Local governments award Elios Zrt. HUF 1.1 billion worth of contracts in Hungary

March 16, 2015


Elios Innovativ Zrt., the company 50 percent owned by Hungarian Prime Minister Viktor Orbán’s son-in-law Istvan Tiborcz (pictured above drinking what appears to be homemade pálinka with his father-in-law), won three public procurement tenders totaling nearly HUF 1.1 billion (USD 3.8 million) last week.

Elios was pronounced the winner of the “Mórahalom public lighting energy saving modification” public tender to modernize the southern Hungarian city’s public lighting for HUF 64.8 million (USD 225,000).  Instead of holding an open tender, the local government invited several companies to submit bids because the total value of the project did not exceed HUF 150 million (USD 526,300).  Over that amount local governments are required to hold open tenders.  Tiborcz’s company was reportedly one of two companies invited by the southern Hungarian city to bid on the project.

Two days later the results of two other tenders were made public.  Elios won a HUF 149.9 million (USD 525,866) contract to install a solar system for the Fejér County Saint George University Teaching Hospital (Fejér Megyei Szent György Egyetemi Oktató Kórház).  The winning bid was just HUF 125,000 (USD 434) under the limit above which an open public tender would have been required by law.   Furthermore, the institution reportedly concluded a contract with Elios in September 2014 even though the results of the public procurement process were only announced last week.

The same day Elios won a contract to modernize the public lighting in the central Hungarian city of Szolnok in the amount of HUF 877 million (USD 3.05 million).  Elios was reportedly the only company to submit a proposal despite the central Hungarian city advertising an open tender.  The work is to take place in two phases.

Altogether, Tiborcz’s company won nearly HUF 1.1 billion in public contracts over the course of a week.

Earlier Hungarian investigative journalism website Átlátszó.hu wrote that Tiborcz’s company won nearly HUF 3 billion worth of public contracts in 2014.   Átlátszó was seeking an explanation as to how the Prime Minister’s daughter, Ráhel Orbán, could afford to attend a private business school in Switzerland given the size of her father’s official salary.  At HUF 15 million (USD 52,000) per semester, the business school is one of the world’s most expensive.

Under the name E-os Innovatív Zrt. Tiborcz’s company had total revenues in 2009 of just HUF 8.4 million and after-tax profits of HUF 2 million.   In 2010 significant shares in the company were acquired by the energy affiliate of Közgép Zrt., the building company owned by Fidesz oligarch Lajos Simicska.  In that year the company’s revenues increased to HUF 686 million (USD 2.4 million).  In 2011 revenues increased to HUF 3 billion (USD 10.4 million), some 360 times that of its revenues only two years earlier.   According to Átlátszó, such dynamic growth has only been produced by one other Hungarian company:  Mészáros és Mészáros Kft., the construction company owned by the mayor of Viktor Orbán’s home town of Felcsút.  After its revenues fell some 40 percent in 2013, the son-in-law’s company won a slew of public contracts in 2014 for a total of HUF 3 billion.

In response to the Átlátszó article, liberal party Politics Can Be Different (LMP) reported Elios to authorities on suspicion of abuse of power, fraud and malfeasance in relationship to public tenders. The National Investigation Office reportedly launched four investigations into public tenders totalling HUF 1.2 billion.