Hungary After Orbán, Part One: Why the System Was Vulnerable
On April 12, 2026, Hungarian voters ended sixteen years of Fidesz party rule in a landslide. Péter Magyar's Tisza party swept in with the largest mandate any party has received in Hungary's democratic history, and while economic stagnation and inflation drove much of the vote, corruption fatigue ran through it. Polling in the lead-up to the election consistently pointed to public frustration with graft as one of the forces pulling support away from Viktor Orbán, a leader whose government had, by the European Parliament's own description, turned Hungary into a "hybrid regime" where elections continued but democratic norms and state institutions were undermined.
In advance of the first TRACE event in Hungary – in Budapest on November 18 – this three-part series examines the EU country that now strives to move from entrenched, systemic corruption toward international anticorruption standards. Part One explains how widespread corruption was made possible and largely kept hidden. Part Two will explain the costs to Hungary of corruption during the Orbán regime, particularly for education and health care. Part Three will look at the solutions for combatting corruption and for recovery of stolen assets.
Systematic Corruption under Orbán
Hungary ranked as the most corrupt country in the EU during the last 4 years of the 16-year Orbán Administration, during which systemic corruption cost the Hungarian state as much as €150 billion, according to Ferenc Bíró, head of Hungary's Integrity Authority. Only since 2021 has the annual GDP of Hungary substantially exceeded €150 billion.
Readers familiar with entrenched kleptocracies elsewhere will know that figure far exceeds the $4.5 billion stolen from the Malaysian state fund 1Malaysia Development Berhad (1MDB), or the $4 billion likely stolen from the state of Congo under former dictator Mobutu Sese Seko over his three decades in power.
The more instructive question is not how much was taken, but how the system was built to make taking it possible, and to make it difficult to notice.
Three Ways the System was Built to be Exploited
Three structural features of Hungary under Orbán, working together, created conditions where large-scale diversion of public assets could continue for years with minimal exposure.
The first was media capture. Over sixteen years, ownership of the press in Hungary was consolidated steadily into the hands of government allies, narrowing the space for independent investigative reporting that might otherwise have surfaced problems earlier. Only a few media firms, including Átlátszó and Direkt36, criticized the government by publishing evidence-based exposures of systemic corruption, cronyism, and state capture. They did so against a media landscape tilted heavily toward the government's narrative.
The second was public procurement rules that systematically favored a narrow set of bidders. Transparency International Hungary found that in 2024 alone, framework agreements worth HUF 3,219 billion (€8.25 billion) were concluded, and in more than two-thirds of those cases, the contracts were awarded in a manner that restricted competition to a single bidder.
The third, and most consequential for understanding where the largest sums went, was the use of opaque foundations and private equity structures to move public money outside the reach of ordinary public scrutiny. This is where the Hungarian National Bank's own foundations offer the clearest case study of how the mechanism worked in practice.
A Familiar Cast of Characters
These structural conditions produced a recurring pattern of cases, not a handful of isolated incidents. Among the most cited is the “Elios case,” involving EU-funded street lighting contracts awarded to a company co-owned by Orbán’s son-in-law, István Tiborcz. Investigators at the EU’s Anti-Fraud Office (OLAF) found evidence of collusion and inflated pricing, but Hungarian prosecutors ultimately declined to pursue charges. By the end of 2024, Transparency International Hungary found that the Hungarian state had funneled HUF 1,311 billion (roughly €3.36 billion) into private equity funds with little transparency or accountability, nearly half of it managed by just two firms: one owned by Tiborcz, the other by Lőrinc Mészáros, a childhood friend of Orbán’s who rose from gas fitter to one of Hungary’s wealthiest men.
The Bertelsmann Transformation Index reached a similar conclusion in its own assessment of the country, finding that “corruption and oligarchization distort market competition” in Hungary’s economy. These cases share a structure with the MNB scandal below: public money, routed through opaque private vehicles, benefiting a small circle with direct ties to the prime minister.
The MNB Foundations: A Case Study in Institutional Capture
In 2014, under then-governor György Matolcsy, the Hungarian National Bank established a set of foundations and transferred more than HUF 266 billion (€760 million) in central bank assets into them, later consolidated under a single entity: the Pallas Athéné Domus Meriti Foundation. Asset management passed to a company called Optima Befektetési, which then raised additional public funds from other state-linked bodies, eventually overseeing some HUF 500 billion (€1.42 billion).
What made this structure an effective means to hide the theft of state assets was its complexity. Hungary's State Audit Office reviewed the foundations' activities in 2018 and found no irregularities. It was not until years later, after the Audit Office received a formal complaint, that a fuller investigation began, and a leaked draft report told a very different story: investments channeled through a deliberately opaque, cross-border corporate network that made it nearly impossible to assess the real value of the assets involved, and transactions that appeared to benefit business interests connected to Matolcsy's own son. The Audit Office ultimately concluded the fund had suffered significant losses through what it described as poor investment decisions, made without meaningful oversight of Optima's activities until 2024, a full decade after the foundation was created.
Transparency International Hungary, in its most recent annual corruption report, called the MNB foundations scandal "the most striking example of the impunity of high-level corruption" in the country. Their assessment is direct: at least HUF 270 billion (€760 million) in public money was diverted through this structure. TI Hungary notes that the fate of a roughly equal amount (roughly HUF 270 billion) remains uncertain, and to date, no one has been held accountable.
Manipulation of state institutions undermined their ability to uncover corruption. Hungarian state auditors looked directly at these foundations in 2018 and either missed the theft of public assets or were not permitted to see it clearly. The mechanism was not hidden so much as it was built to be unreadable, layered deliberately across enough entities and jurisdictions that accountability became someone else's problem to establish.
What Comes Next
Hungarians are only now coming to understand the scale of the theft of state assets by senior officials of the Orbán administration, and how opaque structures like the MNB foundations made that possible without scrutiny for so many years. Efforts to locate and recover stolen assets have just begun by the new Magyar administration, but the negative impacts for the Hungarian people have already become apparent.
Erosion of the country's education and healthcare systems, which were centralized, restructured, and underfunded relative to its European peers over the 16-year Orbán administration, provides the starkest understanding of the impact of government corruption in Hungary. Part Two of this series will look at both those costs, and at what it will take to rebuild.