EC sees something wrong with treatment of Simicska’s companies

July 12, 2016


Prime Minister Viktor Orbán and forma Fidesz oligarch Lajos Simicska fell out last year. The feud between the two former college roommates came to a head when Simicska referred to Orbán as a “cumshot” and suggesting that he served as a police informer under communism and was being blackmailed by Russian President Vladimir Putyin into adopting a pro-Russian stance.

The oligarch’s business interests in media, agriculture, and construction took big hits as the proverbial carpets of government support were pulled out from underneath them.

In retaliation, Simicska’s media outlet started writing critically of the Orbán government and Fidesz. The severing of Fidesz’s ties to Simicska’s media outlets also became evident in the unofficial blackout allegedly ordered by the party.

In the months to follow, story after story emerged about the various ways in the which the government sought to undermine Simicska’s business empire.

Simicska, whose companies enjoyed the good favor of the government until the fallout, found his companies excluded from public procurement projects.

In one such case, the Simicska-owned construction company Közgép was barred from submitting tenders after a decision by the Public Procurement Authority found that Közgép had submitted false information in a tender to work on the Győr–Gönyű port.

The case ended up before the European Commission who called on the Hungarian government to pay a fine of 25 percent of the total EU subsidies for the project — some HUF 1.6 billion.

According to information obtained by Hungarian business daily Világgazdaság, the European Commission is considering more severe fines should it turn out that the government is deliberately locking Közgép out of public procurements.

Világgazdaság reports the European Commission is considering fining Hungary for every case in which Közgép has been denied the opportunity to take part in a public procurement on grounds of submitting “fake information.”

According to Világgazdaság, restrictions set in place by the Hungarian government intended to curtail Közgép’s participation in public procurements have distorted the market.

The European Commission considers the government’s “unlawfully restrictive” practices so bad that it might consider fining the government to the tune of 25 percent of the whole EU operative fund available to the country.

Two of these operative programs are worth HUF 2,377 billion in total for the 2014-2020 EU funding cycle. On average, that’s around HUF 340 billion (USD 1.3 billion) annually and could result in some HUF 85 billion in fines per year.

According to Világgazdaság, the Commission may even consider a more extreme 100 percent “correction” if it turns out that “certain applicants are deliberately being restricted from taking part in public procurements.” Furthermore, Közgép could potentially sue the government for lost revenues.

Közgép reportedly did not comment on the story.