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bávfelcsútgazdaglistakecskefarm


Belföld same in english



HOW COULD LŐRINC MÉSZÁROS AMASS A FORTUNE OF 660 BILLION FORINTS WITHIN TEN
YEARS?

CSÓTI REBEKA / 24.HU
Vitéz F. Ibolya
2024. 01. 09. 09:24

CSÓTI REBEKA / 24.HU
Just recently, Lőrinc Mészáros led the list of Hungary’s richest with 660
billion forints; while based on the assets listed in his name, he would also
easily qualify among Forbes' dollar billionaires. However, the former gas fitter
entered the realm of billionaires only a decade ago and went on to become
Hungary’s richest person in an unprecedentedly short time. We explored the
milestones along his path to billion-dollar deals and a 62-meter luxury yacht.


SAME IN ENGLISH

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Orbán and his team rebrand Europe’s far-right
2024 július 03 - 13:00
Tisza reshapes Hungary’s party system
2024 június 25 - 12:26
Budapest Airport: a „matter of sovereignty” worth HUF 1400 billion to Orbán’s
government
Még több Kevesebb




Lőrinc Mészáros first appeared on the list of the 100 richest Hungarian
entrepreneurs a decade ago. Back in 2014, the public had a rough idea of him
being an associate and confidante of Prime Minister Viktor Orbán, but not much
more was known. The former gas fitter breached the country’s top 100 with 7.7
billion forints and less than a dozen companies – since then, his estimated
wealth has grown exponentially to 660 billion forints, an 85-fold increase.

In comparison, the first Orbán government’s public road construction phenomenon
Elek Nagy, as well as the architect of Fidesz’s economic background, the great
innovator of public fund appropriation, Lajos Simicska, are nowhere near
Mészáros. Neither is – at least for now – Orbán’s son-in-law, István Tiborcz.

A Flourish chart

Elek Nagy has been on the list of the country’s wealthiest for twenty years,
entering with 25 billion forints, and it took him until 2008 to double his
billions. His company Vegyépszer was once amongst the chosen firms to construct
Hungary’s motorways, held out through the era of the left-wing governments, but
would not survive the second Orbán government: ten of the group’s companies had
entered bankruptcy management, and Vegyépszer eventually disappeared from the
major public road companies. Regardless, the entrepreneur remained a stable star
of Hungarian business life, his focus shifting to other industries. Nowadays he
is more known for auction and pawning giant BÁV, his real estate dealings, as
well as cab network Főtaxi.

Although state road construction played a significant role in his career, Elek
Nagy’s pace of wealth accumulation lagged far behind the rapid surge of Mészáros
15-20 years later. Although, while during the Vegyépszer era, the cost of
constructing one kilometre of motorway was closer to one billion forints, it
multiplied several times in the coming years, occasionally grazing the
10-billion threshold. Most recently, the development of the 76th road connecting
the town of Zalaegerszeg to the M7 motorway was quoted at around 9.1 billion
HUF, not to mention the M100 expressway planned between Esztergom and Bicske,
with a previously announced per-kilometre cost of around 10.7 billion forints.
In 2023, Elek Nagy’s wealth stood at 70.5 billion forints, which is just under
three times the value of his starting 2002 fortune.



If one is to take wealth lists and officially known incomes seriously, then the
architect of Fidesz’s economic background, Lajos Simicska, too, should be
considered small fry when compared to Mészáros. According to the list published
annually by Péter Szakonyi since 2002, Simicska has never reached higher than an
estimated wealth of 83 billion HUF; and the former chief oligarch, now retired
to the management of his goat farm, is no longer even listed. However, it cannot
be said that he did not make an effort along with his business partner, Zsolt
Nyerges. Their company Közgép Plc. dominated public road and railway
construction tenders. As reported by newspaper HVG, Simicska, who seemed
almighty until his 2015 fall from grace, raked in over 14 billion forints in
dividends within a single year in 2011 – shortly after the second
Orbán-government’s rise to power – through his and Nyerges’ business empire
spanning a variety of sectors, including the energy sector, construction, as
well as media. The network comprising of nearly a hundred individual firms won
over 300 billion forints in grant money from state and EU sources from the 2010
government change until mid-2012.

