Straw men play essential role in Hungary’s mafia state under Viktor Orbán and Fidesz

May 20, 2017

Lőrinc Mészáros, Hungary’s fifth-richest man (pictured left), with his “master”, Hungarian Prime Minister Viktor Orbán

“The real goal is not to wind up corruption but to monopolize the opportunity for corruption.”

Translation of Attuila Buják’s article “The country plundered by public procurement: the age of the strawmen” appearing in the May 18th, 2017 edition of Hungarian print weekly 168 óra (pp. 6-9).

The straw man’s most valuable treasure is the ability to remain silent.

Where are the corruption methods of old, when economic actors vied with one another in trying to bribe politicians and public officials?  Today corruption has become well thought out, organized, systemic and planned and led by the state in the service of centrally redistributing wealth, the transactions legalized with the help of law makers.  Expert literature uses the expression crony capitalism to describe the Hungarian model dominated by Fidesz.  Its characteristic form is the straw man controlled by politicians initiating the corruption. Corruption researcher Dávid Jancsics believes straw men play a key role since they are the ones who win public tenders, take ownership, and operate it for a while. The straw man serves as a broker between the actors and their future assets, or a kind of corruption broker who assumes the risk in place of his master.  Anyone can be a straw man: homeless, security guards, old friends, former schoolmates, or grandmothers. An enormous amount of property is accumulating in the hands of the straw men, but Hungarian society appears to be unmoved by their sudden enrichment. Experts believe citizens think it is only possible to accumulate property dishonestly and are not interested in the size of the corruption.  For the most part their attitude is that everyone who comes to power steals communal assets.

When the list of the 100 richest Hungarians first appeared in the early 1990s, one of the authors quietly said “there will be more work to do on this.”  Within five years hardly any remained in the top twenty. He was right. In looking over the outdated lists and examining the rise and disappearance of certain individuals, we see what a different world we live in.  We have not seen the colors of Hungary’s fifth-richest person for very long. His wealth has increased 15-fold in under four years, from HUF 7.7 billion to 120 billion forints.  So far. The political gourmands did not known Lajos Simicska’s name in 1990 either. At that time Mr. Mészáros was occupied with gas plumbing work as the villages in his vicinity were connected to gas within the framework of the state gas program in the 1990s.

That was a long time ago.  Different winds are blowing and the age of the straw man is upon us. For six years the domestic opposition has been trying to define the nature of the new system (and the corruption), formulating the popular “mafia state concept”.  (Hungarian sociologist and former liberal politician-tran.) Bálint Magyar believes corruption has decidedly changed in the new structure.  It is well thought out, organized, and systemic.  Every day free trade corruption is slowly being pushed aside. The “new wave” is the state directed and planned central redistribution of wealth. The author calls traditional corruption free competitive corruption (low level), in which economic actors compete with one another to influence politics and public administration.  Free trade corruption also exists in the National System of Cooperation (NER), but is decidedly different.  The transactions are initiated, worked out, and organized by politicians and carried out by legislators.  (See for example the law on casinos and games of chance).  The game has many players.  The political entrepreneurs (poligarchs) are unaffected in a business sense, the business entrepreneurs (oligarchs) hide their political sympathies.  The politicians have power, but their economic transactions are not visible. The oligarchs’ wealth is visible, but their political power is hidden.  On the glorious day of the great falling out, it was not by chance that Simicska stated “I lifted (Orbán) up and I am going to bring him down.”

The reason it is necessary for these processes to occur systematically is because it is necessary to operate a huge apparatus for this — the tax authority, lawyers, legal experts, parliamentary factions — and to organize the flow of information, and plan budgets. After all, we are not talking about traditional corruption involving the occasional deal between two parties, but previously determined distribution (overpricing, custom-tailored tenders).  Upon the conclusion of the one-time transaction, the parties pay and move on.  However, after the NER transaction the team remains.  They take their revenge and hit back. They are served and look for new prey. The process is unstoppable, and the game involves many players. Next to the oligarchs and the poligarchs appear the legal brokers who create the appearance of legality.  A deciding condition is obedience and discipline.  When Zoltán Spéder was brought down for “group dynamic reasons,” the center made use of the state power organs and the victim backed away, with hands raised and voted for his own despoilment.

Because poligarchs conceal themselves, the situation results in the building of the straw man system.  The straw man is a member of the political family, but his ability to make decisions is limited.  One colleague at an investigative journalism portal said that the straw man’s most valuable treasured is silence.  We have never seen a straw man who betrayed his client.  And since the majority of affairs are complicated, sometimes the straw man and the oligarch merge together. At the very beginning, Simicska was both a straw man and a starter oligarch, but as the head of the tax authority he tested himself.  It is irrelevant whether the straw man receives an ownership interest or a salary, the talented straw men will eventually become an oligarch.

After 2014, by which time the system had outgrown itself, the Simicska-Orbán connection become increasingly awkward.  It was for this reason that Orbán did away with the dual function (straw man, oligarch).  Since then he only utilizes pure straw men and oligarchs.  Of course, the system breaks down for him.  If the leader’s personal passion is soccer, then the oligarch’s task is to adopt a soccer team.  There can be no doubt that the TAO system was a breakthrough idea on the part of (Minister for National Development) Miklós Seszták. Meszáros’s central role is anyway determined by his ability to acquire soccer teams.  Apart from Felcsút, he has four soccer academies throughout the Carpathian Basin. The lesson serves as an excuse for everybody.  Seszták: Kisvárda. Tállai: Mezőkövesd.  Kósa: Loki, Deutsch: MTK, Kubatov: Ferencváros.  Soccer is king, even in its most infantile form like the Dunakeszi soccer team founded by the Minister for Foreign Trade.  Indoor soccer was a springboard for (Minister) Szíjjártó’s political career.

