Elegant circumstances awaited Csaba Lantos when he arrived in Limassol, Cyprus in February 2009 for a two-day business trip. The businessman, who currently serves as energy minister in the government of Prime Minister Viktor Orbán, stayed at one of the city’s most elegant hotels, the Four Seasons, in a superior room with windows overlooking the nearby Aphrodite beach.

Lantos traveled to Cyprus to visit a company called Meritservus, which specializes in setting up Cypriot companies for foreigners and helping them to do business through them, sometimes secretly.

Lantos had already had such a company for two years. The company, called Bretonhorn Ltd, owned Lantos’ Hungarian asset management company Futurmed between 2007 and 2009. Futurmed was set up by the businessman after he left his position as deputy CEO of OTP, Hungary’s largest bank, and through this company he started to build up his own businesses, particularly in the healthcare sector.

So far, no information about the minister’s former company in Cyprus has been reported. Direkt36 found out about him as part of an international investigative project led by the International Consortium of Investigative Journalists (ICIJ) and the German investigative outlet Paper Trail Media. The investigation, called Cyprus Confidential, was based on internal documents leaked by Cypriot business firms, including Meritservus.

The documents show that in the 2000s, the use of Cypriot companies was very popular among the Hungarian business elite. The leaked files also include documents relating to the Cypriot businesses of the Wallis investment group, headed at that time by former Prime Minister Gordon Bajnai, and the Cypriot company of former Central Bank Governor András Simor. However, these were already widely reported in the press at the time and were heavily criticised by Orbán’s party, Fidesz, which was in opposition at the time. Viktor Orbán started calling Simor and others “offshore knights” referring to these deals.

Although Lantos did not take up a formal political position until 2022, when he became a minister, he had long been a part of Fidesz’s circles. A few years ago, he joined the advisory board of 4iG, a company we recently revealed to be a priority for Viktor Orbán.

Lantos has always expressed his sympathy for Fidesz in his statements, and between 2007 and 2009 he owned the weekly magazine Heti Válasz, which was openly supporting the party at the time. Lantos was doing business in Cyprus during this period, through the same company that owned Heti Válasz, while the paper was attacking Simor and others very strongly for their companies in Cyprus. (The former management and staff of the newspaper claim that Lantos did not tell them about his own company in Cyprus.)

Csaba Lantos did not respond to Direkt36’s questions sent to his ministry last week. Neither did the administration of Viktor Orbán.

The name Hungarians cannot pronounce

In early June 2007, a Hungarian lawyer sent a letter to a Meritservus employee, enclosing Csaba Lantos’ passport, address card and other personal documents. The lawyer wrote that Csemgando Ltd, a Hungarian company owned by Mr. Lantos, wanted to buy a Cypriot company.

Csaba Lantos energy minister / Source: Energy Ministry

The way Meritservus and similar service companies usually arrange this is that they have a group of companies already registered or in the process of registration but not carrying out any substantial activity, which they can then immediately hand over to interested parties. They are also known as ‘shelf companies’, which refers to companies that can be taken off the shelf and are ready for use.

Lantos’ lawyer said that they selected a company from Meritservus’ list, but it turned out that the Cypriot operator had sold it to someone else in the meantime. Meritservus advised the Hungarian lawyer to choose a company called “Chrysogonus Investments Limited,” which had been registered shortly before. However, the lawyer rejected this option, saying that “Hungarian (sic) cannot pronounce that Chrysogonus”. Finally, the company Bretonhorn was chosen.

First, they made sure that the Hungarian businessman’s involvement in the Cypriot company remained a secret. Even though the real owner was Csemgando Ltd, on paper the shares of Bretonhorn were held in the name of Finservus, a Cypriot company that was a subsidiary of Meritservus. Thus, the true owner of Bretonhorn could remain hidden, because if someone looked at the company’s papers, only Finservus could be found as a shareholder.

Csemgando has also signed a Trust Deed contract with Finservus stating that Csemgando owns the shares in Bretonhorn, but for reasons it did not specify, does not wish to exercise this right, so “as a result the said shares will continue to be registered in the name of the Trustee [i.e. Finservus]”. For this Csemgando paid Finservus EUR 2 500.

This is a common method to hide the beneficial owner in the offshore business world, and Meritservus has offered this to many other clients over the years. It has recently been revealed from investigative articles by The Guardian and OCCRP that this is precisely how the Cypriot firm, with the involvement of Finservus, has helped to conceal the ownership of Cypriot companies by various Russian oligarchs, including Roman Abramovich, a Russian billionaire close to Russian President Vladimir Putin.

Transferred hundreds of millions

The leaked documents reveal what Lantos used his Cyprus company for.

In July 2007, a decision was made to grant a HUF 600 million (EUR 2,5 million at the time) loan to Bretonhorn Ltd. on the condition that it should be repaid by the end of 2012. Around the same time, Bretonhorn decided to lend HUF 500 million to Futurmed Ltd, a Hungarian company it owns, also with a deadline of the end of 2012.

