EU Anti-Fraud Office Accuses Orbán’s Son-in-Law of Corruption in Lighting Contracts
Tom Szigeti 2018.02.14.
A two-year investigation by OLAF, the European Anti-Fraud Office, has found “serious irregularities” and a “conflict of interest” related to an EU-funded street lamp project whose contract was won by a company partially owned by István Tiborcz, Prime Minister Viktor Orbán’s son-in-law.
OLAF does not publish the results of its investigations due to concerns over the “legitimate rights of the persons concerned, as well as to ensure the confidentiality of any subsequent investigative or judicial actions. Despite this, Hungarian investigative journalists have reportedly gained access to the report.
They noted that Tiborcz’s company, Elios (which has been operated under a variety of names over the past 8-9 years), charged up to 56% more than was usual for the LED lamps, even though the price of such bulbs was falling at that time. Following up on its report, OLAF called on Hungary to repay 40 million euros in funding it received from the EU due to this alleged corruption.
Reportedly, OLAF inspected 35 procurements that occurred between 2011 and 2015, and
found irregularities in all of them.
According to the anti-fraud office’s report, Elios, which was partially owned by Tiborcz, and that he actively was involved with until 2015, had rigged public lighting tenders so that, effectively, it was the sole bidder while offering as high a price as it could to municipalities. In its findings, OLAF argued that this scheme potentially rose to the level of “organized crime,” and recommended to Hungarian authorities that charges be levelled against István Tiborcz.
In response to OLAF’s report, some members of the European Parliament are now calling for greater scrutiny over the potential misuse of EU funds in Hungary. For this reason, center-right German MEP Ingeborg Grassle, who heads the EP’s budgetary control committee, recently paid a visit to Hungary. In her estimation, the Central European country has “some specific problems which need to be tackled. In particular, in the aftermath of her visit Grassle and her committee noted that, in Hungary,
36% of tenders for public projects had only one bidder.
When asked about this issue, the Prime Minister’s Office argued that Grassle’s numbers were “out of date,” and claimed that data from the Hungarian public procurement office showed that “EU contracts with only one bidder had fallen to 26.3% of the total in 2017 – similar, it said, to other countries in the region.”
Naturally, these accusations of corruption that have been levelled against Orbán’s son-in-law have led to a swift and highly critical reaction on the part of Hungary’s opposition parties, who have called for a number of steps to be taken in response, ranging from the launching of a parliamentary investigation to the creation of a special prosecutor to deal with corruption.
In addition, OLAF’s report on the Elios scandal has gone from an issue of domestic Hungarian politics to one that has made its way into the pages of some of the world’s largest media outlets. In the Guardian, Jennifer Rankin linked Tiborcz’s supposed misuse of EU funds to other corruption scandals that have dogged the Orbán government over the past several years. These include the building of a large (and usually empty) football stadium in Orbán’s hometown of Felcsút, as well as the use of EU funds to build a vintage train route between Felcsút and another nearby town.
The paper also made note of the rapid rise of Lőrinc Mészáros, a former gas fitter and close personal friend of Orbán who, since Fidesz’s electoral victory in 2010, has become the eighth-richest man in Hungary, worth an estimated 327 million euros. According to investigative news site Átlátszó, some 83% of all of Mészáros’ companies’ earnings come from EU funding, which is distributed by the Orbán government. Likewise, in a recent article the New York Times made note of the fact that
Since the start of 2018, Mr. Meszaros’s company has already won more than $400 million in European Union contracts.
Unsurprisingly, media outlets linked to the Prime Minister and his ruling Fidesz party have been quick to denounce the allegations against Tiborcz. In particular, these sites have argued that, in fact, during the period that OLAF investigated (2009-2014), it was not Orbán’s son-in-law that ran Elios, but rather the Hungarian premier’s friend-turned-enemy, media oligarch Lajos Simicska. Since his estrangement from the Prime Minister, Simicska has become one of the biggest financial backers of (formerly) far-right opposition party Jobbik.
As left-leaning news site Index.hu notes, however, the reality when it comes to Elios is in many ways far more complicated. While Simicska did own a portion of the company for three years, he was far from the only investor. The site also noted that Tiborcz retained partial ownership of Elios until 2015; in short, then, according to Index, it would seem that the scandal does not involve either man alone, but was rather a business tightly connected to multiple figures who are (or were) close to Prime Minister Orbán.
In addition, in response to questions raised by the Guardian regarding the report on the Elios affair, a Hungarian government spokesperson noted that OLAF had previously investigated street-lighting contracts during the Socialist government that governed Hungary from 2002 to 2010, and claimed
Similarly to the previous investigation, we also fully support this latest investigation.
Via the guardian, the New York Times, atlatszo.hu, 24.hu, ec.europa.eu/anti-fraud, and index.hu