Not even István Tiborcz, Orbán’s son-in-law, has reached the heights of
Mészáros’s billions, although his rate of expansion is also staggering. Tiborcz
catapulted onto the list at the age of 33 in 2019, making him the youngest ever
among Hungary’s billionaires. He doubled his then-wealth of 35 billion forints
in four years, and in 2023, at the age of 37, he was listed as the 25th richest
Hungarian businessman with a fortune of 69.6 billion – his portfolio includes a
bank, a brokerage, a leading transport firm, a real estate empire and a
collection of hotels. Should this pace be maintained, Tiborcz may eventually
surpass Mészáros, especially considering the “flow” towards Tiborcz spoken of by
analysts examining assets within NER’s circulation.

(NER, the “System of National Cooperation” is the informal economic-political
network of Fidesz-aligned circles. The term is synonymous with state corruption
among Fidesz’s opponents.)



It was G7 to first suggest that a part of publicly traded real estate firm
Appenin Inc. has slipped from Mészáros’ hands straight into Tiborcz’s, now
belonging to the prime minister’s family, but it also came to pass that
Tiborcz’s real estate company, BDPST Plc., bought into an Alcsútdoboz golf club
in Mészáros’ interests. Tiborcz also acquires pieces of wealth from other
billionaires, for example the shares acquired from Dániel Jellinek in transport
giant Waberer’s, as well as Hotel Gellért.


IT ALL BEGAN IN FELCSÚT

In 2012, it was only Felcsút’s (Orbán’s hometown) sports academy that stood out
by presenting sports and tourism plans to the Hungarian Football Federation
which were quite ambitious for the size of the small Fejér county village with
1800 inhabitants. Within three years, the foundation operating the Puskás Ferenc
Football Academy set sights on over 10 billion forints in sports investments.
The academy’s talent replenishment foundation was founded in 2004 by Viktor
Orbán himself, with Lőrinc Mészáros as curator and his company Mészáros’
Mészáros & Mészáros Ltd. as one of the foundation’s financial supporters.

BELICZAY LÁSZLÓ / MTI Prime Minister Viktor Orbán and Lőrinc Mészáros after the
final of the Puskás Suzuki Cup youth football tournament on April 21, 2014, the
official inauguration of the Pancho Arena in Felcsút.

However, Mészáros was not yet on the level of the academy itself. The
entrepreneur, also Felcsút’s mayor at the time, had a network of companies
rather easy to trace. In early 2015, newspaper HVG outlined a network consisting
of just ten companies. Initially, Mészáros appeared in the sea of public tenders
as a subcontractor or occasionally as a consortium partner. As a construction
industry leader recalls, “at that time, a significant amount of money was
flowing through Mészáros & Mészáros Ltd.,” the former gas fitter gaining an
array of references – indicating that his involvement’s main purpose might have
been beyond the scope of the projects themselves.



Even during his time as a mayor, Mészáros was drawing attention to himself with
his rapidly growing income. His 2013 asset declaration made headlines by
revealing that he had increased his income 77 times in a mere four years.
Mészáros, in addition to his real estate properties, had savings of 400 million
forints and 20 million in cash, withdrawing dividends of 943 million forints
from his companies. Media reported on the declaration after it had been made
public due to a lawsuit initiated by online paper 444.hu. Consequentially,
Mészáros had to amend his declaration as he had seemed to have forgotten that
his withdrawn dividends actually exceeded the amounts stated within.


FROM SUBCONTRACTING TO KÖZGÉP’S INHERITANCE

With the downfall of Lajos Simicska, the time had come for new companies to
replace Közgép in public tenders. Duna Aszfalt Ltd., belonging to
Tiszakécske-based László Szíjj, had already carved out significant projects,
such as the 46 billion-forint motorway section between Makó and the national
border, but Mészáros és Mészáros Ltd. was also making appearances in all
directions, be it sewerage projects in the capital or Southern Hungary’s
drinking water project. Within construction industry circles, the Mészáros-Szíjj
duo was eventually discussed as something of a successor to the Simicska-Nyerges
partnership of the past. More precisely, the opinion was that in the person of
Szíjj, the “expertise was thrown in” to complement Mészáros in the various civil
engineering projects. Statistics were piling up on the tens of billions worth of
public projects raked in by their companies. One of our sources, downgraded to a
subcontractor, simplified the picture: “They won tenders, and as main
contractors, they subcontracted the work to the other players in the market.”

