earliest opportunity so that Hungary may utilise the maximum amount of funds available within the 2007-2013 programming period.” This, however, is still not the whole truth.

Lázár actually said that of the 20 billion euros allocated to Hungary for 2007 through 2013 there is a good possibility of losing about 2 billion euros if no agreement is reached before the end of the year. He didn’t dwell on the reasons for the suspension of funds but showed himself eager to “close the disputes between Hungary and the European Union.” The Hungarian government is ready to pay the fines that will most likely be forthcoming without turning to the European Court of Justice because of the urgency. He indicated that he would be happy if Hungary had to pay only 50-70 billion Hungarian forints.

János Lázár at his press conference / Photo Károly Árvai

János Lázár at his press conference / Photo Károly Árvai

This withholding of funds is only one of the problems. The other is that Hungary has only a few more months to utilize the remaining grant money, about 1 billion euros, that until now has not been allocated.

What happened? In 2010 the Orbán government completely reorganized NFÜ, which entailed firing 170 of the 210 employees of the agency. Brussels was apparently stunned. They may also have considered Viktor Orbán’s “reorganization” illegal because the Hungarian government was supposed to ask approval of these changes from the European Union. Because of the reorganization there was practically no work on projects at the agency. And not a single new project was launched. I might add here that today NFÜ has 600 employees and, as Lázár made clear at his press conference, there is no plan to reduce the size of the staff.

Meanwhile, just as I suspected back in May, concern was raised in Brussels over the alleged widespread corruption in the dispersion of funds, currently being investigated by the police. Most of the corruption that is under investigation happened when the Hungarian government tried to allocate money to small- and medium-size Hungarian businesses. Then there was the case when NFÜ wanted to decide the winner by lottery, which Brussels gravely objected to and eventually managed to stop. Sometimes grants were handed out without open competition. It is also known that there were occasions when firms with close ties to Fidesz offered assistance (naturally for a fee) to smaller companies without political connections. As far as I know, Közgép, the largest recipient of EU funds and according to some the most tainted, is not under investigation.

The question of the operative project funds was discussed yesterday at the cabinet meeting. As usual, not much can be learned from the press release except that the decision was made to create a new “working group” within NFÜ called “Tervezési Támogatási Munkaszervezet” (Planning and Assisting Working Organization) which is supposed have “functions of direction within the organization units.” Whatever that means.

According to MSZP’s Gábor Harangozó, although Lázár talked about 2 billion euros (500-600 billion forints) that needs to be approved by the European Commission and spent this year, in his opinion the real figure might be as high as 1,500-1,200 billion forints or about 4 billion euros. Right now no money is coming from Brussels, not even for projects that are already under construction. Moreover, it seems that the Hungarian government, which is supposed to be the guarantor of EU subsidies, doesn’t have the resources to pay the companies that are working on these projects.

Harangozó inquired in writing from Viktor Orbán about key details of the case. For example, how long has the Hungarian government known about the European Union’s objections to the government’s handling of the grants? When did Brussels turn off the spigot? Did the European Union complain about government corruption? MSZP also inquired about the situation from the director-general of the European Council.

Today the government, obviously feeling the pinch, reacted to Harangozó’s statements. They countered that Hungary “has lost billions of euros due only to the incompetence of the Gyurcsány-Bajnai governments.” According to the government press release, during Gordon Bajnai’s tenure as the head of NFÜ “76% of the money for development that was spent was not in accordance with rules and regulations.” In any case, one of the first announcements of Lázár after the cabinet meeting yesterday was that the Orbán government will re-examine all projects, including those long since finished, beginning with 2007.

In brief, a new attack on Ferenc Gyurcsány and Gordon Bajnai is in the offing. If they follow their usual pattern they will darkly hint at all sorts of irregularities, fraud, and corruption. Then the police and the prosecutors will madly search for evidence while Magyar Nemzet reports on lurid details of the investigation that they gleaned from reliable sources. The whole circus will last at least until the elections. A tried and true campaign strategy.

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, 444.hu, 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 444.hu, 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.