Hungarian media group ‘fuelled’ by cbank cash

Co has links to NBH governor, family

BUDAPEST, May 23, (RTRS): Shortly after National Bank of Hungary (NBH) Governor Gyorgy Matolcsy took his post three years ago, a group of businessmen launched an online media group that has grown rapidly with the help of the central bank.

The company, New Wave, has received central bank grants totalling $2 million and a loan from a lender under the control of the central bank, according to NBH and company records.

New Wave also received a bigger slice of money from a central bank advertising campaign than any of its online rivals, in the period covered by published NBH data.

None of this funding violated any regulations or broke any laws, according to the central bank. It has nonetheless prompted some Hungarian media outlets and opposition politicians to allege New Wave received preferential treatment because it is owned by businessmen with close ties to Matolcsy and his family. Matolcsy and New Wave deny these allegations.

New Wave said in a statement to media outlets: “It is completely incorrect to assume that support from the National Bank of Hungary’s foundations transferred to these companies had anything to do with family ties.”

New Wave launched news website VS.hu in late 2013 and bought web portal Origo.hu from Magyar Telekom for $15 million in January this year to become one of Hungary’s biggest online news groups.

Balazs Weyer, Origo editor until 2011 and chair of Hungary’s Editors’ Forum, said that in his experience of the media industry, the speed of the New Wave group’s expansion was “highly unrealistic” under normal business circumstances.

“A mid-size media company acquiring the market-leading brand (Origo) is unimaginable outside the zone of power,” he said.

VS, the news website of New Wave, has been the only major news outlet to benefit from grants handed out by the central bank through six foundations, according to a list published by the foundations.

Endowed

Matolcsy set up the foundations in 2014 and endowed them with money from the NBH’s operating surplus in 2013 and 2014. He said their aim was to promote financial education.

VS received $2 million of grants last year to produce a series of articles on subjects that the NBH said were important but neglected in the local press. VS produced the series, sending reporters to produce about 10 video reports in places where Hungarian outlets rarely go, including Kenya and California.

Only a handful of other news companies received grants, but much smaller ones. The next biggest media recipients were two small news stations, Echo TV and Business Radio, which received grants worth about $25,000 and $7,000 respectively for programming.

Hundreds of companies and individuals in other sectors received money - grants or contracts - from the foundations. The total spending on grants, and the selection process involved, was unclear.

The central bank did not directly address Reuters questions about the grant to New Wave, instead referring to Matolcsy’s comments to daily newspaper Magyar Nemzet on May 6.

“The foundations do not examine what owners stand behind the supported projects,” Matolcsy said. “(VS) submitted a modern, excellent programme that fits the foundations’ philosophy perfectly, so we supported it.”

Matolcsy is a close ally of Prime Minister Viktor Orban, who described him as his “right-hand man” when he served as economy minister in 2010-2013 and nominated him for the NBH job.

Support

Orban has enjoyed strong support in print and broadcast news, with most leading outlets either swinging behind his Fidesz party or largely refraining from criticism during the 2014 election. But online outlets have been more critical.

Fidesz has sought to increase its influence in online media for several years, according to sources with knowledge of the government’s communication strategy.

“New Wave is an important new player among media groups close to Fidesz, one that strengthens the party’s influence in the online sphere, where it had less clout than in the traditional press,” said media analyst Gabor Polyak of the Mertek Institute think-tank in Budapest.

Orban’s government denies infringing on media independence and says it meets EU standards on media freedom. A government spokesman declined to comment on central bank ties to New Wave or allegations of Fidesz influence.

Matolcsy’s cousin, Tamas Szemerey, played a central part in the launch of New Wave; his consultancy firm BanKonzult paid registration fees to state authorities on behalf of the media company when it was set up in 2013, the registration documents show.

Weeks later a Czech company called Idspisa bought a majority stake in New Wave through a subsidiary. Jan Nagy, Szemerey’s longtime business partner, is the only board member listed at Idspisa, according to company records. He is also listed as the “official representative” for the subsidiary, Bawaco.

New Wave’s other shareholder and its CEO is Istvan Szaraz, a close friend of Matolcsy’s son Adam and Szemerey’s son Bertalan, according to media reports and sources close to New Wave.

While no one is asserting that these deals have cross legal lines, the partners’ links to Matolcsy have led to some opposition politicians calling for him to resign, accusing him of nepotism. Matolcsy has dismissed such calls as political opportunism.

Reuters was unable to contact Nagy. Szemerey did not reply to repeated emails seeking comment about the central bank funding and allegations of preferential treatment. His son and Matolcsy’s son also could not be reached for comment.

Szaraz did not address Reuters questions on the NBH funding and allegations of preferential treatment, but said it was his idea to launch the media group, which started with a tourism site.