Prime Minister Viktor Orbán (center) and businessman Oszkár Világi (right, bald-headed) at a football match. Photo by Tony Stefunko ©

Shady Deals

/ February 3, 2018

Hungary’s national energy producer MVM (a 100 percent state-owned company) is a link in Budapest’s secret financing of a campaign to create regional identity in the Romanian counties of Harghita and Covasna.

In 2014, MVM, the Hungarian state-owned power company, with interests in electric, nuclear and natural gas businesses, paid over 27 million euro for 90% of Hivatalos SRL (Ltd.), a company that owned 6 micro hydropower plants on streams in Harghita County. The power plants were worth less than 6 million euro.

It begs the questions:

– Why did the Hungarian State pay an extra 21 millions euro to the Hivatalos shareholders?

– Who are the Hivatalos shareholders?

– What is the link between the Hivatlos shareholders and the Székely Identity Campaign promoted by Igazi Csiki Sör (which translates to “Real Ciuc beer”) and the Orban Government in Budapest?

Hivatalos - Meaning "Official" SRL

The Hivatalos company − a Hungarian word meaning ‘official’ − was established in 2007 in Harghita county.

According to documents obtained by PressOne from the Harghita County Environmental Protection Agency, in 2010 Hivatalos SRL stated its intention to build 8 micro hydropower plants in Sânmartin, Ciucsângiorgiu and Plăieşii de Jos, on three watercourses: the Uz and its tributaries Başca and Bărzăuța.

In 2011, 100% of Hivatalos SRL ownership fell into the hands of Lénárd András, through HydroEnergy ZRT, a Hunganian legal entity owned by András.

Hydropower companies thrived during this time, supported by ‘Romania’s Energy Strategy for 2007- 2020’. One of the goals of the strategy was that a quarter of the green energy produced in Romania in 2015 would come from micro hydropower plants.

This energy was bought by the state from private investors through Electrica SA and was then introduced into the national energy system. Investors were also awarded green certificates for each megawatt-hour (MWh) produced.

In 2011, Lénárd András sold 10% of the Hivatalis shares to the Pension Fund of the Reformed Diocese of Transylvania based in Cluj-Napoca. The Diocese was represented by Kató Béla, who was to be elected bishop in 2013.

We tried to get an official statement from the current director of the Pension Fund of the Reformed Diocese of Transylvania. We enquired about why the Reformed church got involved in this business, as well as the risk it took when investing pensioners’ money. The director has not responded.

In 2011, a decision by the Environmental Protection Agency Harghita determined that the Hivatalos project “was not subject to environmental impact assessment”, meaning it did not pose a threat to the environment. This decision appears dubious, because Lénárd’s proposed power plants fell within a Natura 2000 protected area, called Nemira-Lapoş.

It would later be proven that these miniature hydropower plants, generally built on small streams in the mountains, pose an ecological threat by reducing the water level of the streams to a critical level and threatening the fauna.

In July 2012, the town hall of Sânmartin approved the land use of 7,600 square meters for the installation of a high voltage underground cable to connect the 6.98 MW micro hydropower plants in the area to the national grid.

In May 2013, according to the environmental permit no. 138 / 27.05.2013, Hivatalos SRL was given approval to build 6 micro hydropower plants. The environmental permit came around the time when investors recognized that micro hydropower plants were unprofitable, environmental disasters.

Micro Hydropower Plants - "Unprofitable Facilities That Destroy Our Environment"

“The real reason for the overflow of demands and pressures for the approval of micro hydropower plants in otherwise unprofitable locations is the disproportionate economic advantage.

This is made clear by the most recent report of the National Energy Regulatory Agency (ANRE), which calculated in May 2013 that the bonus of three green certificates per megawatt was too high and proposed a 25% reduction, that is to say 2.3 certificates.

In fact, we have to pay more for our electricity to the benefit of unprofitable energy facilities, which in the mean time destroy our environment and landscape.”

Excerpt from “Microhidrocentrale, macroprobleme” (Micro Hydropower Plants, Macro Problems) published in 2014 in the National Geographic magazine.

Cluj-Napoca, January 21, 2016: Reformed Bishop Kató Béla (center, wearing a mustache), together with Hungarian Prime Minister Viktor Orbán at the funeral of László Tőkés's father. Photo by Raul Ştef.

