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EXCLUSIVE-Hungary premier's friends and family win more and more public business

business@ (This accompanies a Special Report: https://www.reuters.com/investigates/special-report/hungary-orban-balaton/) BUDAPEST, March 15 (Reuters) - Hungarian Prime Minister Viktor Orban's friends and family have been increasingly successful in winning publicly funded business since he resumed power in 2010, a Reuters analysis of public procurement data shows. Companies owned or controlled by 10 businessmen - including Orban's childhood friend Lorinc Meszaros and his business partners, and his son-in-law Istvan Tiborcz and his associates - have collectively secured 1.975 trillion forints ($7.85 billion) worth of tenders for contracts funded by public money since 2010, the analysis shows. That is more than 10 percent of the value of such contracts over the period. The total includes contracts awarded either directly or in consortia, and direct contracts as well as framework agreements. The 10 men's share of the total surged last year, when public procurement in Hungary reached a record high of 3.63 trillion forints. In 2017, companies they controlled won business worth 28 percent of that, up from around 1-2 percent before Orban took power. "Reuters' analysis uncovered new hard data and arrived at a valid summary, which contribute to this field in a relevant way," said Istvan Janos Toth, an economist with the Hungarian Academy of Sciences. Toth is also director of the Corruption Research Centre Budapest (CRCB). The analysis used data collected by the CRCB from the Public Procurement Agency's website. Neither the government nor Orban responded to requests for comment. The 10 emerged during reporting for a special report from Lake Balaton, one of central Europe's top tourist destinations. After Orban announced major public funding for tourism projects in the region in 2014, the men bought into properties in the Balaton city of Keszthely. Orban's son-in-law Tiborcz was the first new investor. He pulled out of one property in 2015 after controversy around his purchase, but a company he co-owns now holds a stake in the resort's largest hotel. This company, Reuters found, is entitled to 45 percent of profits from the hotel and another in its portfolio. He did not respond to a request for comment.

EUROPEAN FUNDS Orban, whose party, Fidesz, faces elections on April 8, has made strengthening local businessmen a cornerstone of his economic policy. Polls show the premier, 54, is likely to secure a third straight term in office, although a united opposition has made his campaign less predictable. The Balaton investment will include European Union funds. The EU has "zero tolerance to fraud with EU funds and therefore insists on a clear commitment from all member states to prevent fraud," a Commission spokesperson said by email. The spokesperson did not respond directly to Reuters findings. In its 2016 annual report, the EU's anti-fraud office (Office européen de lutte antifraude or OLAF) recommended that Brussels ask Hungary to repay EU funds totalling more than 4 percent of the cash Europe has given it between 2012 and 2015, the highest rate of any EU member country by far. OLAF declined to discuss specific projects, but says on its website it makes such recommendations when it believes EU money has been "defrauded or irregularly misspent." Suspected violations can include projects that have been overpriced, involved collusion with bidders, or pointed to conflicts of interest. ($1 = 253.0400 forints)

Figures in millions of forints

Year Total of Total public SHARE (pct) Keszthely 10 procurement 2005 14 141 1 291 300 1.10 2006 7 245 1 685 800 0.43 2007 32 977 1 521 300 2.17 2008 32 810 1 417 900 2.31 2009 46 177 1 809 800 2.55 2010 23 201 1 496 500 1.55 2011 22 279 1 457 200 1.53 2012 88 965 1 333 500 6.67 2013 181 884 2 394 300 7.60 2014 147 558 2 135 900 6.91 2015 146 102 1 931 600 7.56 2016 204 595 2 007 100 10.19 2017 1 014 417 3 629 900 27.95 2018 145 931 n/a n/a TOTAL 2 108 289 24 112 100 3.93 Total since 2010 1 974 936 16 386 000 11.16 Total before 2010 133 352 7 726 100 1.73

Source: Hungary's Public Procurement Authority (via the Corruption Research Centre Budapest for all except total annual values); Reuters calculations.

($1 = 251.4600 forints)

(Reporting by Marton Dunai Edited by Sara Ledwith and Richard Woods)