Goulash: China’s Train Push into the EU; Hungary’s Oligarch Rescue

FRESH FROM VSQUARE

TIKTOK CAMPAIGN NEARLY WINS PRESIDENTIAL ELECTION FOR FAR-RIGHT CANDIDATE

Investigace.cz’s Josef Šlerka has been spearheading our Central European investigations into how different social media platforms spread disinformation and pro-Kremlin narratives while aiding political extremists. After focusing on Telegram earlier this year, the latest installment of the project, titled Firehose of Falsehoods, uncovered how TikTok is amplifying far-right candidates across Europe, from Germany to Romania. Even before a shadow campaign on behalf of a previously unknown Romanian presidential candidate disrupted the country’s election in early December, our dedicated colleagues were already sounding the alarm about TikTok’s role – in July. But as most people apparently didn’t hear the bell ringing, in this latest article, Josef teams up with Context.ro’s ⁨Iulia Stănoiu for a forensic analysis of how the aforementioned candidate, Călin Georgescu, surged from 5 percent to 23 percent of popular support within just three weeks. It was thanks to a coordinated, well-funded social media campaign that exploited algorithms and the weak regulation of the Chinese-owned platform. If you don’t want to wake up to similar hijackings of democratic processes, I suggest reading what happened in Romania here.

HUNGARY’S SPYING ON EU OFFICIALS SPARKED INTELLIGENCE INFIGHTING

Some of our subscribers may have already read this spy thriller on Direkt36, written by András Pethő and me: Hungary’s spies were surveilling EU investigators who were attempting to uncover corruption tied to Prime Minister Viktor Orbán’s family—specifically his son-in-law’s company, Elios, which was involved in allegedly rigged public lighting tenders. But there was a twist—or rather, two: First, the operation triggered infighting within Hungary’s intelligence agencies as there was suspicion that, under the oversight of the minister heading the Prime Minister’s Office János Lázár, the foreign intelligence agency actually collected sensitive information about domestic political actors, including on the Orbán family’s business activities. Second, a later raid on the Hungarian foreign intelligence headquarters revealed that the proper documentation of the operation against the EU investigators was missing, hinting at possible illegal surveillance. In case you missed it, read our story here.

POLISH LAW AND JUSTICE EX-MINISTER LOBBIES FOR HUNGARY’S MOL

Building on the scoop from our last newsletter, we found out that a high-ranking former Law and Justice (PiS) government official specializing in energy has registered as a lobbyist in Brussels for Hungary’s MOL oil company. What makes Anna Łukaszewska-Trzeciakowska’s career move controversial is that MOL is reaping excess profits from trading Russian oil—something that should be a clear no-go for a Polish right-wing politician. Read it here.

SPICY SCOOPS

There is always a lot of information that we hear and find interesting and newsworthy but don’t publish as part of our investigative reporting — and share instead in this newsletter. 

RUSSIAN DEFENSE INDUSTRY-LINKED OLIGARCHS SAVED FROM SANCTIONS BY HUNGARY

Once again, Viktor Orbán’s government has shielded two more high-profile Russians from EU sanctions, according to information shared with me by my excellent Latvian colleague, Sanita Jemberga from Re:Baltica. The individuals in question are long-time business partners: Uzbek-Russian oligarch Iskandar Mahmudov and his sidekick, Andrey Bokarev—shady billionaires, complete with the obligatory French villas, who have been co-owners of the Kalashnikov Concern and Transmashholding (TMH), the Russian rail giant that also supplies military equipment. Latvia has persistently tried to include Mahmudov and Bokarev on the EU sanctions list over their active support for Russia’s war on Ukraine. However, these efforts failed during both the 14th and 15th sanctions rounds. Latvian sources told my colleague that, in the most recent case, the two oligarchs didn’t even make it to the list circulated by the European Commission to member states. Our sources indicate that they disappeared from the list when it reached the European External Action Service (EEAS), reportedly due to Hungary’s objection. 