Orbán discovered the twin stars of the present — Zsolt Hernádi (Mol) and István Garancsi (Market) — during his first term in office, and indirectly ran a real estate business (CD Hungary). Hernadi became a strategic leader and Garancsi Orbán’s (Székes)fehervár soccer resident.  An important element of the system is that as many participants as possible be corrupted, from tobacconists to ground tenants.

The system no longer makes attempts to disguise its gestures.  The prime minister’s savings on paper are 742,000 Ft ($2,600). He has no car, no valuable property, and no economic interests.  He is dutifully repaying a loan he received in 2002.  He has even become somewhat poorer,

The opposition can say what it likes. The likes of Péter Juhász can shake their noisemakers, says a colleague specializing in enrichment.  In vain do they chant that Mészáros’s wealth should be added to Orbán’s in order to arrive at the real result. In this system they will never be able to prove anything.

“Not in this system,” acknowledges Juhász.

Around the year 2000, stories still came out in the press.  They wrote about Dezső Kékessy and Viktor Orbán’s joint business, and about the parent support protocol smuggled by an injured secretary.  About the company shareholders meeting (taggyűlés) about which the court had to decide whether it was a company meeting or an “assembly of members” (tagi gyűlés) or a “meeting of all members” (tagok összegyűlése).  Even at that time Orbán won. After 2004 the flow of information ended.  The NER definitely closed his lines.

Bálint Magyar believes the organization of the straw man system also explains that those exercising state power know what they are doing is nowhere close to being legal.  But because they have to play on the wings of a rule-of-law state, they must simulate operating lawfully. The chief prosecutor plays a key role in this, and anti-corruption campaigns serve the cause of liquidating rivals. The real goal is not to wind up corruption, but to monopolize the opportunity for corruption.

The entry of the “criminal state” is in a certain sense a brake on corruption.  Because if Garancsi enters a government office in order to win his umpteenth 100 million forint contract, for this he needn’t bribe anyone.  The officials remain clean, the applicants win lawfully.  The reward of the government office head is to retain his or her position.  The mayor can remain mayor, if he or she takes into consideration certain side circumstances.  For example, if the head of government’s son-in-law’s company peddles LED lamps, that he win in a “natural manner.”

There are many types of straw men as well, and the straw man have their own straw men.  The first circle is the family. This is accepted by the public. For example, since 300 hectares is the maximum amount of ground any one individual or nuclear family may possess, with the help of a grandmother, a close-knit family can goose this up to 2000 hectares. A more modest version is when a homeless person gives his signature and his face for a bottle of wine.  When Quaestor failed and panic broke out in the background, Bela Orgován agreed to serve as managing director for 500,000 forints. Péter Juhász talks about how, when they were investigating (former) Budapest’s 5th district (mayor) Rogán’s affairs, it turned out the managing director of the largest company handling EU funds was a porter.  The Mészáros type of big political entrepreneur straw man belongs to a rare “premium category.”  It should be added that Mészáros is not fond of the term “straw man”, and initiated a trial lawsuit against Együtt.  The court twice rejected his petition.

The straw man is spread thin. Mészáros demonstrates self-awareness by acknowledging that considering his enrichment exceeds that of the fathers of Facdebook, he can rightfully say “Maybe I am more clever than Zuckerberg.” Sometimes he is taken by surprise when members of the press learn that he bought a couple of dozen camping sites in the vicinity of Lake Balaton. Not even Mészáros can know everything. However, somebody is using his name.

The basis for the straw man’s company and the oligarch’s company as well is easy to recognize.  It is suspicious that state orders make up a much larger proportion (of total orders-tran.) than the national average for the sector.  If the profits taken out of the company are unrealistic.  Normal companies are obliged to expand, reinvest something. The straw man company is not concerned with this.  It is suspicious if the dividends paid out quickly wander overseas.  Over the course of the complicated distribution here and there, something has to be be given back sometimes in order to turn profit into political capital.  But those amount to fillers.

And as for whether there is any kind of vision?

Some kind of value system and ideology exists, even in a swamp of corruption, claims Lajos Bokros. Even Fidesz has a vision for transforming society.  It is not possible to steal so much money from the public till “without a soul.”  This is obviously a kind of primitive tribal nationalism. The problem is that the stolen money is not used purposefully. The winners of the loyalty contest have to get by in a market situation. But they have no such goal. The state is the opposite of the market. It is an indispensable condition.  The bad state, like the Hungarian one, creates uncompetitive oligarchs and a monopolistic situation.

As for what will be the fate of the corrupt money, here opinion is divided.

It will be difficult to get it back, says Péter Juhász.   If the hullabaloo gets big, then capital flight abroad will begin.  But for the time being they are not thinking of defeat.

Mészáros doesn’t concern himself with such things.  He is a successful sport director.  He drives an SUV.  He has a yacht and a stadium.  It’s an enthralling sight to see throngs of journalists marching through Felcsút.  He carries pink dossiers under his arms. His steps have weight.