Lajos Simicska is a reclusive Hungarian businessman who owns an opaque network of businesses, most prominently the construction company Közgép. Simicska was actively involved in the pro-democracy movement that resulted in the foundation of the Alliance of Free Democrats (Fidesz) in 1988 and was a long-time associate of Prime Minister Viktor Orbán. Simicska was considered to be the most powerful Fidesz business oligarch until his dramatic open rift with Prime Minister Orbán in February 2015.
Riddle Wrapped in Mystery Inside an Enigma
The place and date of Simicska’s birth are unknown, just as there is no data available regarding his childhood or early youth. The first information known about Simicska is that he went to the same high school as Viktor Orbán in the city of Székesfehérvár in central Hungary (pop. 100,000), graduating in 1979, two years before Hungary’s current prime minister. Simicska subsequently attended the Loránd Eötvös University School of Law and Political Sciences in Budapest in the 1980s, though it is not known if he graduated. While at the university, Simicska and Orbán both lived at the special residence hall for law students called the Bibó College (Bibó Szakkollégium). Simicska participated in the formation and early activities of Fidesz at the Bibó College, though was not among the 37 founding members of the party in 1988.
Simicska assumed his first formal political position in 1993, when he became Fidesz’s financial director. He then served as president of Hungary’s internal revenue service ÁPEH at the time of the first Orbán government in 1998 and 1999 before resigning and withdrawing from public view in the latter year.
Simicska spent the next decade quietly building an opaque business empire that most prominently includes the formerly state-owned construction company Közgép and advertising company Mahir Cityposter. Simicska has been so secretive about his business activities that, though it had long been speculated that he had acquired a majority stake in Közgép, definitive proof that he actually owned the company emerged only in documentation submitted as part of a public tender in 2012.
Simicska did not appear in public for a period of 15 years from the time of his angry resignation as president of ÁPEH in August 1999 until attending the official inauguration of an equestrian center in western Hungary in September 2014. The weekly Magyar Narancs published the first updated photograph of Simicska in over 13 years on the magazine’s cover in December 2012.
The Public Machine
The KÖZGÉP Construction and Metal Structure Manufacturing Company (known simply as Közgép, or “Public Machine”) was founded in 1921, nationalized during the communist era and reprivatized in 1994. Közgép conducts a wide variety of building and assembly activities, including road, bridge and railway construction, manufacturing machinery for power plants, laying pipeline and building sewage facilities and waste-management systems (source in English).
Közgép generated revenue of 60.4 billion forints in 2013, up nearly 35 percent from 2010, the year Prime Minister Viktor Orbán returned to power. The company had after-tax profit of 4.5 billion forints in 2013, up nearly two and a half times from 2010 (sources A and B in Hungarian).
Közgép won state tenders worth 129 billion forints in 2013, up over 100 times from 1.22 billion forints in 2010 (source in Hungarian).
Companies under the total or partial ownership of Lajos Simicska had pre-tax profit of 23.6 billion forints in 2013, up 30.4 percent from 2012, on revenue of 85.4 billion forints, up 4.3 percent from the previous year (source in Hungarian).
Politics Can Be Different Protest
On July 11, 2012, about 40 activists and National Assembly representatives from the liberal-green party Politics Can Be Different (Lehet Más a Politika) chained themselves together at the entry of the Közgép headquarters on the southeastern periphery of Budapest to protest the alleged preference the Orbán administration had shown toward the company in awarding lucrative state building and construction contracts. Police officers cut the chains and arrested 26 of the protestors, including Politics Can Be Different National Assembly representativea Bernadett Széll and Benedek Jávor, after they refused to comply with an order to leave the premises (source in Hungarian).
The Budapest Police released the protesters the same day, though imposed a fine of 100,000 forints on each of them for resisting arrest (source in Hungarian).
They would like to finally get themselves beaten up in order to demonstrate that there is a raging dictatorship in Hungary. To this I say that my dear Politics Can Be Different . . . fellow National Assembly representatives should pay for a private security firm out of the party’s budget and have themselves given a real good beating and quit fooling around with public money.
Közgép filed charges against the protesters on several accounts, including “disrupting the operations of a production plant of public interest” and slander—the latter accusation in reference to the signs they held bearing inscriptions such as “Orbán’s New Oligarchs!” (Orbán új oligarchái!), “Here Is Where your Money Disappears! (Itt tűnik el a pénzed!), “Közgép Takes All!” (A Közgép mindent visz!) and “They Run the Country from Here!” (Innen irányítják az országot!) (source in Hungarian).
On March 25, 2014, the Budapest 18th, 19th and 20th District Court exonerated the protesters on all charges (source in Hungarian).
Rift with Prime Minister Orbán
The Orbán government formed after the Fidesz victory in the 2014 National Assembly election launched a campaign under the direction of new National Development Minister Miklós Seszták to reduce the economic power of party-affiliated oligarchs, notably Simicska (see sources A and B in Hungarian and Cleft in the Monolith).