“We cannot go into detail on specific cases that were not included in our listings,” said EU Spokesperson for Foreign Affairs and Security Policy Anitta Hipper in response to a request for comment. Meanwhile, Hungary’s foreign ministry did not respond to my questions as to why these oligarchs—who reportedly have ties to organized crime—are considered so important to the Orbán government. One theoretical explanation is that TMH had a joint venture in Hungary involving the Orbán government’s current Minister of Defense, Kristóf Szalay-Bobrovniczky, which is striking in itself. But being a NATO member state’s defense minister with Russian business partners who also happen to be under sanctions could make it even worse. It’s worth noting that TMH’s tentacles in the Hungarian rail sector also prompted a recent intervention by Spanish intelligence, which blocked the Hungarian acquisition of a Spanish train manufacturer this summer. (For more examples of Hungary embracing Uzbek-Russian oligarchs, read our last Goulash issue featuring Alisher Usmanov.)

HUNGARY WANTS TO EMBARK ON A CHINESE TRAIN SHOPPING SPREE—BUT WHO WOULD PAY FOR IT?

While the Russian state-linked rail giant is already officially inactive in Hungary, China’s counterpart is just getting started. CRRC, the Chinese state-owned behemoth and the world’s largest train manufacturer, is getting closer to its grand entry into the European Union market—thanks to the Orbán government, of course. Sources familiar with the negotiations tell me that the Hungarian government and MÁV Hungarian state railways are in advanced talks with Chinese counterparts for a shopping spree that includes electric multiple-unit (EMU) trains, electric locomotives, and train control and signaling systems. While the exact timeline for these purchases remains unclear, the first agreement could be ceremoniously signed in China as early as January. In its debut phase, Hungary would acquire trains for the Budapest-Belgrade railway line—China’s flagship Belt and Road project in the EU’s backyard. Longer-term plans allegedly include the purchase of EMU trains for domestic use by MÁV, followed by locomotives at a later stage. One of CRRC’s double-decker EMUs was already spotted in Hungary this summer, and CRRC plans to set up a European production hub in Hungary have also been reported.

Minister János Lázár, now at the helm of the Ministry of Construction and Transport (yes, this is the same politician who oversaw Hungary’s intelligence shift to spying on EU institutions), has been remarkably clear in recent interviews: there will be no train deals with MÁV’s long-time European partners like Siemens, Stadler, or Alstom. German, Swiss, and French companies. Take the hint—you’re out. One source indicates that the government is considering plans to bypass public procurement regulations by funneling these Chinese train acquisitions through state-owned companies not subject to such rules—like one that operates heritage or vintage trains. As for the funding? Your guess is as good as anyone’s. Speculation ranges from Chinese loans to leasing schemes, given that Hungary’s state coffers currently resemble a barren wasteland. The Hungarian transport ministry did not respond to my request for comment. (In previous Goulash editions, I’ve extensively covered Hungarian-Chinese rail deals, including a high-speed railway project connecting Budapest with its airport, a dispute over rail communications technology, and even a peculiar wiretapping scare involving the ministry handling Chinese train companies.)

TRAIN STATION PRIVATIZATION LIKELY TO BENEFIT ORBÁN PROXIES

While Orbán’s government has famously spent tens of millions of euros—some of it EU funds—on a miniature train circling the prime minister’s hometown of Felcsút, the country’s underfunded regular train infrastructure is crumbling. “Hungary won’t have money for the renovation of these large train stations,” Orbán admitted in parliament when opposition MPs criticized the government’s controversial plan to privatize major train stations in Budapest and other cities across the country. The plan involves selling 90 percent ownership of these run-down stations to private companies for 99 years. According to some cabinet ministers, big parts of these stations could even be converted into shiny supermarkets. While the winner of the open bidding process is officially unknown, the opposition TISZA party has speculated—without evidence—that Orbán’s son-in-law, István Tiborcz, stands to benefit. Meanwhile, sources close to the government confirmed to me that one of Tiborcz’s business partners, Dániel Jellinek, already proposed a somewhat similar plan to the government and MÁV state railways’s leadership over two years ago. 

