Business,  Hungary

The Audi defiance

Guest post by Ken Cameron

This is not a story about a new car launch by Audi. This is a story about how one man defied the plans and ambitions of a multinational company, and the consequences that followed.

Most people are ready to settle for a quiet life and so it can be difficult to empathise with those who resist the status quo – dissidents if you will. It may be worth remembering the events in Tiananmen Square, Beijing, in 1989, when a nameless individual stood in front of a column of tanks and defied the communist regime. Of course Audi is not the Chinese Communist Party; the point is that it takes courage to defy overwhelming power.

In 2010 Audi decided to expand its car manufacturing facility in Györ, Hungary. It seemed both logical and cost-effective to build next to the existing site rather than to consider development land elsewhere in the district. The board of Audi made its plans and decided to implement them. There was just one problem. The land in question was part of a National Park, an area of sand steppe of special scientific interest containing rare plants and animals in an almost unique landscape. The National Park (Natura 2000 ) had already received full recognition during 2010 with a European Union grant of €1.2 million.

Part of the reserve was under the final control of the Hungarian defence ministry, and the government agreed to sell 195 hectares of land to Audi in August 2010. In January 2011 the EU withdrew its recognition of Natura 2000 status at the request of the Hungarian authorities. So far everything seemed to be moving extraordinarily quickly, in favour of Audi.

The EU justified its volte face by accepting that the factory expansion was in the public interest and that 18 alternative development sites were unsuitable. It is estimated that Audi contributes 1.8% of total GDP in Hungary and so the government of Viktor Orban was likely to respond sympathetically to requests from the car giant. Eventually, Brussels asked the government to designate new land under National Park rules in order to compensate for the destruction in Györ and this arrangement was supposed to be in place by 2015.

Although Audi seemed to have achieved all of its objectives, it was still worried that the entire process might be derailed by one man. Ferenc Zsak the unpaid chairman of Tiszäntuli Termeszetvedök Tarsulata (TTT), a charitable organisation that was responsible for the reserve under Natura 2000. Zsak decided that he would oppose the factory extension as a matter of principle and law. Audi expressed its concern to the authorities and they responded.

Zsak began legal action against Audi within the EU Commission and in Hungary itself in order to preserve the National Park. On 1.7.2011 Zsak was arrested in his office by state police from the National Bureau of Investigation. He was taken to Budapest and held in custody for four months. He was kept in a cell with 16 other prisoners and lost 9 kilos, leading to serious health problems. The police seized his files and computers. Some people who are close to the case have asked why the Hungarian Secret Service spied on TTT‘s electronic communications and passed confidential information to Audi.

The initial legal action by Hungarian prosecutors failed and Zsak received compensation of €5,000 for improper treatment by the state, which he used to cover his legal fees. However the car company continued to harass Zsak with the assistance of the Orban government. Audi did not change its plans, the development went ahead and the factory extension opened during the Summer of 2012.

It is interesting to look at two payments by Audi and one of its subcontractors.

–Payment to TTT by Audi HUF: 200 million (approximately € 645,000).

–Payment to TTT by STRABAG (Austria): HUF 30 million.

Ostensibly these payments were made as part of a compromise deal– the funds were to be earmarked for other conservation projects. After the payments were transferred, Audi complained to the authorities that Zsak had induced a bribe in return for dropping opposition by TTT. Zsak denied ever receiving funds for his personal benefit. This second Audi legal case was rejected by a Hungarian court in March 2014. Nevertheless it is reported from Hungary that Audi and its associates within the Orban government continue to harass Zsak and that legal action continues.

Ferenc Zsak is in poor health and there is no closure for him. Zsak is a conservationist and he tried to save a National Park from industrial development, as was his duty as he saw it. The Audi company appears to have rejected any compromise in its determination to develop the existing factory in Györ. Single-mindedness may be a virtue in the world of business; however the behaviour of Audi and its confederates raises some important questions.

1. How does Audi justify its decision to build on green land of the highest
status– a National Park?

2. Along with other concerns Audi claims to be a green company. Is
expediency an overruling factor?

3. Is Audi an ethical company?

4. Why has Audi failed to use its influence with the Hungarian government to call a halt to the pursuit of Ferenc Zsak?

5. Why has the Audi company failed to make an apology and offer a compensation payment to Ferenc Zsak?

6. Why have the German government and the European Commission failed to regulate Audi according to recognised international standards?

7. Why has Audi failed to brief its shareholders about its business philosophy in Hungary?

8. Is Audi willing to accept an independent investigation to establish whether or not the company has made improper payments to the Hungarian authorities and members of the European Commission?

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