Sun, Jun 23, 2013 - Page 14 News List

Hungarians fume over revealing tobacco scandal

By Peter Murphy  /  AFP, BUDAPEST

Rita Felkai, a member of the Felkai tobacconist family, arranges cigarette packets in their shop in Budapest, Hungary, on June 4.

Warning: Smoking can damage your health

Photo: AFP

When Hungarian Prime Minister Viktor Orban swept to power in 2010, one of the many things he promised was to clean up government and root out graft.

Three years on, a shake-up of the sale of cigarettes, of all things, has turned into a scandal that has convinced many Hungarian voters that a culture of corruption remains very much alive.

Originally, last year, the slashing of the number of outlets allowed to sell tobacco products from 42,000 — including gas stations and supermarkets — to just 7,000 “National Tobacco Shops” run under a state monopoly was billed as a noble attempt to stub out teenage smoking.

However, when the list of winners, from a tender process, to own the licenses for the new state shops was revealed in April, it emerged that many not only had no experience in the business, but had close ties to the ruling right-wing party Fidesz. In some cases they were even family members.

Others were employees of cigarette manufacturer Continental, whose chief executive is a friend of Janos Lazar, Orban’s chief of staff and the author of the legislation creating the state monopoly on tobacco sales.

Inflaming matters further, a recording was leaked to the press of the Fidesz mayor of one town telling party colleagues to check a list of bidders and saying “just as long as the [opposition] Socialists don’t win any.” Similar cases emerged in two other towns.

Speaking at a demonstration against the monopoly, Katalin Szabone, one of the leaders of an angry protest group of tobacconists, told reporters that of 5,145 concessions granted so far, just 60 of Hungary’s current tobacconists had won their bids.

Gabor Felkai, a 55-year-old who has run a shop since the 1990s, but who failed to win a concession, said he cannot cover costs without selling cigarettes.

“I am too old now to get another job, so I feel very bitter,” he said, holding a placard that read, “Fidesz has taken away my living.”

Several amendments to the legislation were made after the bidding process was closed. There would be a lucrative sales margin of 10 percent. Shops would sell not just cigarettes as originally planned, but also ice cream, drinks and newspapers, and get cheap loans.

Moreover, Fidesz — which enjoys a majority in parliament — then rushed through a Freedom of Information amendment as suspicions over the concessions grew, which critics said was to ensure that compromising data on the scandal remained secret.

The amendment was vetoed by the president for infringing civil rights, but made its way back into parliament to be approved in only a slightly modified format.

Gergely Karacsony, a lawmaker with the opposition Dialogue for Hungary party, compares the scandal to the cronyism rampant during the communist era that ended in 1989.

“Back then [the elite] got apartments from the party, now they get shops,” he said. “It’s a mirage that they are trying to curb smoking, in reality it is centrally organized theft.”

And it is not the first time since Orban came to power that suspicions have been raised that those in the ruling party are out to line their own pockets and those of their family and friends.

In the leasing of agricultural land, concession winners’ secret bids left local farmers furious at losing out to well-connected individuals and companies.

The government insists the procedure to award the tobacco concessions was fair, with Orban saying media reports that some winners have ties to the left proves this. The combative Lazar accused US tobacco giant Philip Morris — which has a plant in Hungary — of stirring up the outrage as they now stand to lose revenue.

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