American and Czech defense companies with ties to government profit from Hungarian police contracts

A company with ties to the Hungarian government which often flies Hungarian oligarchs by helicopter has recently co-founded a new company with Pennsylvania registered International Defense & Aerospace Group LLC (IDAG). IDAG sold helicopters to the Hungarian police in 2017 and one of its co-owners was involved in an infamous helicopter deal a year before.

Fly-Coop Ltd. has been win the limelight for its government connections for more than two years now. This was the company that, in the fall of 2016, flew high-ranking government minister Antal Rogán and his family to the wedding of a celebrity in Eastern Hungary.

When asked about the posh trip, Rogán first denied using a helicopter to travel to the wedding. However, daily newspaper Népszabadság published photos of him arriving in the helicopter. A few days after the publication of the pictures the pro-Fidesz owner of Népszabadság shut down the paper.

A few months later, Atlatszo tracked and published a record of the occasions when pro-Orban oligarchs traveled using private jets and helicopters. Fly-Coop took center stage in the results of that investigation.

Fly-Coop’s success continued when it won  the public tender of the National Healthcare Service Center in the fall of 2017. Fly-Coop now provides two helicopters capable of transporting both doctors and organs for transplants for the National Blood Service. The contract is worth 571.5 million forints.

One of the key figures in our story is Tamás Jakab, CEU and co-owner of Fly-Coop. He has several ties to the government. Another company co-owned by him, Aeroglobe Ltd, co-founded a company with a private security company favored by Fidesz, Valton-Sec Ltd.

An American company enters Hungary

In June 2018, Fly-Coop founded a new company called Flight Trails Akadémia Ltd. The primary business activity of the company, according to the business registry, is ‘driving school activities.’ In addition, the registry lists several other fields of activities ,such as the manufacture of air and spacecraft and related machinery, the repair and maintenance of aircraft and spacecraft, coding, communications and development of building projects.

Besides Fly-Coop, there is another owner of Flight Trails Akadémia Ltd., a company registered in Pennsylvania, called International Defense & Aerospace Group LLC (IDAG).

Those who keep up with aerospace news in Hungary might have heard of IDAG already. In 2017 IDAG sold six MD902 helicopters to the Hungarian National Police Headquarters. The helicopters had previously been owned by the UK police.

According to flight trade magazine called Aeromagazin, the helicopters are old and outdated. On average they have already logged almost 12 thousand hours in the air. According to newspaper Magyar Nemzet, the Hungarian police paid 5.3 billion forints for the helicopters and signed another contract with IDAG for the maintenance of the equipment. The latter contract is worth 3.8 billion forints. We found another contract in the 2018 contract list of the police dated 2018-2022 citing ’purchase of 6 helicopters and parts’ which is worth 2.5 billion forints.

We looked at the ownership structure of IDAG and that is where this story turned out to be more complex than we had imagined.

According to the Pennsylvania Department of State registry of business entities, IDAG was founded by Robert T. Caldwell in May, 2016.

A few months after the Hungarian police bought the six helicopters from the company, there was a change in the ownership structure. According to the Pennsylvania registry a new owner was added to the company November 2017: Jan Obrman. He was listed as a member of the management beside Caldwell.

Who is Jan Obrman?

Obrman was born in 1961 in Prague, in socialist Czechoslovakia. His family left the country, going  first to Switzerland and then to Germany. Later, Obrman lived for years in the United States and Canada.

He has degrees in history and political science. For a while he worked for Radio Free Europe as an analyst of Central European politics, economy and defense. In 1989, he moved back to Prague to help launch RFE in the city. Later he went into the television business and became entangled in one of the most complex ownership battles in Czech media.

Obrman went on to work in the defense industry. According to New York Times reporter Mark Mazzetti’s book, Obrman’s Prague-based company, U-Turn, produced a computer and mobile game for the Pentagon. The game was aimed at the Middle East and it had two goals: to spread pro-American messages to Iraqi youth and to gather information about those who downloaded the game.

In 2012 a new defense company called European Air Services (EAS) was founded in Prague. Its main business activity is the sale of American MD helicopters in the European market. According to Czech business registries, just after the company was founded Jan Obrman became co-owner with an investment of 100,000 Czech crowns. Obrman was also named CEU of the company on the day it was founded.

He also became a face of the company, appearing in a 2013 EAS ad where he discusses the advantages of MD helicopters.