Mysterious Winsland Holdings

In 2012, Winsland Holdings, a Cyprus based holding company bought 50% of Hivatalos SRL for 105 euro. At this time, Hivalalos had yet to begin construction of the hydropower plants.

According to Winsland Holdings’s 2014 financial report, this offshore loaned Hivatalos SRL 11.5 million euro in 2013 and 10.8 million in 2014. Presumably this money was to fund construction of the 6 plants.

Winsland’s representative in Romania was businessman Csigi Levente, director of Kárpátia Magyar-Román Kereskedelmi és Iparkamara(KMRKI) − The Carpatia Romanian-Hungarian Chamber of Commerce and Industry, based in Cluj-Napoca.

Contacted by phone, Csigi Levente stated he no longer recalls the Winsland-Hivatalos SRL transaction and refused to comment on his involvement in this business.

Csigi Levente during a poker game in a bar in Cluj (YouTube capture)

The Hungarian State, Through MVM, Enters the Game

According to MVM’s annual report for 2014, the transaction value for 90% of Hivatalos SRL amounted to 27.8 million.

The EUR 27.8 million purchase price is allocated as follows:

• Purchase of EUR 17.7 million loan from Winsland to Hivatalos

• Purchase of Winsland stock for EUR 5.8 million

• Purchase of Lénárd András (HydroEnergy) stock for EUR 4.7 million

If we assume that Winsland Holdings had not received any payments on it’s EUR 22.3 loan, Winsland’s profit was only EUR 1.2 million (17.7 + 5.8 – 22.3).

Interestingly, the Pension Fund of the Reformed Diocese of Transylvania got nothing out of the transaction. They still own 10% of Hivatalos.

The big winner was Lénárd András, with EUR 4.7 million in proceeds.

Excerpt from the MVM official report for 2014.

Who Are the Hungarian State's Sweethearts?

By any reasonable measurement, the EUR 27 million MVM paid for Hivatalos was ridiculous given that in 2014 the race for subsidies (green certificates) had subsided.

To get an estimate of how much a micro hydropower plant (MHPP) was worth in 2015, we contacted Otilia Nuțu, an infrastructure and energy analyst for the Expert Forum. Ms. Nuțu said the selling price of a micro hydropower plant ranged between 700,000 and 900,000 euro per MW produced. The 6 Hivatalos’ plants were expected to produce 6.98 MW, which implies a total business value ranging from just 4.9 to 6.2 million EUR.

Another valuation metric is Hidroelectrica’s auction of 32 micro hydropower plants. In 2015, Remus Borza, then the judicial administrator of Hidroelectrica, said he hoped to get a price of 16 million euro for all 32 micro hydropower plants. About EUR 500,000 per plant. This would value Hivatalos at EUR 3 million.

MVM justified the huge purchase price by saying the “transaction had sealed the national Hungarian producer’s Magyar Villamos Művek (MVM) entry into the Romanian energy market.” Common sense tells us otherwise.

Changes in the structure of Hivatalos SRL over a period of 10 years (Infographic by Cosmin Creţ)

The Curious Life Mr. Lénárd

In 1995, at the age of 18, Lénárd András moved to the United States and married an American woman from Plymouth, Connecticut. Magyar Nemzet writes that he and his wife were organizing illegal migration of people from Canada into the US.

In 2001, Lénárd was arrested in New York City, along with three Hungarian women who had arrived in the US through Canada. The women had job offers in a US strip club.

Lénárd András was indicted by the American authorities, but was released on a bail of 50,000 dollars. He fled to Canada in order to avoid appearing in court.

It appears his US arrest warrant is still in force and the circumstances of his return to Romania are still unknown. The article recently published by Magyar Nemzet forced Lénárd to give an interview on the subject.

In the video interview, Lénárd states that he arrived in the US in the 90’s through the Visa Lottery Program and afterwards illegally extended his stay to work as a painter. He was detained by US customs police when he was returning from helping some friends in Canada. He rejects any accusations of human trafficking.

Lénárd András during the interview posted on YouTube on January 4, 2018.

Orbán's Interest in the Csiki Sör Symbol

Shortly after selling his stake in Hivatalos SRL, Lénárd András set up a craft brewery in Sânsimion, Harghita. The Hungarian name he chose for his product was Igazi Csíki Sör, which means “the real Ciuc beer”.

