Oiling Orbán’s Propaganda Machine

An influential cheerleader for Hungarian Prime Minister Viktor Orbán has pumped over 3.2 million euros into his North Macedonian media network under the guise of questionable advertising purchases.

The money was transferred to two North Macedonian media companies belonging to Peter Schatz, a Hungarian media executive, from another company he owns in Slovenia. The television and web ads bought through these payments were aired on behalf of two small Hungarian companies, one of which sells olive oil and the other small trinkets such as refrigerator magnets. Neither company appears to have imported anything into North Macedonia, calling into question the stated purpose of the transactions.

The North Macedonian financial police are looking into the matter, according to a report obtained by OCCRP’s local member center and interviews with officials. Investigators suspect that the ad purchases represent “laundering” of Hungarian state money.

The ads are still appearing on Schatz’s TV channel, Alfa TV, where he is a majority shareholder, and his news website, ripostmk.com. Both outlets were part of what appeared to be a Hungarian push in 2017 to back media supporting Orbán’s beleaguered ally in North Macedonia, former Prime Minister Nikola Gruevski.

Schatz had risen to prominence two years earlier when he co-founded the original Ripost, a pro-government tabloid, in Hungary. He then became a key player in the foreign expansion of Hungary’s pro-government media, setting up branches of the outlet in Slovenia and North Macedonia.

Another network of pro-Orbán websites in North Macedonia, also owned by a Hungarian media player, has published the same questionable ads, though it is not clear whether this was part of the same scheme.

The outlets that received the cash influx have been frequently criticized for peddling propaganda for Gruevski and Orbán and publishing distorted news on NATO, Russia, immigration, and George Soros.

While the trinket and olive oil ads, which run incessantly on Alfa TV, have already raised eyebrows in Hungarian media, documents obtained by OCCRP and its local member centers — Investigative Reporting Lab Macedonia, Direkt36 in Hungary, and Oštro in Slovenia — show for the first time how large amounts of money were funneled into the country’s pro-Orbán press.

Advertising experts who reviewed contracts and invoices related to the transactions said the deals made no commercial sense.

A North Macedonian financial police report summarizing the agency’s findings describes Schatz’s transactions as having been based on “suspicious invoices” that represent advertisements for products that “do not exist on the [North Macedonian] market.”

The document also asserts that the funds could be the proceeds of criminal acts, and that they had been “legalized” through companies in North Macedonia. This represents evidence of “the criminal act of money laundering,” the financial police concluded. It is not clear what criminal acts the police refer to in the report, or whether it is related to suspicions of Hungarian state involvement.

Arafat Muaremi, the director of the Finance Ministry’s financial police, is overseeing the investigation.

Muaremi said in an interview that he suspected the funds originated with the Hungarian state and were part of a propaganda operation intended to fund political activities, though he offered no evidence.

North Macedonia’s Prosecutor’s Office was informed about the findings of the financial police investigation in August 2019, but the office has not yet opened an investigation, according to Muaremi. Prosecutors confirmed they were aware of the case, but declined to comment further.

The influx of funds into North Macedonia comes as the country prepares for new elections in April in which the Orbán-friendly VMRO party is seeking to regain power.

It is illegal in both North Macedonia and Slovenia for foreign entities to fund political parties, but there is no ban on channeling money to media outlets.

Olive Oil and Crystal-Encrusted Mugs

Outlets that uncritically convey Viktor Orbán’s messages, supported by advertising purchases by the state, have long dominated Hungary’s media environment. Years of small steps toward building a centralized propaganda machine culminated in the creation in 2018 of the Central European Press and Media Foundation, which now controls over 100 pro-government media outlets, according to a report by a group of press freedom organizations.

Meanwhile, pro-Orbán media tycoons were looking beyond their own borders into the former Yugoslavia and the wider Balkan region.

In the spring of 2017, people close to the Hungarian government, including Schatz, moved on Slovenia and North Macedonia.

In both countries, he purchased and established newspapers, websites, and television stations that supported former prime ministers — Nikola Gruevski in North Macedonia and Janez Janša in Slovenia — who are considered friendly to Orbán. Both men share a range of populist, right-wing political tactics with the Hungarian leader, emphasizing the supposed threat posed by immigration and decrying the influence of Hungarian-born American philanthropist George Soros.

Credit: Reuters/Ognen Teofilovski Nikola Gruevski, North Macedonia’s prime minister at the time, stands in front of his Hungarian counterpart, Viktor Orban, during a meeting in Skopje in 2011.

The Hungarians arrived in North Macedonia at a desperate time for Gruevski and his party — as well as VMRO-friendly media outlets. Anti-corruption protests had recently swept the country, while government-backed advertising dried up after Gruevski stepped down as prime minister in 2016.