MARJAI JÁNOS / 24.HU Lőrinc Mészáros and László Szíjj getting off a private
plane in Budapest in 2018.


NER’S PRACTICE: FULL SWEEP FROM BASEMENT TO ATTIC

Mészáros’ growth can be traced through a single company: Mészáros & Mészáros
Industry and Trade Ltd., established in 2001, showed rather modest results for
almost a decade. In 2008, it barely reached revenues of 100 million forints,
with just over 5 million forints in after-tax profits – all of which was
withdrawn as dividends by the owning Mészáros family. The breakthrough finally
came in 2011, following Orbán’s rise to power: turnover and profits both soared
in heights barely comparable to former figures; the balance sheet revealed
revenues of 2.2 billion forints and a taxed profit of 853 million forints. With
this, the year’s dividends also grew; the Mészáros couple took home 322 million
HUF.

In 2013, the turnover skyrocketed to another order of magnitude, approaching ten
billion forints, while the 1.5 billion net profits yielded 1.27 billion in
dividends. From this point onwards, the company reported billion-forint profits
every year, which was almost completely paid out as dividends each year. This is
NER’s typical model of business: any profits generated by a given company are
almost completely withdrawn as profits by the owners – long-term investments are
hardly a consideration.

A Flourish chart

Mészáros’ firm peaked in 2020 – the year plagued by the COVID-pandemic. As the
overall performance of the economy turned negative, the Felcsút-based
construction firm breached the hundred-billion threshold, reporting a revenue of
112.8 billion HUF. With the deployment of free retained earnings, the family
would extract 15.71 billion in dividends, more than the annual taxed profit of
15.55 billion. The company, operating as a joint-stock firm (Plc., or Zrt. in
Hungarian) from 2021, had an even more profitable year in 2022, generating 17
billion after taxes. However, in 2022, the Mészáros couple had to settle for
“only” 14.6 billion in dividends.

Until 2018, it was clear where the dividend showers would end up, as the company
was registered under the name of the now-separated Mészáros couple. Afterwards,
through a construction industry holding company, the firm became a subsidiary of
Mészáros’ publicly traded Opus Global Inc., which became the new direction of
the flowing billions. After the process of going public, profits suddenly
reached 11.8 billion, then 15.5 billion, and although they dropped to 9.47
billion in 2021, 2022 year was a record year, with profits surpassing 17 billion
forints.

In 2014, when Lőrinc Mészáros entered the list of billionaires, Mészáros &
Mészáros Ltd. barely reached a turnover of 10 billion forints, translating to a
taxed profit of 1.8 billion. The pace of growth is evident considering that by
2020, which is considered the peak year, the firm increased its revenues by 11.5
times and its profits grew tenfold in a mere six years.




ACQUISITION FRENZY: THE ERA OF OMNIVOROUS EXPANSION

While road and railway construction – “pouring concrete” – quickly brings in
money on a large scale, it seems that the goal was far beyond merely generating
massive amounts of cash. It seems that another objective was the expansion in as
many crucial sectors as possible. There are numerous ways of doing this, “they
take assets from others, or more delicately put, participate in the
redistribution of fortunes,” our informant referred to the takeover of
Simicska’s companies and the acquisition of assets from insolvent businesses. A
contract surfaced in which Mészáros had commissioned a debt collector to
purchase for him the the kind of debts that would enable him to obtain adequate
assets during liquidations. It was the method widely used within NER that was
used to scatter the assets of the Quaestor group’s liquidated companies, for
example. As for Mészáros, this was how he acquired the resources necessary for
launching mineral water enterprise Vivienvíz. It is also how he managed to put
his hands on the Egerszalók hotel and spa complex at a meagre price, after the
holiday resort had to be liquidated despite an 11-billion state investment.

Simultaneously, the acquisition of assets coveted from other entrepreneurs
continued, ranging from Tamás Leisztinger’s Hunguest hotel chain to Sándor
Demján’s Balaton winery. It was more and more commonly thought that
someone who had not crossed paths with the former gas fitter can’t even be
considered a big league entrepreneur. Some he buys out, some he partners with,
while others he chooses for collaboration. However, no reports of anyone putting
up a fight have surfaced;
We have compiled a list of the deals struck with Mészáros here.