As it appears from the leaked documents Bretonhorn had no other source of funding, it is assumed that Lantos was funneling his own money through the companies he owned. 600 million started from Csemgando Ltd in Hungary and, with the intervention of the Cypriot company, 500 million of this was returned to Hungary to a company that was also owned by Lantos.

According to tax advisers interviewed by Direkt36, who asked to remain anonymous due to the sensitivity of the issue, the business case for such a scheme is that some money can be saved at the interest cost.

If two Hungarian companies with the same ownership were to enter into such a loan transaction with each other, there would be no possibility of such a profit. What would happen is that the borrowing company would have to pay interest to the lending company. For the borrower, this is an expense, so it reduces its tax base and must pay less corporate tax to the State. In the lender’s case, the interest is recorded as income, so the tax base increases and the company must pay more in tax. “So, it comes to zero at group level,” said one of the tax advisors.

However, the inclusion of a Cypriot company could – at least according to the rules at the time around 2007 – reduce the tax payable, according to the tax advisers. If the Hungarian company taking out the loan paid interest to a Cypriot company, no tax was payable there under the rules in force at the time. The Cypriot company could then decide to pay the amount as a dividend to its Hungarian owner, who would then not have to pay tax in Hungary. The tax base of the Hungarian company that received the loan was therefore reduced by the interest repaid, while the tax base of the company that made the loan was not increased because it received the money back as a dividend.

„The money changes its legal title when you include the Cyprus company”, explained one tax adviser. The source added, however, that with the 500-600 million forints involved in Lantos’ case, this could only be worth a few million forints a year.  “This won’t be the offshore business of your lifetime,” said the source, who suggested that the insertion of the Cypriot company may have been more about secrecy – if it was important to the company executing the deal. To an outsider, the credit relationship between Lantos’s two Hungarian companies was not revealed.

Since Lantos did not respond to our questions, it is not clear what happened to Bretonhorn. Hungarian company registration data show that Bretonhorn was the owner of Futurmed Kft. until June 2009. It was then replaced by Lantos’s Hungarian company Csemgando, so from then on, the businessman transparently claimed ownership and no longer hid behind the Cypriot company.

„Offshore knights”

In the 2000s, the use of Cypriot companies was widespread among the Hungarian business elite. They were able to reduce their tax burden, and, thanks to the solutions such as those offered by Meritservus, they were able to keep certain businesses secret. “What happened in Cyprus stayed in Cyprus”, said one tax advisory source, describing the situation at the time.

At the time, it was perhaps the Cypriot company of András Simor that drew most attention in Hungary. The economist, formerly head of private financial firms, was appointed governor of the Hungarian National Bank (MNB) in 2007, following the nomination of then Prime Minister Ferenc Gyurcsány.

Simor reported in his asset declarations as central bank governor that he owned a company called Trevisol Management Services Ltd, but this did not attract much attention until 2009. At that time, weekly magazine HVG reported that his asset declarations showed that Simor’s assets had been reduced by hundreds of millions of forints, leading to speculation that this money might have gone to his Cypriot company (as Simor later admitted, this is what happened).

Fidesz, then preparing for the 2010 elections, seized on the opportunity. Viktor Orbán started calling Simor (and other government politicians with Cypriot interests) “offshore knights,” and at a May 2009 press conference he said “I am fed up with the situation in Hungary where the central bank governor, the prime minister and the finance minister are bailing out their assets from taxation to offshore companies, and then, citing lack of money, are using cutbacks to make people pay.”

Simor was outraged by this and wrote a letter to Orbán saying “I do not own or have any interest in offshore companies. The only foreign-registered company I own, Trevisol Management Services Ltd., is not an offshore company, but an onshore company registered in a Member State of the European Union and paying tax under local tax law.”

Simor did not get very far with this argument. He continued to be attacked by Fidesz politicians and the media close to the party.

For example, in an article published on 11 June 2009, Gábor Borókai, editor-in-chief of Heti Válasz, harshly criticized government politicians with interests in Cyprus, and described Simor as “one of the emblematic figures of the small Hungarian public service pornography.”

Borókai has now told Direkt36 that Lantos did not tell him that he also had a Cypriot company. András Bódis, the author of most of the Heti Válasz articles on the Cyprus businesses, said that Lantos did not tell him that he had a company there, but he indicated that he was embarrassed by the stories because of his circle of friends. According to Bódis, this is why Lantos finally sold the paper in the second half of 2009.

The fact that Lantos and Simor had known each other for a long time adds a special dimension to what happened. They worked together at Creditanstalt Group in the 1990s (together with Gordon Bajnai), and although their world views and political sympathies differed, they were on good terms for a long time. According to people who know them, this ended for good after Lantos took up the post of minister in the government in 2022.

Simor told Direkt36 that he was not aware that Lantos also had a company in Cyprus. He added that he had not spoken to Lantos about being attacked by the Fidesz press, including Heti Válasz, for his own business in Cyprus.

Cover photo: Péter Somogyi (szarvas) / Telex

Balázs Schneider contributed to the story.

For Hungarian company data, we used the services of Opten.