Hungarian specialty: trust foundations, not the state benefits from record profits

Despite record profits of state-owned companies, shareholders of public trust foundations will benefit the most from the two biggest Hungarian company’s record-breaking year.

Hungarian public trust foundations can receive more than HUF 91 billion (EUR 242 million) in dividends, 24.hu reports. Although the two largest Hungarian state-owned firms recorded previously unprecedented profits in 2022, the state and citizens won’t see any profit. Instead, the large sums will land in the hands of shareholders.

Record profits despite economic hardship

Despite the fuel price caps and the widely condemned excess profit tax, in 2022 the Hungarian national oil company MOL recorded a historic profit of HUF 628 billion (EUR 1,6 billion). MOL’s board of directors has proposed a payout of HUF 287 billion (EUR 761 million) from last year’s profit to shareholders. This is a 15 percent increase from last year’s payout.

At the same time, the Richter pharmaceutical company is set to pay HUF 90 billion (EUR 238 million) in dividends. The jump in dividends is much larger in the case of Richter, as it grew by 73 percent in just one year compared to 2022.

For these two companies alone, the beneficiary trust foundations will receive dividends of HUF 91 billion (EUR 242 million) instead of the state. These include the Mathias Corvinus Collegium (MCC) talent institution, which is under the leadership of Balázs Orbán, Prime Minister Viktor Orbán’s political director, and the Maecenas Universitatis Corvini (MUC) Foundation, which is the parent foundation of the Corvinus University of Budapest. These two foundations will receive HUF 36 billion (EUR 96 million) each in dividends.

The Hungarian government and governing party Fidesz have been previously criticised for moving valuable public assets from the state to private trust funds. This phenomenon was most obvious in the Hungarian higher education system, where prominent politicians were on the board of directors. The European Commission obliged the Hungarian government to remove the politicians from the boards due to the conflict of interest, to receive the frozen EU funds.

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One good year is not enough to compensate for decades of lack of funding

24.hu asked the MUC, how they will use the expected dividend of HUF 36 billion. “The MUC is responsible for the long-term maintenance and development of the Corvinus University of Budapest, so it spends its revenues and funds on the operation of the university, scholarships and investments. It must create the conditions necessary for the university to operate at a high level of quality in the long term” – the foundation argued in their reply.

“It would be irresponsible to immediately spend any outstanding dividend income, especially since such a positive year is compensating for decades of bad investment.”

Recently the President of Corvinus University, Antony Radev gave an interview to DNH, where he outlined the university’s medium- and long-term plans and vision to become the leading higher education institution in Central Europe.