That proposal envisioned transforming significant parts of Budapest’s Nyugati (Western) and Keleti (Eastern) railway stations into shopping malls, similar to certain railway stations in Paris or Vienna. The Ministry of Construction and Transport responded to my request for comment by stating that “countless ideas and proposals for the utilization [of train stations] have been presented” over the past 15 years and that “everyone competes under equal conditions. The process is not influenced by any prior proposals, ideas, or suggestions.” Meanwhile, Jellinek’s Indotek Group replied to me that they “do not plan to submit a proposal for the renovation or utilization of any of the main railway stations in the capital”—not ruling out those outside of Budapest. At the same time, Tiborcz’s BDPST Group denied bidding for any train stations. Sources close to the government allege that other proxies, including the Gazprom-linked, Russia-born Rahimkulov family—who are unsurprisingly business partners of Tiborcz—may bid instead. (The Rahimkulovs didn’t respond to my request for comment.)

ABANDONED RAILWAY YARD GRANTED TO EMIRATI INVESTOR MARRED BY SUSPICIOUS FIRES

It has been almost a year since we revealed that Hungary’s government was in talks with Emirati businessman Mohamed Alabbar to create a luxury district in Budapest, centered around a skyscraper. The proposed location is, once again, owned by MÁV Hungarian State Railways and is currently undergoing a clean-up phase. This process includes removing the very few legal residents of the abandoned railway yard, as well as homeless people camping there. Meanwhile, over the past six months, three significant fires have broken out in the area, with at least one officially classified as arson. While the police have not issued any formal comments on the situation, they are reportedly informing local district municipality officials that all the fires, including the latest incident involving garbage piles set on fire, are cases of arson. An official in contact with MÁV conveyed a similar view, suggesting there is a strong suspicion that these fires were intended to expedite the clean-up process. It is worth noting a similar Alabbar real estate project in Serbia, the Belgrade Waterfront, was far more brutal. That development involved masked individuals attacking and tying up local residents and bulldozing buildings on the future construction site, ultimately resulting in the death of a security guard. But returning to Budapest: while no one was injured, a long-time resident of the surrounding neighborhood told me that they couldn’t recall any similarly large fires in the location over the past decade—let alone three in quick succession. Hungarian police responded to my request for comment, stating that two proceedings were initiated: one has been suspended, and the other has been closed.

SECOND HELPINGS

We’d already reported but the story went on… here’s a second bite of our previous stories and scoops.

Budapest’s skyscraper project might become even more ambitious. Following up on the earlier scoops on the Emirati real estate project in the Hungarian capital: While my initial reporting mentioned plans for a skyscraper between 220 and 240 meters tall as the centerpiece of the project, a government-connected source tells me that they heard that Alabbar’s ultimate goal is to construct Europe’s tallest building—or at least one taller than The Shard in London, which stands at 310 meters.

Superyacht order for Hungarian client progressing smoothly. Back in March, I reported that a mysterious Hungarian client had placed an order for a 73-meter megayacht from Italian luxury boatmaker Sanlorenzo, set to be completed and delivered in 2028 for an eye-popping price of approximately $100 million. While the identity of the client remains shrouded in mystery, Viktor Orbán’s childhood friend and Hungary’s richest businessman, Lőrinc Mészáros, is well-known for his fondness for Sanlorenzo yachts. At the time, the Italian company did not respond to my request for comment. However, their recently published financial report confirms the existence of a 73-meter yacht with a 2028 delivery date. In fact, it reveals that two such yachts have already been ordered. As an EU and Hungarian taxpayer, I sincerely hope that at least the second yacht isn’t being financed by yet another European oligarch who amassed their wealth through public contracts and EU funds.

MORE FROM OUR PARTNERS

BELARUSIAN BUSINESSMAN UNDER EU SANCTIONS REGISTERED A LUCRATIVE COMPANY IN HUNGARY. Atlatszo.hu and the Belarusian Investigative Center (BIC) have uncovered a Hungarian company linked to Viktor Chevtsov, a businessman with close ties to the authoritarian Belarusian government and a former suspect in financial crimes. (Text in Hungarian, Belarusian, and English.)

CZECH WEAPONS TO RUSSIA: BULLETS GO VIA KAZAKHSTAN, WEAPONS VIA KYRGYZSTAN AND ARMENIA, OPTICS VIA TURKEY. Investigace.cz and their international partners have mapped the routes through which Czech and other Western weapons are heading to Russia. (Text in Czech and Russian.)

This was VSquare’s 32nd Goulash newsletter. I hope you gobbled it up. Come back soon for another serving. 

Still hungry? Check the previous newsletter issues here! 

SZABOLCS PANYI & THE VSQUARE TEAM