First, the government initiated the National Assembly’s June 11, 2014 adoption of a new tax on advertising revenue that will significantly reduce the profits of the television station (Hír TV), newspaper (Magyar Nemzet), radio stations (Class FM and Lánchíd Rádió) and advertising companies (Mahir Cityposter and Publimont) under Simicska’s ownership (source in Hungarian).
Second, Prime Ministry chief János Lázár and Deputy State Secretary Nándor Csepreghy confirmed in July 2014 that the government would require construction companies that had built roads in Hungary pursuant to state contracts between 2007 and 2014, such the Simicska-owned Közgép, to pay an estimated 70 to 100 billion euros in probable European Union fines for failing to use asphalt conforming to EU regulations in construction of the roads (source A and B in Hungarian).
Third, on October 10, 2014, the government founded an organization called the National Communications Office (Nemzeti Kommunikációs Hivatal) go conduct its advertising operations, thus depriving Simicska-owned Mahir Cityposter and Publimont of a significant source of previous revenue (source A and B in Hungarian).
Simicska ostensibly voiced his objection to the above measures through his indirectly owned pro-government daily Magyar Nemzet, which until the summer of 2014 had expressed steadfast support for the policies of the Orbán administration (source A and B in Hungarian for information regarding Simicka’s partial ownership of the newspaper).
Magyar Nemzet referred to the tax on advertising revenue as a “blow below the belt” and joined the June 5, 2014 protest of mostly opposition media against the tax (source in Hungarian; see Black Screen of Protest).
Magyar Nemzet characterized the government’s reported plan to require construction companies to pay the cost of a likely European Union fine for use of substandard asphalt as “completely unrealistic” (source in Hungarian).
On July 31, 2014, Magyar Nemzet called for the dismissal of National Development Minister Miklós Seszták on the grounds that “companies that may be regarded as off-shore can be connected to one of the minister’s enterprises” (source in Hungarian).
The largely veiled and indirect conflict between Simicska and the Orbán administration came out into the open after the directors and editors-in-chief of Hír TV, Lánchíd Rádió and Magyar Nemzet abruptly resigned for “reasons of conscience” on February 6, 2015 (source in Hungarian). Simicska told the opposition newspaper Népszabadság on this same date that he believed that either Prime Minister Orbán or his “entourage” had played a role in the resignations (source in Hungarian). Simicska referred to Orbán as a “fuckhead” (geci) during the interview with Népszabadság as well as in other February 6 interviews with the websites index.hu and hír24.hu (see sources A and B in Hungarian and Fury of an Oligarch Scorned).
Post-Rift Company Performance
Közgép generated net revenue of 101.5 billion forints in 2015, down from 112.9 billion forints in 2014. The company posted after-tax profit of 9.6 billion forints in 2015, down from 13 billion forints in 2014 (source in Hungarian).
In February 2016, the Budapest Court of Justice (Fővárosi Törvényszék) upheld a previous ruling from the Public Tender Arbitration Board (Közbeszerzési Döntőbizottság) prohibiting Közgép from participation in public tenders for a period of three years because the company had misstated the size of two ships listed in a 2015 tender to develop the Győr-Gönyű Danube River harbor (source A and B in Hungarian).
The radio station (Class FM), television station (Hír TV) and four outdoor advertising companies operating under Simicska’s total or partial ownership generated total revenue of 12.1 billion forints in 2015, down from 20.5 billion forints in 2014. The companies recorded profit of 1.32 billion forints in 2015, down from 5.42 billion forints in 2014. The fall in the revenue and profit of these companies was the result of a decline advertising revenue from state advertising (source in Hungarian).
In June 2016, Simicska and his business partner Károly Fonyó decided to cease publication of the free Budapest newspaper Metropol because they believed it would not be able to compete with rival free newspaper Lokál, which began daily publication under the ownership of Prime Minister Viktor Orbán’s chief strategic adviser Árpád Habony the same month (source in Hungarian).
“Orbán is a fuckhead [geci].” February 6, 2015, during interview with opposition website index.hu (source in Hungarian).
“Naturally an independent media always deals with current issues, though the Orbán government has ambitions to essentially abolish the independent media; but naturally this media―our media―will resist this and will not give a fucking shit about what Orbán wants.” February 6, 2015, during interview with opposition website Átlátszó.hu (source in Hungarian).
“Believe it or not, my alliance with Orbán was based on the fact that we wanted to bring down the dictatorship and the post-communist system. This proved not to be an easy thing, it required a lot of work. But building another dictatorship in its place was certainly not a fucking part of this alliance. I am not a partner in this.” February 6, 2015, during interview with the website of the opposition weekly Magyar Narancs (source in Hungarian).
“I imagined him [Orbán] to be a statesman who could do good for this country, but I had to realize that he’s not.” February 6, 2015, during interview with the website of the opposition weekly Magyar Narancs (source in Hungarian).
Last updated: June 13, 2016.