Former powerful CEO of Hungarian state companies, convicted for economic crimes, invited to government meetings

László Palkovics convened an important meeting on June 24 of last year at the Paks nuclear power plant. The topic was the issue of the renovation of Paks I which plays a key role in the country’s energy supply, i.e. it was about how to avoid the need to close the units in the 2030s. Palkovics, who was then the Hungarian Minister of Technology and Industry, invited about a dozen of influential experts to discuss the issue. Among them were various managers of Paks I and also a representative of the Hungarian Atomic Energy Authority.

In addition, there was a special guest in the meeting whose presence surprised several participants. The meeting was attended by István Kocsis, a key figure in the political and economic elite following the regime change who led several large state-owned companies during the socialist governments, including the Paks I nuclear power plant and the Hungarian Power Companies Ltd. Kocsis’s career, suffered a serious setback when, after more than seven years of legal proceedings, in 2019 he received a five-year sentence for economic crimes he committed as the top executive of the Hungarian Power Companies Ltd.

According to sources familiar with the details of the meeting last June, many of those present did not understand how Kocsis, who was still serving his sentence, could have turned up at the ministerial-level meeting. One of the participants, who did not personally know Kocsis before, was unconvinced whether it was actually him sitting at the table. But their doubt was soon dispelled when everyone present, including Kocsis, introduced themselves. “What was especially remarkable that he had a say in the meeting,” a source familiar with the details of the conversation said, and added that Kocsis, who previously supervised the nuclear power plant, was arguing for an extension of the operating time. “He wasn’t wearing a prison suit or anything. But it was really strange,” another source noted ironically about Kocsis’s presence.

This was not the only time when Kocsis appeared at such a private nuclear-themed meeting last summer. One source with information about the event said that a few weeks later Palkovics organized a similar discussion at a countryside location outside the nuclear power plant, also with Kocsis. Palkovics later held a third meeting in connection with the extension of the Paks operating time at his ministry building in Budapest. According to one source familiar with the details of the meeting, Kocsis was not physically present at that one, but according to another source, Kocsis joined the discussion online.

It is not clear how Kocsis, who is serving his sentence, was able to attend these meetings.

The Hungarian Prison Service refused to answer our questions about whether Kocsis was still in prison or when he would be released, citing “criminal personal data.” From the courts hearing Kocsis’s case, the Kaposvár Court of First Instance said that the court of first instance are always informed when convicts are sent to prison and when they are released, and so far they have not been notified about Kocsis’s release, the court told Direkt36 in early May. We have tried to reach Kocsis through his former lawyer but have been unsuccessful. We have sent several questions to Palkovics, who has since left his ministerial position, through the state-owned companies he oversees, but have not received any reply.

Speaking about the meetings organized by Palkovics, a nuclear expert said that the former minister’s aim was to speed up the preparation of the extension of the plant’s operating time. The Orbán government’s related commitment was linked to Russia increasing gas prices and consequently also electricity prices in the fall of 2021. Energy insecurity was further increased by Russia’s invasion of Ukraine. Meanwhile, the implementation of Paks II, a second nuclear power plant to be built in the near future, remains slow. Substantial construction work has still not started, even though the contract for the expansion was signed in 2014 and the commissioning date was set for 2023.

At the helm of state companies

In this situation, the government thought it could benefit from the advice of István Kocsis, who had decades of experience in the energy sector. According to a 2011 portrait by online news site Index, Kocsis was first deputy state secretary for industry during the conservative government formed after the regime change and then became deputy director general of the State Asset Management Company in 1993. Kocsis retained his position at the head of the state-owned company, renamed State Privatization and Asset Management after the Socialists came to power in 1994. His responsibilities included the privatization of the energy sector. As the privatization of OTP Bank was also taking place at the time, Kocsis became friends with Sándor Csányi, the head of OTP, and was appointed to the board of OTP Bank.

In the late 1990s, Kocsis went to work for a German energy company and was reappointed to a state position after the Socialists took power again as the CEO of the Paks nuclear power plant in 2002. Under his leadership, the plant suffered its worst accident in 2003, with a small but significant release of radioactive material into the environment. Despite this, Kocsis was able to retain his post, and in 2005, under the Socialist government, he was appointed CEO of the Hungarian Power Companies Ltd (MVM), which also owns the Paks plant.

He was replaced as the head of MVM in early 2008. A few months later, the left-liberal—led Municipality of Budapest appointed him as CEO of the Budapest Public Transportation Company (BKV). Kocsis’s reports of corruption at the company contributed to the downfall of the powerful Socialist deputy mayor Miklós Hagyó. The series of scandals were welcome by Fidesz which was still in opposition at the time but was already preparing for governing.

Suspicious money movements

At the same time, details of suspicious financial transactions that took place at MVM during Kocsis’s leadership continued to emerge. In the summer of 2009, for example, several news editorial offices received internal investigation material from MVM which detailed the millions in contracts that the MVM Group had concluded with various offshore companies. The case that attracted the most attention was perhaps the one that also included Kocsis’s wife. According to the case, a person called “Mrs. István Kocsis” was the owner of an offshore company that rented a hotel in Croatia to an MVM subsidiary for 4,3 million euros but did not pay the rent after the contract was terminated.

Despite Kocsis’s denials, in 2012 the Budapest Chief Prosecutor’s Office brought charges against him and five of his associates for criminal misappropriation of assets causing particularly significant financial loss. According to the indictment, between 2006 and 2008, the defendants caused more than 15 billion forints (47 million euros) in damages to MVM, including through unjustified contracts. During the lengthy proceedings, Kocsis was acquitted at first instance in 2015, but a year later the court of appeal overturned the conviction.

Around Paks II

While his criminal proceedings were ongoing, Kocsis also appeared around the Paks II project. In May 2017, he caused a major stir when he appeared at the swearing-in ceremony of János Süli, the minister responsible for the Paks expansion. At the time, Süli said that he had invited Kocsis to the swearing-in ceremony, along with other important representatives of the domestic nuclear industry.

In 2018, Direkt36 reported that Kocsis appeared around a lobby organization for the Paks expansion. The P2 Association for the Support of Hungarian Enterprises, founded in May 2017, was set up to build contacts with the major players around the expansion and to participate in the screening of suppliers. The association did not achieve these objectives and was eventually dissolved.

Kocsis’s criminal case was concluded in November 2019, when he was sentenced by the Supreme Court (Curia) to five years in prison for embezzlement and misappropriation. Hungarian newspaper Népszava later reported that Kocsis entered prison in March 2020 and started his sentence in Kecskemét, which is known as a ‘VIP facility’ among Hungarian correctional facilities. Former Socialist politician János Zuschlag and former Fidesz MP Roland Mengyi were previously imprisoned here.

  • András Szabó

    András worked eight years as a journalist at Origo, a then prestigious online news site, but also spent several years at Index and news outlets. At Direkt36 he covers Russian-Hungarian relations, activities of business circles close to Fidesz, and political decision making processes of the Orbán government. In 2011 he received the Gőbölyös Soma Award dedicated to investigative journalism in Hungary, and in 2010 he won the Quality Journalism Award, both for a series of articles that focused on a corruption case connected to the former Socialist-led government.