As prosecutors closed in on him in a kickbacks scandal that would see him sentenced to two years in prison, he fled to Hungary, where Orbán welcomed him with open arms and eventually granted him asylum, despite Macedonian authorities’ attempts to extradite him. He is reportedly still living there today.

In the midst of VMRO’s travails, a Slovenian company owned by Schatz, RIPOST (now called R-POST-R), signed a curious advertising contract with Target Media, the holding vehicle for his North Macedonian media companies.

The two-page document is short on detail, but broadly outlines how R-POST-R was to pay Target Media 2.94 million euros for advertising and other services over 21 months.

Schatz’s signature appears twice at the bottom of the July 2017 contract: as a representative of both the “service provider” and the “service recipient.”

According to North Macedonian financial police, Schatz’s Slovenian company transferred a total of 2.85 million euros, nearly the contracted amount, to Target Media between August 2017 and February 2019.

According to the contract, Target Media was to bill the Slovenian company 140,000 euros per month. In fact, the two invoices reporters obtained were for 120,000 euros and 615,000 Macedonian denars (10,000 euros). The reason for the discrepancy is unknown — but the contract has other questionable features as well.

“This is not a proper contract,” a Macedonian marketing specialist told Investigative Reporting Lab-Macedonia after reviewing the document. The document did not include a detailed budget and appeared to have inflated the price of services, he noted.

The largest client at a major Skopje-based marketing agency where the specialist has worked for 15 years spent less than 500,000 euros per year for prime-time ads that appeared on all national TV channels, radio stations, and online media outlets. He spoke on condition of anonymity, as he was not authorized to reveal the details of his firm’s work.

In addition to the Target Media contract and invoices, the Financial Police also found similar invoices sent to Alfa TV directly from R-POST-R worth about 440,000 euros.

Those seen by OCCRP either do not name the specific advertisers or mention only BonyART, an online trinket shop based in Hungary.

The huge spending on advertising does not appear to have paid dividends for either company: The North Macedonian customs service said it had no records of any Olivery or BonyART products ever being imported into the country.

Olivery’s oil ad, which has become a regular fixture on Macedonia’s Alfa TV, shows a whirring slot machine featuring green olives, olive branches, and drops of oil.

“You can only win,” a male voice intones as the machine spins up a winning combination.

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Though Olivery is a Hungarian firm, the only product it currently sells is cold-pressed olive oil from “family-owned olive orchards on the islands off the coast of Dalmatia, Croatia.” Reporters were unable to find any trace of Olivery in the country, but they did successfully order a bottle of Olivery oil from the firm’s website. The oil arrived in Budapest in a cylindrical box with a label showing Croatia as its country of origin.

The firm currently has no official employees and in 2018, the most recent year for which data is available, its turnover was 2.4 million forints, or about 7,400 euros, according to the Hungarian business registry.

When reached by phone, Olivery’s owner said he was “too busy” to talk to journalists and did not want to discuss the details of his advertising in the Macedonian media.

The other company that advertised in Schatz’s outlets, BonyART Design, has been designing and producing “unique decorative products” since 2011, according to its website. The company’s online store currently offers keychains, bottles, and fridge magnets emblazoned with the names of European cities or slogans like “Thinking of You.” Its most unusual wares are a series of mugs encrusted with Swarovski crystals.

“Why not?” asked the company’s owner, Miklós Bonyár, when reporters asked why he was advertising his products in North Macedonia. He said he had not been aware of the financial police investigation and had not been contacted by authorities, but insisted that his trinkets were genuinely being offered for sale.

He claimed his company also advertises in Slovenia, Croatia, Serbia, the United Kingdom, and the United Arab Emirates, and that there’s a “nice demand” for his products. BonyART’s turnover has grown in recent years, with income reaching more than 200 million forints (630,000 euros) in 2018. Its profit that year, however, was just 2.1 million forints (around 6,700 euros).

Bonyár said that he knows Schatz, adding he has maintained “a friendly relationship with him for over 20 years.” He declined to disclose the details of their agreement regarding advertising in North Macedonia.

Schatz did not respond to an email seeking comment.

Credit: OCCRP Miklós Bonyár poses with his wares in this photograph from his website.

The Hungarian Pipeline

North Macedonian police suspect that the funds used to bolster the pro-Orbán media outlets originated in Hungary before passing through Slovenia. “[Our] Slovenian colleagues informed us that the money is coming from Hungary,” the financial police told Investigative Reporting Lab Macedonia.

Necenzurirano.si, a Slovenian news site, recently reported that R-POST-R received at least 4 million euros from several companies tied to the Hungarian government since August 2018, including Ripost Hungary, and that the cash was later disbursed to media in Slovenia and North Macedonia. The outlet did not publish any documents supporting this claim, and OCCRP was unable to verify them independently.

However, Slovenian and Hungarian corporate documents indeed show financial transactions between R-POST-R and Ripost Hungary. Hungarian company documents from 2018 show that R-POST-R was a supplier for Hungarian Ripost, which was to pay more than one hundred million forints (348,000 euros) for the Slovenian company for unspecified services.

