dailynewsnblog
By Gergely Szakacs and Michael Kahn
BUDAPEST/PRAGUE, Aug 2 (Reuters) – Hungarian firms and business magnates who leveraged ties to Viktor Orban to build sprawling empires are pivoting to smaller projects as a new ruling party moves to stamp out alleged cronyism.
Reuters spoke to around a dozen former officials, companies and analysts who said billionaires among Orban’s inner circle were rethinking operations under new Prime Minister Péter Magyar, whose election victory in April ended Orban’s 16-year rule. Some firms, analysts said without naming specific companies, would likely not survive in the new era.
“We must and will adapt,” Sandor Scheer, founder and chief executive of Market Epito, one of Hungary’s biggest construction companies, told Reuters. The firm, linked to Orban ally and magnate Istvan Garancsi, has generated a quarter of its revenue from public contracts, including high-profile football stadiums.
“We are preparing for a shift where, instead of large-scale projects, we will have a higher volume of smaller-scale projects, and housing and infrastructure construction will become dominant.”
The strategic shifts underscore the biggest shake-up in corporate Hungary in decades, which is hitting share prices of firms seen as linked to Orban, while creating a more competitive landscape that could boost investment from foreign companies.
Those most at risk, analysts say, are firms that fed off public infrastructure procurements, but will now compete with newcomers for a share of government funds.
“Construction and road-building firms that were part of these (…) networks will vanish in one or two years as the contracts will go to other companies,” said Daniel Hegedus, deputy director of Berlin’s Institute for European Politics.
Construction company Market Epito says three decades of successful operations and financial strength were not tied to political cycles, and that its diversified portfolio gives it stability.
ORBAN ALLIES HANG ON: ‘WE ARE NOT AFRAID’
During Orban’s rule, allies drew on preferential access to state spending, public tenders and favourable regulation to both acquire and grow companies across Hungary’s corporate landscape.
A 2024 OECD survey found Hungary had a high rate of single-bid public procurement procedures, with the European Union setting out reforms to improve market competition as part of wider conditions to release suspended EU funding.
A survey by Hungarian anti-graft think tank CRCB published shortly before the April election found what it called “clear evidence of political favouritism” in public procurement.
