Is CBA part of Hungary’s “political mafia”?

December 11, 2013

CBA

Laszlo Baldauf, the Godfather of Hungary’s “political mafia”?

Why does the European Union continue to give Hungary hundreds of millions of euros every year with which to “improve competitiveness” and “level the playing field” when the Hungarian government seems intent on using  every means at its disposal to advance the interests of certain Hungarian companies at the expense of other domestic and foreign competitors?

Never far from the headlines, Hungarian supermarket chain CBA has been in the news a lot lately.  Are its owners part of the “political mafia” running Hungary’s politics from behind as alleged by former Fidesz member of parliament Jozsef Angyan?

Established in 1992 when ten businessmen pooled their resources to purchase a network of seventeen government-owned grocery stores, CBA has since grown to become Hungary’s largest supermarket chain.  With last year’s acquisition of 48 Match and Profi grocery stores, CBA presently operates some 3225 grocery stores in Hungary, including 1500 franchises.

CBA’s turnover in 2012 was HUF 578.5 billion (USD 2.8 billion) representing an increase of 2.4 per cent over the previous year.

Among the company’s many owners are a number of long time Fidesz supporters, including CEO Laszlo Baldauf and Zoltan and Vilmos Lazar.

In October of this year Baldauf and Vilmos Lazar sent a letter to all CBA employees encouraging them to to attend Prime Minister Viktor Orban’s speech in Heroes Square as part of official ceremonies commemorating the Hungarian revolution of 1956, and to join the so-called “Peace March” (Bekement) led by controversial Fidesz co-founder and publicist Zsolt Bayer who has been condemned for penning anti-Gypsy and antisemitic editorials for right-wing daily Magyar Hirlap.

Baldauf and Lazar’s letter to CBA employees has been widely criticized as a throw-back to the Communist era when workers and students alike were compelled by their employers and school directors to attend 1 May (International Workers’ Day) celebrations.

It seems CBA’s support of Fidesz is not limited to swelling the ranks of those attending pro-government political rallies.

According to index.hu in April of this year a number of CBA owners, directors, and their relatives were awarded multiple National Tobacco Store concessions in Budapest, many of which came to share premises with existing CBA supermarkets.  As none of the CBA supermarkets are affected by a recent government decree prohibiting National Tobacco Stores from operating at petrol stations or supermarkets over a certain size, CBA retailers stands to gain immeasurably by the fact that Tesco and Auchan customers can no longer buy cigarettes where they purchase fuel or food.

Banning the sale of tobacco products on the premises of CBA’s main competitors is an anti-competitive move on the government’s part intended to benefit CB at the expense of other domestic and foreign competitors.

Why does the European Union continue to give Hungary hundreds of millions of euros every year with which to “improve competitiveness” and “level the playing field” when the Hungarian government seems intent on using  every means at its disposal to advance the interest of certain Hungarian companies at the expense of other domestic and foreign competitors?

It is not merely CBA’s cosy relationship with the prime minister and cabinet members that is raising eyebrows, but its relationship with the National Tax and Duty Authority (NAV) as well.  Delikat Kft., CBA’s franchisee for Gyor-Moson-Sopron county which operates 19 CBA stores, is the majority owner of Porteka ABC Kft., a company being investigated for systematic tax fraud on a massive scale.  The company reportedly unlawfully reclaimed some HUF 3.5 billion (USD 160 million) worth of VAT after sugar exported on paper but in fact sold domestically.

Despite two people being taken into preventative custody, Porteka ABC’s majority owner, Delikat Kft., successfully challenged attempts to lock down Delikat’s assets despite close legal and personal ties between the two companies.

Companies connected to CBA may be among those allegedly defrauding Hungarian taxpayers of some HUF 1.7 trillion (USD 8 billion) a year according to former tax inspector turn whistleblower Andras Horvath.

What is clear is that NAV and government spokespersons are going to great lengths to muzzle Mr. Horvath even as they try to discredit him by impugning his reputation.  On Tuesday Fidesz members of the Parliamentary Committee on National Security prevented the committee from hearing testimony from Horvath and other government officials.  Fidesz communications director Mate Kocsis justified Fidesz’ position on the grounds that such committees should not investigate matters that are the subject of criminal proceedings (even though there is ample precedent for this as opposition members were quick to point out).

Kocsis’ comments echoed those of fellow Fidesz politician, Gegely Gulyas, who managed to keep a straight face while telling ATV’s Olga Kalman last Friday there was no point to establishing a parliamentary fact finding committee because “such committees rarely turn up anything useful”.   For those who are interested in what a Fidesz automaton looks like, watch this interview.  Parental guidance is recommended, however, lest Hungarian children get the impression all Fidesz politicians are shameless hypocrites.

Opposition politicians accuse Fidesz of trying to silence Andras Horvath for fear that prominent Fidesz supporters might be implicated or even arrested in the months leading up to national parliamentary and municipal elections in 2014.

Referenced in this article:

A négymilliárdos abdai áfacsalás története, origo.hu, 12 December 2013

A CBA “nagycsaládot” is hívták a békemenetre, nepszava.hu, 12 November 2013

A CBA-sok nagy nyertesei a nemzeti dohánybulinak, index.hu, 23 April 2013

Gulyás Gergely, Egyenes Beszed, 6 December 2013