Transparency International has filed a complaint with the Office of the Attorney General and is initiating a State Audit Office investigation over 281 billion forints in state investments, the organisation announced to MTI on Thursday.
An analysis by Transparency International Hungary also examined the background documents of the Baross Gábor Capital Programme. In the two most recent phases of the programme, the Hungarian Development Bank (MFB) and MFB Invest committed to investing approximately 388 billion forints of capital across 11 capital funds; of these, Transparency International analysed the decision-preparation documents of five private capital funds.
The findings revealed systemic shortcomings in risk management, market tests of questionable validity, undisclosed conflicts of interest, and 281 billion forints in public funds whose fate will remain untrackable for years, the organisation highlighted.
They explained that of the three pillars of the Baross Gábor Capital Programme — launched in 2023 with a total budget of 600 billion forints — the first pillar, covering real estate and securities funds, was implemented through an open tendering process.
However, the other two pillars — the Green Funds Capital Programme and the Co-investment, or so-called Economic Stimulus pillar — involved no public tendering, and in several cases the names of the beneficiary fund managers, and even the investment amounts, did not appear in communications from the state bodies involved: the National Capital Holding, which coordinates the programme, and MFB Zrt. and MFB Invest, which prepare and implement the investments, they added.
The state party also brought in a privately backed co-investor for the investments, whose identity had not previously been known.
The organisation conducted a detailed, document-based risk analysis on five of the 11 capital funds — the Andezit Private Capital Fund, the Trustify Impact I. Private Capital Fund, the CLM Future Private Capital Fund, the MBH (previously known as Equilor II., then MKB) Private Capital Fund, and the XANGA RED Private Capital Fund.
These five private capital funds alone represent 281 billion forints in state commitments, they added.
According to the organisation, the documents examined reveal the same pattern across all five private capital funds: a privately owned fund manager and a co-investor of unknown background appear, typically alongside a 70 percent state ownership stake, yet with voting rights disproportionate to that share — amounting to only 20–50 percent — meaning the state is, in most cases, reduced to a minority position even as a majority owner.
This is compounded by the systematic absence of a risk management function: not a single one of the examined private capital funds could demonstrate, through documentation, the substantive risk assessment that is required by law to be kept separate from the investment decision-making process.
In one case, at Xanga RED Magántőkealap, the text of the submission is word-for-word identical to the risk manager’s opinion — but even more illustrative shortcomings characterise the case of MBH Magántőkealap: one of the target companies acquired by this private equity fund, Aqua Lorenzo Kft., had already posted losses of several billion forints before the investment was made, yet state capital in the private equity fund still grew to three times its original size over the course of the programme, they wrote.
They continued by noting that the so-called MEIP tests used to demonstrate compliance with the prohibition on state aid — which are meant to substantiate that a market operator would also have invested under similar conditions — in several cases uncritically accepted the applicants’ own optimistic financial projections.
In the case of MBH Magántőkealap, for example, earlier investments appear with an expected return of 4.3 percent and new ones with 15.65 percent, with the difference left without explanation, they added.
Based on the documents, the privately backed co-investors also became identifiable: as a result, some form of ownership entanglement between the fund manager and the co-investor, or between the fund manager and the target companies, could be uncovered at all five private equity funds.
The available documents suggest that the state investor did not treat this entanglement as a conflict-of-interest risk, even though the overlaps may have an impact on the selection of target companies and on the valuation of the private equity funds as well.
As an example of the conflicts of interest, it was noted that in the case of the CLM Future Private Equity Fund, the fund manager and co-investor belonged to the same circle of interests: at the time of its establishment, it was owned by Dániel Jellinek, and following the change of fund manager, by Largus Holding AG, a Swiss-registered company. The co-investor behind the MBH Private Equity Fund can be linked to the interests of Lőrinc Mészáros, while the interests of the former prime minister’s childhood friend appear both as a seller and as a co-investor in the target companies receiving investment from the private equity fund.
The fund manager and co-investor behind the Trustify Impact I. Private Equity Fund are also linked to the same individual: Péter Fenyvesi, a figure connected to the circle of interests of Márton Nagy, the former minister of national economy. The fund manager of the Andezit Private Equity Fund belongs to the ownership sphere of István Tiborcz, while the co-investor is Alteo Nyrt., in which the fund manager’s other private equity fund, the Főnix Private Equity Fund, holds an interest.
In the case of the Xanga RED Private Equity Fund, the conflict of interest between the fund manager (Herdon Group) and the co-investor (XID Zrt.) is recorded in the proposal but is not treated as a disqualifying condition, they said.
According to Transparency International’s position, the patterns uncovered together establish grounds for suspicion of the criminal offence of breach of fiduciary duty, given that MFB and MFB Invest — entrusted with the management of state assets — may have caused financial harm by violating their obligations of prudent asset management, the precise extent of which will typically only be determinable upon the closure of the funds, due to the lengthy, predominantly fifteen-year, terms.
Artificial intelligence was used for the translation of parts of the original Hungarian text.