Viktor Orbán’s son-in-law awarded billions in state and local contracts

December 22, 2014

Rahel OrbanHungarian investigative journalism website Átlátszó.hu has published an extraordinary exposé about Hungarian Prime Minister Viktor Orbán’s son-in-law, István Tiborcz (center right).  The following is our translation of that article.  It is followed by the complete text of Ráhel Orbán’s (center left) Facebook post of 18 December 2014, as well as open letters addressed to her on behalf of publicist Sándor Jászberényi and Dialogue for Hungary (PM) co-chair and MP Timea Szabo.

Even as the prime minister announces zero tolerance of corruption, family members win billions through public tenders with unique conditions:  son-in-law István Tiborcz and his old business partner play games with calls for tenders involving European Union grants.

In the middle of the argument over the purchase of luxury items (by high-ranking Fidesz public officials and certain advisers-ed.), a member of the Orbán family has finally spoken out.  Ráhel Orbán (the prime minister’s eldest daughter-ed.) posted the following on her Facebook page:  “With my husband we have an independent family, we stand on our own feet, we get by with our own resources, and we live our own life.”  Presumably the message was intended as a response to questions arising over the HUF 15 million (USD 58,500) annual cost of attending an MBA program at the École Hoteliere in Lausanne, Switzerland: “… opposition parties and politicians have organized attacks on my father, Hungary’s prime minister, through me.”

If we understand correctly, Ráhel Orbán’s testimony, if somewhat vague, implies that she and her husband managed to save up the CHF 60,000 tuition.

So the question is where did they get the money to cover her tuition?  Ráhel Orbán’s announcement contains a statement which suggests that she also contributed to the cost of her MBA course.  (“I have a degree in economics, and for more than three years have worked in the hospitality and tourist industry”).   According to the Central Statistical Agency (KSH) last year those working in the industry earned HUF 145,000 (USD 600) a month on average.  Unless her salary as someone starting out in that industry was a multiple of the average, she could not have contributed to the cost of her Swiss tuition.

If the Prime Minister did not finance his daughter’s tuition, and Ráhel could not have realistically had enough income, that leaves the other member of her independent family, István Tiborcz, as the one providing the funds.   And in actuality it appears on the basis of information available to the public that the young husband could fund the cost of many Swiss MBA courses from his income.

Public money and public lighting

In an article last year we presented the dramatic increase in revenues of the company owned by István Tiborcz, E-Os Innovativ Zrt. (subsequently Elios Zrt.).  In 2009 the company posted after-tax profits of HUF 2 million (USD 10,000) after revenues of HUF 8.4 million (USD 42,000).    In 2010 the energy company of Közgép Zrt. (owned by Fidesz oligarch Lájos Simicskaed.) acquired a controlling interest in the company.  In that year revenues jumped to HUF 686 million (USD 3.2 million).  In 2011 they exceeded HUF 3 billion (USD 13.6 million), or 360 times that of two years earlier.  Such growth has only been displayed since the 1989 system change  by perhaps one other company than E-Os Innovativ Zrt.,–that of Mészáros és Mészáros Kft. (owned by Felcsút mayor Lőrinc Mészáros).

This visible prosperity, as in the case of its parent company Közgép, was realized through the public procurement market:  most of E-Os Innovativ Zrt.’s income has originated from various EU-financed energy projects.

Last year we also explained what tricks the company used to become a leader in the market for renewable energy without experience, capital or adequate human resources.  What is certain is that the Public Procurement Decision Committee (KD) played an active role in the company’s success, whose chairman until spring of this year, Zoltán Kövesdi, was still a member of the Közgép supervisory committee in Autumn 2011.

However, E-Os Innovativ Zrt. appears to have lost momentum in 2013:  revenue fell to 40 percent that of the previous year and the after-tax profits were barely HUF 20 million (USD 90,000).  According to the company information Közgép’s energy company was no longer among the owners of the company which, in the meantime, had changed its name to Elios Innovativ Zrt., whose shares were now equally owned by Green Univers Kft. and Green Investments & Solutions Kft.

The majority shareholder of the latter was Tiborcz’s former partner in IBC Projekt Kft. (subsequently renamed Hamar & Tiborcz Kft.),  Endre Hamar from Pécs.  On 30 April 2014, just three weeks after the general election, Tiborcz bought 50 percent of Green Investments from Hamar, and in this way once again became the 50 percent owner in Elios Zrt.  And with that the company started to take off again.

Latest successes

From the latest public procurement information it appears that with the acquisition of this ownership interest the good old times have returned:  In 2014 Elios Innovativ Zrt. won HUF 2.9 billion (USD 12.6 million) of public tenders, of which HUF 1.9 billion (USD 8.2 million) worth was concluded after the return of István Tiborcz in April.  The table summarizes the data of the public tenders.  (Click here to see the table).