A separate chapter could be dedicated to the realm of green-field investments
carried out with significant state backing and financial support. Examples
include wheat and corn processing factories Viresol and Kall Ingredients. While
both are gigantic, it seems that the invested state billions will not pay off
anytime soon. Kall Ingredients Ltd. made a profit only once in the last five
years, in 2020. The Tiszapüspök plant drew in the resources for its launch from
state-affiliated players; and as we reported earlier, despite receiving nearly
60 billion forints in public funds for its establishment (with active
involvement from Eximbank and the Hungarian Development Bank), the company did
not lose its private character. Even at the end of 2022, the Hungarian
Development Bank held just below 16% in the company’s stakes. In agricultural
circles, the two factories are sometimes referred to as ‘grain incinerators’,
referring to the 127 billion forints amassed in liabilities by Mészáros’ two
food industry giants.



Particularly striking is the case of Mátra Power Plant Plc., acquired from a
foreign investor. After Mészáros had withdrawn all the dividends, the poorly
performing firm, awaiting massive investments, was purchased by state-owned MVM,
saving Mészáros from bearing the financial losses and the burden of an
investment in the hundreds of billions. As it later turned out, the sum involved
was hardly chickenfeed; the state-owned energy company had to spend more than 75
billion forints) to acquire the power plant.


FROM THE STOCK EXCHANGE TO CHALLENGING OTP

A significant change occurred when the focal point of the Mészáros empire became
a publicly traded company, and all enterprises from various sectors of the
economy, including tourism, construction, and energy, were crammed into Opus
Global Inc. Mészáros – much like how László Szíjj was brought in for road
construction – received Gellért Jászai to serve as partner and financial expert.
Road construction is no easy task, but the task cut out for Mészáros was beyond
anything Felcsút had seen: to give Hungarian bank giant OTP a run for its money.
That Mészáros and his team were working on assembling a banking behemoth was
leaked as early as 2018; the project had long been in the sights of Prime
Minister Orbán.

SZAJKI BÁLINT / 24.HU

To achieve this, several partially state-owned or state-backed banks were
merged. Mészáros first acquired a stake in MKB Bank, and the fusion with
Budapest Bank and Takarékbank was orchestrated in such a way that Mészáros
became the dominant owner of the resulting Hungarian Bankholding Plc., now
counted as the second largest player in the Hungarian banking market. According
to recent news, the fears of Sándor Csányi, leader of OTP and the only person
somewhat able to compete with Mészáros in terms of wealth, have come true: by
channeling EU funds, the rival bank of Mészáros could gain a competitive
advantage. The Hungarian Development Bank’s tender was won by István Tiborcz’s
Gránitbank and Mészáros’ Bankholding, allowing them to operate the MFB Pont
Plusz corporate network in the 2021-2027 cycle – this is the network companies
can access to apply for EU development funds.




A SHIFT TO THOUSAND-BILLION DEALS AND PRIVATE CAPITAL FUNDS

“It was an honour to be his right hand” – this is how Jászai eventually parted
ways with Mészáros in 2019. Later, he went on to realise another long standing
dream of the government – consuming around a thousand billion HUF so far – with
4iG in the communications sector. In the market, it is believed that the absence
of Jászai’s financial expertise can be felt within the Mészáros-empire. However,
this did not prevent the Felcsút multi-billionaire from leaping to whole new
levels. With his company RM International Plc. (the subcontractors being R-Kord,
V-Híd, and Fejér-B.Á.L., also all in his interests), he became involved in a
giant project with the Chinese on the Budapest–Belgrade railway line, an
undertaking initially estimated at 700 billion forints. This large investment is
related to Orbán’s eastern-oriented foreign policy. Investigate Europe estimated
its return on investment based on on-site research to take 979 years.

The motorway concession, awarded to private capital funds said to be affiliated
with Mészáros and Szíjj for the next 35 years, is orders of magnitude greater
than even the railway projects, ranging in the thousands of billions. Based on
the first few months’ profits, G7 calculated the total 35-year profits to be
reaped by Lőrinc Mészáros and László Szíjj to be 684 billion HUF.

The point of private equity funds, however, is to conceal the identity of
investors and beneficiaries. Several private equity funds are linked to
Mészáros, leading to the conclusion that he is connected to insane amounts of
wealth. Others argue that the hundreds of billions dissolve into the jungle of
private equity funds and trust fund managers, and as investors and owners can be
exchanged without a trace,
perhaps it’s not so important under what name the fortune of 660 billion forints
or more has been accumulated.







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