A new year, a new example of systemic corruption in Hungary?

One of the defining features of Hungary’s Orbán regime is the systemic and wanton corruption. The new year brings yet another example of what appears to be brazen turpitude when it comes to how state funds are used on a massive scale to reward those close and loyal to the ruling Fidesz party.

István Garancsi, a close friend of Prime Minister Viktor Orbán and the owner of the Videoton soccer team, recently purchased the company that owns the Kopaszi dam, a narrow peninsula located in the south-end of Buda, which was once a neglected area, but today is a popular public park, with restaurants and entertainment venues. As is the usual routine in these types of transactions, a firm closely aligned with Mr. Garancsi, called Market Asset Management Kft, as well as another firm called River Dunainvest Kft, are what ended up acquiring the incorporation that owns the Kopaszi dam. The state-owned Eximbank provided a 16.5 billion forint loan for the business transaction.

István Garancsi (right) with Prime Minister Viktor Orbán at a Videoton soccer competition in Székesfehérvár.

István Garancsi (right) with Prime Minister Viktor Orbán at a Videoton soccer competition in Székesfehérvár.

What is especially odd, is the fact that Eximbank’s mandate is first and foremost to support Hungarian companies in their export ventures, and not to provide loans for real estate purchases in Hungary. But this is not the first time that Eximbank provides major financing to individuals who are within the prime minister’s inner circle and who are requesting a loan for ventures that have absolutely nothing to do with export activities. For instance, Hungarian pro-government filmmaker and businessman Andy Vajna obtained 6.7 billion forints to purchase TV2, one of Hungary’s main privately-owned television channels, focused on light entertainment and widely seen as the main rival to the German-owned RTL Klub.

Mr. Vajna’s purchase of TV2, however, has turned into a dark parody of just how inbred the Orbán regime can be. There has been an on-going battle between two Fidesz oligarchs – Mr. Vajna and media mogul Lajos Simicska, who was Mr. Orbán’s roommate in college and close friend for decades, but had a nasty and public falling out in 2015 – over who has actually purchased TV2. Mr. Simicska’s circle claims to own TV2, as a company affiliated with him, called Megapolis Media Zrt., apparently had an agreement years ago, in which it would have the right to purchase the channel, should it ever go up for sale, at a previously agreed-upon price. As such, Megapolis Media claims to have de facto purchased TV2’s parent company, TV2 Media Group Holdings Kft, back in October 2015. Meanwhile on Sunday, Mr. Vajna declared yet again that his firm is the rightful owner of the television station and he has already confirmed that Dirk Gerkens will be TV2’s director under the new ownership. Mr. Gerkens was previously the executive director at the rival RTL Klub station.

The Orbán government’s preferred oligarch is effectively in a legal battle with the oligarch who fell out of favour with the regime, over the country’s second most popular commercial television station. And taxpayer funds are involved.

Millions of euros in Hungarian public funds are being used to finance shady, convoluted transactions among those closest to the regime and in this case, transactions which will end up bogged down in court for months, and possibly years.

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