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Winning the deal is all about being in the right place at the right time
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It is no longer a surprise that friends and family of Hungary’s political elite often manage to get their hands on lucrative business opportunities. Atlatszo.hu recently reported on how the prime minister’s son-in-law acquired an entire marina complex. The legal loopholes required which allow these deals to happen, without any clear oversight or public involvement, make for interesting reading.
Atlatszo.hu recently covered the story of how István Tiborcz, son-in-law to Prime Minister Viktor Orbán, and his business associates acquired the Keszthely marine on the shore of Lake Balaton. The buyers paid little over €1 million for this very valuable asset.
The deal itself, and especially the fact that it went ahead without an open tender procedure, already raised questions. A more thorough look into the matter revealed that Tiborcz and company needed the active support of the municipal government to be in the right place at the right time in order to be able to properly exploit the relevant loopholes.
On the surface, the deal could not have taken place without a competitive tendering process. The marina was previously operated by Bahart Zrt, a company owned by 22 local governments located in the townships around Balaton, Hungary’s “sea” as it is often referred to, and which is a popular vacation destination for domestic tourists as well as foreigners. As such, Bahart controlled state wealth and as such could not have been sold to a private buyer. The only exception is if the buyer is a local government, which is permitted to take control of state assets.
This is exactly what happened. The town of Keszthely indicated that it would like to operate and then buy the marina operator as well as its real estate assets. The sides concluded an agreement that was to transfer ownership to Keszthely by December 15, 2014. The agreement also stipulated that if Keszthely fails to go through with the deal, it was to pay HUF 50 million in compensation.
As the date drew near, it became clear that Keszthely didn’t have the funds to pay for the marina or even the compensation. Failing to go through with what was previously arranged, Keszthely chose a tricky approach and that’s where Tiborcz and friends come into the picture.
On December 9, Keszthely announced that it would proceed with its option on the marina. On the same day, they signed a deal to sell the company that was to function as the buying entity, Keszthelyi Yachtkikötő Kft, to Tiborcz. At the time of the formal transaction, the asset was transferred from the ownership of one municipal entity to another, hence there was no need for an open procedure. One day later the company was signed over to Tiborcz’s business.
It is still strange that the final stage of the process was concluded without an open tender, since its value was well above the legal limit requiring a competitive process.
The original article in Hungarian was published on 27th January 2015.
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