Orban-Style Cronyism Turns Gas-Fitter Friend Into a Billionaire

(Bloomberg) -- Hungary’s decade-long rule by Viktor Orban has helped create the first dollar billionaire in the leader’s entourage.

Even more remarkable, Lorinc Meszaros, a childhood friend of the prime minister, built most of his sprawling corporate empire in just five years of dizzying wealth accumulation that followed decades working as a pipe fitter and later as mayor in Orban’s home village.

He’s a symbol of an entrepreneurial class loyal to the government that mushroomed after Orban’s return to power in 2010. A central feature of the administration is graft, according to Transparency International, which ranks Hungary the European Union’s third-worst member in terms of perception of corruption. But Meszaros, who has relied on state contracts and EU-funded projects to create a web of companies spanning finance, construction, energy and tourism, says his success has nothing to do with Orban.

“I’ve never had a business relationship with the prime minister,” Meszaros, 53, said in a written reply to questions, one of the rare instances when he’s talked about his business. “Our relationship is private in nature. I’ve known Viktor Orban since my childhood. I’ve said it on numerous occasions that I respect his achievements and I regard him as a friend.”

Bloomberg Billionaires values Meszaros’s wealth, including assets owned by his wife, at $1.5 billion. They are majority owners of Opus Global Nyrt, a publicly traded company worth $789 million that invests in hotels, utilities, construction and food. He holds a stake in MKB Bank Nyrt., Hungary’s eighth-largest lender, and retains ownership in a private construction firm. And they own Talentis Group, a private holding company. His wife and three children all have roles running the companies.

Ties to the government, Meszaros said, were inevitable, as many of his companies are involved in state-financed infrastructure projects, such as road and rail links. He said his companies bid in public procurement tenders just like other Hungarian or foreign firms.

Always Winning

Not everyone is convinced that Meszaros’s friendship with Orban -- whose unprecedented centralization of power is the focus of an EU probe over the erosion of the rule-of-law in Hungary -- doesn’t benefit him.

“When Meszaros bids for something, he almost always wins,” said Istvan Janos Toth, the director at the Corruption Research Center in Budapest, who’s analyzed hundreds of thousands of public procurement contracts. “That’s the essence of cronyism.“

Recently, Meszaros had a number of transactions with a company controlled by Orban’s son-in-law. In this year’s only press conference where questions weren’t tightly controlled, Orban was bombarded with queries about potential links to Meszaros, whom opposition parties have alleged is a front for wealth controlled by the prime minister. Orban has rejected the accusations and refuses to answer questions about business issues.

Meszaros puts his success down to decades of hard work, going back to when he’d take pipe-fitting jobs even on weekends. More recently, he said his ability to delegate to professional executives to run everything from a bank to a power plant has been key.

What’s clear is, despite his account of gradually building wealth over decades, his ascent really started when Orban returned to power in 2010. It then skyrocketed after a public falling out in 2014 between Orban and Lajos Simicska, a businessman and ruling-party insider whose ties to the premier dated back decades. Until then, it was Simicska who often dominated big state tenders.

That marked the start of an avalanche of government contracts going to Meszaros, who in 2014 credited “God, luck and Viktor Orban” -- as well as his “labor and wisdom” -- for his success.

Shares Skyrocket

Meszaros then started buying penny stocks that became both vehicles and catalysts for his empire. Investors followed, speculating on the prospect of big government contracts, and Meszaros used the equity from ballooning share prices to acquire further companies.

One of them was retailer Konzum Nyrt., the world’s best-performing stock for a while in 2017 after Meszaros turned it into a conglomerate. He merged it with Opus this year. In his written responses, Meszaros said Opus’s share price was undervalued after falling by a third this year and that the company planned “significant” acquisitions.

Future plans include expanding his companies beyond Hungary, Meszaros said, in line with Orban’s call to build a new class of entrepreneurs in the next decade who bring home profits from abroad.

Opus recently sold its first corporate bond, half of which was bought by the nation’s central bank, which is run by a close Orban ally. At least two other companies with ties to Meszaros either sold such bonds or planned to do so as part of a program to boost corporate credit.

Meszaros said his inspiration to continue to grow harks back to his days as a tradesman in Felcsut, a town a half-hour drive from Budapest where he and Orban grew up. Orban still visits frequently, having founded a vast soccer academy there that Meszaros chairs, with a stadium literally next door to the prime minister’s country house.

“From the beginning, doing quality work paid off,” Meszaros said. “I loved the responsibility and freedom that came with being an entrepreneur. And that’s still the case today.”

--With assistance from Yuliya Fedorinova and Tom Maloney.

To contact the reporters on this story: Marton Eder in Budapest at meder4@bloomberg.net;Zoltan Simon in Budapest at zsimon@bloomberg.net;Alex Sazonov in Moscow at asazonov@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net, Michael Winfrey, Andras Gergely

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