It is clear from the data that the company has one tender to thank for HUF 2.1 billion (USD 9.1 million) worth of contracts.  The National Development Agency issued an energy conservation tender (KEOP 5.5.0./A/12-2013) at the end of 2012 in which, among others, local governments could apply for funds with which to modernize public lighting.

Each of the winners got close to HUF 1 billion (USD 4.5 million) for the project.  In the customary manner of the day they entrusted a company with the technical preparations of the project and the preparation of the tender within the framework of the program.  Such contracts are typically under HUF 10 million (USD 45,000) and are rarely at the center of attention, even though from the point of view of public procurement corruption, potential collusion between the company which writes the tender and the company that wins the tender is among the riskiest elements.

Elios Innovativ Zrt. was also able to win in a second KEOP program: a 100 percent grant-funded program involving the creation of “photovoltaic systems”.  The contract was awarded to Elios Zrt. without an open tender because the value of the project was HUF 17,000 less than the HUF 150 million limit above which an open tender would have been required by law.

A total of  HUF 2.3 billion (USD 10 million) was awarded from the above two programs to companies in which the prime minister’s son-in-law is interested.   It also won a project to modernize public lighting in Bicske.  There István Tiborcz’s sister, Eszter Tiborcz, won the right to cultivate state ground in a scandalous public tender in which she beat out her competitors on four occasions solely on the basis of points awarded for “subjective considerations”.   Elios Innovativ Zrt. signed a HUF 86 million (USD 375,000) contract with the local government of Bicske to modernize public lighting in November.

Orbán’s son-in-law’s interests are no stranger to the stadium business either, winning a HUF 92 million (USD 400,000) contract from the Dunaújváros local government to realize stadium lighting suitable for color TV broadcast, as well as its modernization.

A store of friendly competitions

The Szekszard local government contracted with Endre Hamar’s company, Sistrade Kft., to prepare the technical documents necessary for the KEOP public lighting modernization project, that is, the precise technical content of the tender was determined by Hamar’s company.  On the basis of the tender prepared by Sistrade, Elios won with an offer of HUF 548 million (USD 2.4 million)

Here they also got something from after the project for Sistrade:  For HUF 487,000 (USD 2,100) a month they are going to maintain the modernized public lighting.

Elios contracted with the city of Mezőhegyes for HUF 135 million (USD 430,000) in August.  Here the condition of public lighting was surveyed and the tender documents prepared by Sistrade.  The local government of Kalocsa contracted with Tiborcz’s company in November for HUF 409 million (USD 1.8 million) within the framework of the KEOP 5.5.0./A/12-2013 program.

The absurdity of the matter was completely obvious in the case of the Héviz project.  Hamar’s Sistrade participated in the preparation of the HUF 130 million (USD 565,000) public tender.  When winning the closed public tender, Hamar was still formally an owner in Elios Zrt, via Green Investments Kft.  In other words, Hamar’s one company won a HUF 130 million contract on the basis of a closed public tender prepared earlier by his other company.  (We did not find the Héviz contract, but Héviz appears among Sistrade Kft.’s references under “Public Lighting survey and preparing energy saving modernization proposals”).

Altogether then in 2014 István Tiborcz’s Elios Innovativ Zrt won at least HUF 1 billion (USD 4.3 million) worth of public tenders prepared by Endre Hamar’s Sistrade Kft., including the tender documentation.  Hamar was the 50 percent owner of Elios through Green Investments Kft. until the end of April, when Tiborcz bought himself into Elios through the acquisition of Green Investments Kft.

We are happy to believe that Ráhel Orbán’s tuition was not paid by the prime minister, especially since his salary would not be enough to cover this.  We also believe that the related expenses are paid by her “independent family standing on its own feet”, that is by her husband.  By itself, it would not necessarily be a problem that out of nothing the twenty-something István Tiborcz’s company received billions in revenues exclusively from state  and local government orders for years, although on the basis of today’s Hungarian public connections we have some doubts regarding the prime minister’s son-in-law.

Beyond ethical concerns, questions arise over the fact that a third of these projects were awarded on the basis of public tenders prepared by another company owned by the previous owner of the winning company.   (Minimally, the insider information the winner was able to obtain through the unique interweaving of individuals conferred serious advantage on the winner over those companies that did not possess this information).  Furthermore, Hamar and Tiborcz either took turns being the owners of Elios and its predecessor, or were joint owners.

So there can be no doubt that the profit from which Ráhel Orbán studies in Switzerland is the profit arising from transactions involving public money.   From the above, it appears that Viktor Orbán’s son-in-law was able to set aside profits from tenders which his business partner’s company prepared.

 

Ráhel Orbán’s Facebook post of 18 December 2014 (6:40 pm)

For those who are interested.

