Corruption risks in Hungarian procurement reached their highest level since 2005 during the COVID-19 crisis, according to a new report published by the Corruption Research Centre Budapest (CRCB). The big winner is Prime Minister Orbán’s straw man.
The report reveals that a staggering 41 percent of public contracts were granted to pro-government companies without competition – reports the Budapest-based non-partisan think tank. The biggest winners: companies linked to Lőrinc Mészáros, a close friend of Mr. Orbán’s, who won 74 public contracts by the end of April – receiving 27 percent of all public procurement.
Mr. Mészáros is not only a friend of Mr. Orbán’s but he lives in the same village, Felcsút, a small town of 1,800 inhabitants that also happens to be the Prime Minister’s home town. In the past decade, he went from an unknown and poor gas pipe fitter to the richest man in Hungary with an estimated wealth of nearly 1 billion USD. He claims his mysterious enrichment has nothing to do with the prime minister’s friendship – but according to public polls, even Mr. Orbán’s supporters think Mr. Mészáros is the Prime Minister’s straw man.
In its report CRCB analyzed more than 248,000 contracts in the Hungarian procurement process from January 2005 to the end of April 2020. They provide a list of all crony companies that are owned by the same group of people – personal friends and relatives of PM Orbán, including his son in law, István Tiborc, and Mr. Mészáros himself. Before 2020, 51 percent of all the public contracts these crony companies won were without competition.
CRCB points out that the risk of corruption in the contracts won by these crony companies was significantly reduced in periods when these contracts could come under greater public scrutiny. For example, there were hardly any contracts these companies won without competition in the months preceding the 2013 and the 2018 parliamentary elections. Also interesting: the share of EU tenders won by the crony companies without competition were reduced after the European Anti-Fraud Office (OLAF) started its investigation in 2016. In contrast, the share of public procurements won by the crony companies within the total public procurement value has significantly increased in the same period.
The fact that Mr. Orbán’s friend was able to amass a considerable fortune in the COVID-19 crisis is proof that the Hungarian government expertly navigates the ebbs and flows of public scrutiny. Before elections and under EU anti-fraud investigation, crony companies won considerably less; in the pandemic, they went on a winning spree as their competition magically disappeared. The value of public procurement contracts in the first four months of 2020, including framework agreements won by these companies, can be estimated at HUF 253 billion (USD 84 million).
As it is often the case, the government’s attempt to concentrate wealth and power is masked by the pretense that the real struggle is about something else, the rule-by-decree Coronavirus Law. On May 26, it appeared that the government was ready to give back emergency powers when Deputy Prime Minister Zsolt Semjén submitted a bill to parliament on the transition of emergency powers in the aftermath of the State of Danger. A group of human rights organizations have since published legal analysis to prove that the new law would not strip the government of their emergency powers, and in fact would further extend the possibility of rule by decree in the future. Orbán successfully hijacked media attention; meanwhile, he stepped on the accelerator to build crony capitalism. While public opinion is distracted, the real abuse of power continues behind the scenes, far from the watching eyes of the international press.
Cover image by István Gábor Takács. The original picture of Lőrinc Mészáros is by Dániel Kovalovszky.
Executive Director of the Rights Reporter Foundation.
He is a human rights activist and drug policy expert, the founder and editor of the Drugreporter website since 2004, the author of countless articles, co-author of books and director of films about harm reduction and drug policy reform. He was the Director of the Drug Policy Program at the Hungarian Civil Liberties Union between 2004 and 2015. He is experienced in working at international drug policy forums such as the Commission on Narcotic Drugs. He was twice elected to the Core Group of the EU Civil Society Forum on Drugs. He is advisory board member of the Eurasian Harm Reduction Association (EHRA) and the Steering Committee member of the Correlation European Harm Reduction Network. He was representing the Hungarian Harm Reduction Network at the government’s drug advisory body in Hungary between 2007 and 2015. As a member of the Drugreporter video advocacy team, he has produced videos about drug policy issues in a number of countries. These videos are now part of a unique online drug policy video library.
WHAT IS THIS BLOG ABOUT?
This blog provides you English news updates, articles, and videos about rising authoritarian rule in Hungary.
WHY DO WE NEED THIS BLOG NOW?
We live in an age where democracy is in decay and authoritarianism is rising. One of the first countries where the tide turned and the process of democratisation was reversed is Hungary. Since it came to power in 2010, the government of Viktor Orban has been slowly undermining the rule of law with its constant attacks against democratic institutions, independent press, and civil society.
According to the Nations in Transit report published by Freedom House in 2020, Hungary is no longer a democracy but a “hybrid regime”, having lost its status as a “semi-consolidated democracy”.
Since the outbreak of the COVID-19 epidemic, the situation has further deteriorated. The government used the crisis as a pretence for a power-grab that has been unprecedented in the European Union: the Orban government can now govern by decree, without any constitutional checks or balances, for an unspecified time period. Armoured with its newly gained powers, the government is now launching further assaults against civil liberties and the rule of law.
Civil society and the remnants of the independent press make huge efforts to monitor and document these assaults, but they often remain invisible to those who do not speak Hungarian. This blog aims to fill this gap and provide an analytic insight into rising authoritarianism by presenting relevant cases for abuses of power, and giving voice to activists and communities under attack.
- China Funds a Trip to Autocracy in EuropeChina needed to pass through Europe. Hungary needed to bypass it. Here is the story of the Hungarian-Chinese partnership to renovate the Budapest-Belgrade railway route.
- How to Become a Hungarian Millionaire in Just a Few Weeks Using Public ProcurementA soccer player made USD 25 million when he applied to a public tender without any experience. Here is how he did it. He was in the right place, at the right […]
- Hungary’s Campaign to Centralize Power in the Crisis: the DetailsFaced with a dire economic outlook, the Orbán government undermined those best positioned to help — municipal governments.