Five helicopters for three times their original price

European Air Services sold five MD helicopters to Hungary in 2016. At the time, Obrman was the CEO of the company.

That year the German state of Baden-Württemberg sold five fifteen year old MD902 helicopters. According to a statement the helicopters were sold for 4.8 million euros.

The same five helicopters were bought by the Hungarian National Police Headquarters from EAS for 13.2 million euros. That is a selling price of 8.4 million euros more than the price EAS paid for them.

This was quite the scandal in Hungary at the time. The press covered the fact that the price of the helicopters practically tripled by the time EAS sold the equipment to the Hungarian police.

The MD helicopters bought by the Hungarian police Photo:  Tamás Kovács /MTI

The police said that the price hike is explained by the fact that EAS not only sold the helicopters to them but also heat cameras, as well as complete hardware and software systems supporting the helicopters. They also sold tools for maintenance, service equipment and spare parts and the helicopters arrived completely restored and re-painted.

According to press reports later confirmed by the Hungarian ministry of the interior, there was an intermediary company that helped the police and EAS to strike the deal. It is a Hungarian company called Aerotechnika M&T Zrt. The owner of this company, Miklós Takács also provided an explanation for the price hike. He told news magazine HVG that besides the helicopters the contract included police equipment, ground service equipment and training as well.

The story has political aspects worth pointing out. EAS was bought by one of the subsidiaries of the defense industry giant Czechoslovak Group (CSG). CSG is heavily involved in Czech politics as a financial supporter of Milos Zeman. Czech President Zeman has a good relationship with Hungarian Prime Minister Viktor Orban. Zeman is also a fan of Vladimir Putin and he once joked about shooting journalists. The chair of CSG, Michael Strnad, is a close political ally of Zeman.

OCCRP recently discovered that Strnad has been secretly buying up  Balkan arms for several years.

CSG also paid for former Trump advisor Steve Bannon’s May 2018 trip to Prague. Obrman was not far from the scene, either. A photo of the event shows Strnad and Obrman side by side welcoming Bannon to Prague.

IDAG’s new man worked closely with the Hungarian government

The name of Miklós Takács and his company, Aerotechnika M&T Zrt., an official NATO supplier, popped up elsewhere as well.

International Defense & Aerospace Group (IDAG) and Aerotechnika M&T Zrt. co-founded a company in August 2016. The name of the company is Aero-Idag Kft.

The founding of the new company was covered by website vg.hu at the time. The news piece said that the new company might have something to do with the intention of the Hungarian military to buy new aircraft. It seems this did not materialize, though as Aero-Idag Kft. had no income in either 2016 or 2017.

In March 2018, Aerotechnika M&T left Aero-Idag, leaving the American company IDAG as the sole owner of the Hungarian Aero-Idag. However, in March 2018 a new manager, Zoltán Ozoli, was registered at Aero-Idag.

Ozoli has close ties to the Hungarian government, having worked for several branches, including the military and the police.

At a recent conference about drone technology he took part as a representative of IDAG. According to his introduction, he has been working as a drone operator trainer for the Hungarian military, the police and the border guard since 2014.

Three months after Ozoli joined Aero-Idag he co-founded a company with Fly-Coop, the company mentioned above and favored by Fidesz politicians.

To summarize:

–          at the beginning of 2016 EAS sold 5 helicopters to the Hungarian police for a price generally considered excessive

–          Hungarian company Aerotecnnika served as an intermediary in the deal

–          in the summer of 2016 Aerotechnika co-founded a company with US company IDAG

–          in 2017 the police bought 6 helicopters from IDAG

–          in November 2017 EAS’s Jan Obrman became a member of IDAG

–          in 2018 IDAG’s Hungarian subsidiary co-founds a company with the government’s favored flight operator, Fly-Coop

The new company of IDAG and Fly-Coop has not shown any activity so far, but it is worth keeping an eye on. In August 2018, IDAG lost a public tender contracting  a new maintenance company for the police’s helicopters, but we have to see whether the new subsidiary will be more successful.

Written by Katalin Erdélyi and Anita Kőműves

Additional reporting by Botond Bőtös in Prague

English version by Anita Kőműves, editing by Clare Humphreys

You can read the original, Hungarian language story here.

Cover photo: Jan Obrman explains the advantages of MD helicopters in an EAS ad.

Hungarian company information was provided by Opten.