I read that opposition parties and politicians have organized attacks on my father, Hungary’s prime minister, through me.  I know that the facts do not influence such attacks.  Still, I inform those for whom the truth matters of the following:

I am 25 years old.

With my husband we have an independent family, we stand on our own feet, and we get by using our own resources.

I have a degree in economics and worked in the hotel industry and tourism for more than three years.  I speak four foreign languages.  Presently I am studying, and in the future I will study next to my work and my family.

I believe that a family-centric woman can also be successful in her field, and also that there is a point to lifelong learning.  I don’t involve myself in party politics, but I believe in my father’s work and that Hungary stands at the gate of great possibilities.  My father taught at home never to ask what the country can do for me, but what I can do for my country.  Dastardly attacks will not topple my convictions.

P.S. I wrote an exam this morning in tourism economy, and only minutes ago finished one in financial accounting.  I think both went well.  For those who are happy, I thank you.

I wish everyone peaceful, happy Christmas preparations.

 

Sándor Jászberényi’s open letter to Ráhel Orbán of 19 December 2014:

Dear Madam:

Many have attacked you in the online and the print media for yesterday’s Facebook post.  Many think brazen your claim that your father, Hungary’s prime minister, is being attacked through you and called a corrupt thief.  They think an effrontery your claim that you are where you are because both you and your husband work and you speak languages.

By contrast, others believe that you seriously believe what you wrote on Facebook.  I believe in your simplicity, integrity, and youth.

For this reason, I would like to ask you to ask yourself the following question:  how can you finance your Swiss tuition which costs HUF 15 million (USD 60,000) per semester?  Is it really from your own strength and abilities that the two of you make enough to be able to pay this?  Ask yourself this question in front of the mirror.  Open your eyes.

I am 34 years old.  I speak two languages apart from my mother tongue.  I have worked for ten years, and I cannot buy a flat for myself without encumbering myself with debt for decades, assuming I get a loan at all.

Many tens of thousands of people your age have moved abroad.  They left because people’s lives have more opportunities there than at home.

Open your eyes, Ráhel!  Look after your schoolmates, college classmates, high school classmates, and find someone who can pay HUF 15 million per semester.  You won’t find anyone.   To the contrary.

You will see that the people live in destitution. That their salaries are not enough and that they are getting into debt 5000 Ft at a time even though they work.  Assuming they can.  Yes, all of those who do not belong to your father’s court within your wider circle.

Open your eyes and see.  You are not an arrogant liar.

Open your eyes and ask yourself, who am I that I should be able to attend a private school in Switzerland costing HUF 15 million per semester, apart from the fact that the Hungarian prime minister is my father.

If you cannot answer, ask your father.

 

Timea Szabo’s Facebook message to Ráhel Orbán

Dear Ráhel,

This is the second letter I am writing you since yesterday.  I know that you are very busy, and I do not expect an answer.

First, I would like to say that I regret the personal, insulting comments which your Facebook post received.  You do not deserve that.  However, the outrage on the part of Hungarian society over the content of your message is, unfortunately, very justified.  Particularly justified since this morning, when atlatszo.hu discovered whose feet you actually stand on, and how it is that you can afford to attend one of the most expensive tourism schools in one of the world’s most expensive cities.

It’s true you do not stand on your daddy’s legs.  You directly stand on those of your husband, István Tiborcz, whose company had revenues of HUF 8.4 million in 2009, but over HUF 3 billion in 2011 (!!).  In other words your husband’s company’s revenues increased 360 times over a period of two years.  Wow!  They say tens of thousands of small and medium sized Hungarian companies (more than 30,000 entrepreneurs) have had to close their businesses over the past two years due to burdens placed on them by the government.  I’m sure you know that this means more than 100,000 workplaces.

Ráhel, the problem isn’t that you stand on your husband’s feet, but that István’s company went from nothing to enjoying billions in revenues for years exclusively from state and local government orders, which, moreover, were obtained in a highly questionable manner (the shocking details are in the Átlátszó article).  Well, the problem with this is that if you stand on state money, then you are standing on our feet.  Not on your own, and not even those of your husband’s, but the taxpayers’.  For this reason I ask you and Istvan to get off our feet as soon as possible!  You know, we have had enough of more and more people—you, Árpád Habony, János Lázár, Antal Rogán, and the others—standing on our feet.  You are quite heavy by now.

Sincerely yours,

Timi Szabo

References:

http://atlatszo.hu/2014/12/20/mibol-telik-orban-rahelnek-15-millio-forintos-tandijra-meg-fogsz-dobbenni/

http://www.hir24.hu/poszt-itt-jaszberenyi-sandor/2014/12/19/jaszberenyi-nyilt-level-orban-rahelnek/

https://www.facebook.com/szabotimeapm