As a result of this choice, Heineken Romania, the Ciuc brand owner, filed a civil lawsuit demanding that Lénárd András change the name of his beer.

Csiki Sör Factory, before and after Lénárd András's investment. Photo: Facebook

The conflict between the small producer in Harghita and the multinational Heineken was used as a pretext by Viktor Orbán, the Hungarian Prime Minister. After a Romanian court ruled in favor of Heineken, two senior officials from Budapest, Deputy Prime Minister Semjén Zsolt and FIDESZ parliamentary leader Lázár János, proposed a law to prohibit the commercial use of “totalitarian” symbols. This would have forced Heineken to discard the red star on its label.

Lázár János, delegate from Budapest (center) raising a glass of beer with Lénárd András (left) at the Sânsimion factory. Photo: kormany.hu

The two dignitaries were quoted as saying that the logo had a clear political connotation, and that the citizens of Hungary were urged to boycott Heineken’s products. This was, in other words, the Orbán government’s indirect way of reprimanding the Romanian subsidiary of Heineken.

Subsequently, Heineken Romania reached a co- existence agreement with Lénárd András’s brewery. However, as an affront, the latter chose to print the word Tiltott (forbidden) on a red background, over the Csiki Sör label.

Below the name Csiki Sör, the label reads: "Ciuc Beer from 1540. Refreshes, nourishes and invigorates".

In an August 2017 The New York Times article, Lénárd states that the conflict with Heineken had become the symbol of the struggle for survival of the Székely community.

A spokesman for the Orbán Government asserted that Budapest has a responsibility towards the Hungarian nation as a whole, not limited to the citizens living in Hungary.

These statements confirm the interest FIDESZ has for ethnic Hungarians in Romania who have acquired Hungarian citizenship through the so- called re-naturalization initiative. These newly naturalized citizens could matter in the 2018 Parliamentary elections.

A large pro-FIDESZ vote in Transylvania might give Viktor Orbán the majority needed for him to continue his strong arm over Hungary.

Final Question: Who Is Behind Winsland?

When MVM overpaid for Hivakalos SRL by 21 million euro, they not only gave András the money to stir up Hungarian nationalism, but they also bailed out the Winsland Holdings investors who invested 22 millions euro in 6 unprofitable hydropower plants. Who were the lucky friends of the Hungarian largesse?

Established in May 2012, Winsland Holdings was owned by an association in the Cayman Islands. In 2014, the Cayman Islands association sold the Winsland interest to the Dutch company CEI Holding B.V. based in Rotterdam for only 1,000 euro. In December 2015, CEI Holding B.V. decided to close down Winsland Holdings. The offshore has done its job and was now redundant.

Dutch law allows for the real shareholders of CEI Holding BV to remain anonymous. This is accomplished through non-profit entities called STAK (Stichting AdministratieKantoor). STAK’s are a subject for another time.

But we can learn a little from companies in the CEI Holdings portfolio. One of these is a Slovak company, EHCS a.s, whose board is headed by the daughter of lawyer Oszkár Világi. Világi is a Hungarian businessman who became famous for his friendship with Prime Minister Viktor Orbán.

Oszkár Világi lives in Slovakia and is the chairman of Slovnaft AS, the Slovak subsidiary of MOL, the Hungarian oil and gas company. The Hungarian government is the largest shareholder in MOL.

Világi was present several times at the Tusványos Summer School in Baile Tusnad, Romania. He and Prime Minister Viktor Orbán are among the traditional guests of this event organized annually by a Budapest foundation close to FIDESZ.

Oszkár Világi is passionate about football, like Viktor Orbán, and bought the Slovak club FC DAC 1904 in Dunajská Streda, his hometown. The majority of the population (75%) in Dunajská Streda are Hungarians.

Oszkár Világi (on the left) at the 2015 edition of the festival organized by FIDESZ in Baile Tusnad, Romania.

The Unanswered Questions

So who was the money behind the 6 micro hydropower plants? Our best guess is Viktor Orbán’s buddy Oszkár Világi.

Why does money travel through four EU countries, two tax havens and Dutch non-profit run by a person close to Viktor Orbán – just to invest in a small Romanian business in Harghita County? We’ll let you come to your own conclusions.