The ownership of the largest recipients of EU funds is not transparent.
There is no financial return on certain projects.
Translation of article appearing in the 3-9 October 2013 edition of Figyelő under the title Dzsungelpénz (Jungle money).
Winners with interesting backgrounds are found among the top 100 Hungarian owned companies. The Hungarian press has already written about the five companies that pocketed HUF 12.5 billion of a HUF 20 billion tender to build a wide-spectrum optical network. In this way we only deal with them tangentially. Apart from them one finds companies whose chain of ownership ends in offshore-like places, despite strong criticism on the part of governmental spokespersons. True, in practice to date there have been no visible consequences.
The result of the unpromising fight against offshore companies can be seen in the top 100 list. Among the owners of Delog Debreceni Logisztikai Központ és Ipari Park Kft. that won HUF 1.7 billion in support between April 2009 and November 2011 appears the New York based Euro Logistic Enterprises. One of the company’s representatives whose home address is the same as the official seat of the company, Alastair Matthew Cunningham, who appears elsewhere in the companies official documents with a Cyprus address. The gentleman’s name appears in the registration documents of numerous companies, including ten companies in the United Kingdom, the majority of which wind up their activities after only a few years. While the unidentified owner was a member of the company, it received HUF 1.46 billion from four contracts signed with the EU between 2009 and 2011. We tried to contact the American owners of the company with our questions regarding their experiences with EU grants but had not received an answer as this article went to press.
One of the company’s owners from the beginning until 2008 was Dezső Kékessy, and the other since then is Zsolt Károly Fülöp, who is presumably a relative of the founding member as his mother’s name is Erzsébet Kékessy. Dezső Kékessy’s name is familiar as the Hungarian ambassador to France during the first Orbán administration and the partner of Orbán’s wife, Anikó Lévai, in Szárhegy dűlő-Sárazsadány-Tokajhegyalja Kft. that was involved in the Tokaji grape scandal. After the departure of Euro Logistic two brothers joined the company, Szabolcs Zsolt Fülöp and Levente Károly Fülöp, presumably the children of Zsolt Károly Fülöp but the company has yet to confirm this. Later Kékessy’s two daughters appear as owners, Catherine Elizabeth Kékessy and Piroska Barbara Kékessy, as well has his son, Georges Sándor Kékessy. Thanks to the HUF 1.7 billion in EU grants the company’s revenues increased from HUF 522 million in 2008 to HUF 917 million in 2012, even though according to the most recent data the number of employees decreased by two to 34 in comparison to 2009.
Empire on Váci Street
The effectiveness of grants is also called into question in the case of Európa-Center-Miskolc Kft. According to its website the Borsod county based company that develops business and logistical parks in reclaimed industrial areas with gross revenues in 2012 of HUF 37 million and employs two people won HUF 1.6 billion forints worth of grants for four projects. In response to our questions the company told us that without the EU grants they could not have realized the project and that the purpose of the grant was so that the necessary projects could be realized whose return on investment takes a long time, even many decades. They also said that the development would create over 100 new workplaces but that the project was not completely finished. However, according to the company’s documents the number of people employed by the company did not increase.
We also came across the company in the form of a small groups within the company registered in Budapest at 123 Váci St. whose owners excel at getting EU money. Many connections exist among the companies, but mostly those of ownership, which we illustrate below for the sake of clarity. According to an article published by átlátszo.hu (a Hungarian site devoted to investigative journalism—ed.) Novarov-Immo Szolgáltató és Beruházó Kft. received HUF 992 million worth of grants to support the construction of the Európa Center Automotive Logisztikai Park in Győr. No financial data is available as of yet about this company which was founded in January 2012 and employs one person. EF-Invest Kft. won HUF 221 million in 2009 for the development of a company incubator house in Miskolc but unfortunately the company has yet to experience a signficant increase in revenues which in 2010, 2011, and 2012 was HUF 0, HUF 250,000, and HUF 1.17 million, respectively.
Also having its official place of business at 123 Váci St. is WIS Zrt. the nearly 100 per cent owner of which is József Vicha, a prior owner and director of the above mentioned companies. The WIS name may be familiar from the Római Wellness Otthon, the Hotel Thermal Spa in Sárvár, or the Európa Center Logisztikai és Üzlet Park in Budapest’s 4th district. The company won HUF 1.2 billion in EU money for the development of its Miskolc project and the purchase of innovative technology used in the manufacture of timberwood. The company’s revenue last year were less than 2008’s as well as 2011’s and it currently employs one quarter of the 17 people it employed in 2009. Incidentally in a short interview given to Bors in 2010 in which he among other things said that he went from being a heating plumber to being a billionaire “We have to achieve that in Hungary people obey the laws. One of the roots of our problems is that we are always looking for loopholes by breaking the rules that provide for order.”
We can also find offshore connections: the part owner of Európa-Center-Miskolc is S-Bird Kft., one of the owners of Grandtown Holdings Limited of Gibraltar. In response to our question who the real owner was we were told through Európa-Center- Miskolc that a number of individuals are registered as owners. Perhaps that will also suffice for the National Development Agency (NFÜ). The Deputy Secretary for Development Policies told the Magyar Nemzet: the government only fights against lack of transparency, and not against the fact that a company’s owners registered the company in a country where there is no real activity just because of the favorable tax laws. Another question is how NFÜ experts inspect the registration documents of companies registered in Gibraltar or even the Seychelle Islands.
Among the 100 largest companies to win grants (discounting the state project companies) are seven that had no revenue last year. Of these five were registered on the same day at the same address with the same group of owners–Regio, Micronet, Ponet, Pannon és a Pátria Optikai Hálózatfejlesztő Kft.—which together received more than half the support for the optical network development. We were informed that the owners of the Cyprus part owner were Hungarian businessman Róbert Bauer on one hand and the Cyprus National Telecommunications and Telegraph Company.
Also practically without revenue was Magyar Fogászati Turizmus Fejlesztő-, Kutató, és Tudástranszfer Központ Szolgáltató Kft. (Hungarian Dentistry Tourism Developer, Researcher, and Knowledge Transference Service Ltd.) led by Viktor Orbán’s dentist which received a HUF 1.9 billion EU grant. Also without any revenues last year was the HUF 1.9 billion grant winning EcoSolifer Modulgyártó Fotovillamos Technológiák Kft. (EcoSolifer Module Manufacturer Photoelectric Technology Kft.) that did not respond to our questions regarding the support. According to the website the mailing address for the Swiss companies is an address in Budapest and „the group of companies is engaged in everything relating to the production of energy using solar technology.”
Our paper’s resources are limited, but even with an incidental search it is easy to find EU grant supported projects where the return is questionable, the background ownership is secretive, and where foreign, offshore companies pop up. If the government is really serious about taking steps against doubtful support we recommend earlier editions of our magazine.
Referenced in this article:
“Dzsungelpénz”, Figyelő, 3-9 October 2013