Slovenian company documents from 2017 also show that R-POST-R owed 350,000 euros to “companies in the [Ripost] group.”

Slovenian company documents also show that R-POST-R spent a significant proportion of its income on fulfilling its contract with Target Media. According to the contract, in 2018, Schatz’s Slovenian company was to transfer 1.7 million euros, or 40 percent of its annual income, to his Macedonian company.

In a brief written statement in response to questions about illegal party financing in Slovenia and the police investigation in North Macedonia, Slovenian police confirmed that a preliminary investigation had been opened in 2018, without revealing its target.

The Propaganda Machine

Schatz’s acquisition of pro-VRMO Alfa TV and his launch of a news portal in the Balkan country came at a low ebb for Gruevski, who was facing protests and criminal investigations.

“It was not advertising, it was controlling media and setting up party channels designed to spread hate speech, smearing campaigns on the opponents and even open calls for ethnic tensions,” said Mladen Chadikovski, president of the Association of Journalists of Macedonia, referring to how the outlets operated during Gruevski’s time in office, up until 2016.

“Faced with the possibility of losing the elections set up for 2016, EM Media group and Alfa TV became the front runners of the so called anti-Soros campaign that almost brought the country to the edge of a civil war”, said Katerina Sinadinovska, president of the Council of Ethics of Macedonian Media.

Biljana Bejkova, executive director of NVO Infocentar, an NGO monitoring media and anti corruption and rule of law policies, said these outlets continue to push a similar worldview, although the approach has softened a little since VMRO was voted out.

“Their policies had not been changed, and they are still anti-migrant, anti-NATO, anti-EU oriented, but a bit more careful because they don’t feel so safe while their party [VMRO] that is backing them is in opposition.”

In Slovenia, Schatz-controlled media is also known for publishing fake news and misinformation, especially regarding migrants. Oštro’s fact-checking program, Razkrinkavanje.si (Disclosure), has documented several such stories published by his television station and news portal, including a story that turned out to be fabricated about a migrant who supposedly died of ebola in Slovenia after infecting local hospital staff.

🔗Balkan Allies in Misinformation

Hungarian businessman Peter Schatz started investing in the Balkan region in March 2017.

In Slovenia, he became the business partner of Árpád Habony, who is considered an unofficial adviser to Orbán, as they both acquired stakes in a company that runs Nova24 TV and its online news portal, Nova24TV.si. The outlets are known for supporting the political agenda of SDS, the main Slovenian right-wing party. Similar to the North Macedonian outlets controlled by Orbán allies, both are known for spreading misinformation and airing stories that trumpet SDS’s political agenda.

The station is now owned by three Hungarian companies, one of which is controlled by Ágnes Adamik, another key media operator in the region who set up a string of news outlets in North Macedonia at around the same time as Schatz in 2017. Both Schatz and Adamik are members of the supervisory board at NovaTV24.si along with some of Janša’s key SDS party members. Janša personally holds minority stakes in both companies, as do some other party members.

Schatz also founded Ripost založništvo (later renamed R-POST-R), a company that became the majority owner of SDS’s own publishing company Nova obzorja which publishes the right-wing mainstay weekly newspaper Demokracija, as well as a newer tabloid paper.

In the lead-up to the 2018 parliamentary elections, Orbán personally supported Janša’s campaign. “I can be your lucky talisman,” Orbán said at an SDS congress in 2017.

In Slovenia, although Janša’s SDS won the most votes in the 2018 parliamentary election, it was unable to form a government and remained in opposition.

At the time of his Slovenian purchases, Schatz also established Target Media Group, a consulting firm in Skopje, and acquired a stake in a company that operated the pro-Gruevski Alfa TV. In mid-2017, he launched his Macedonian news site, Ripostmk.com.

A number of stories featured on Alfa TV and RipostMK have also been criticized for inaccuracies.

In May 2018, North Macedonia’s Council of Media Ethics ruled that two reports from the same show on Alfa TV covering Russian influence and sexism in the North Macedonian army had breached the council’s code of conduct. Fact-checking outlet F2N2 (Fighting Fake News Narratives), which is partly funded by the US Embassy in Skopje, also raised serious concerns about an article written by Hungarian-owned Republika headlined “Zaev asked for money from Soros, Albanian votes from Rama and gave El Cheka bombs for DUI?”

Fact-checkers found: “Except for the empty conspiracy theories, the portal Republika doesn’t offer any evidence but refers to their unofficial sources. The content of the text is a false and unverified description of the events and persons presented, presenting them as part or result of some hidden plan (plot).”

Alfa was also criticized for a story it ran in March 2019 which misreported a survey of German businesses operating in North Macedonia. “The story is a spin and an attempt to present the survey … in a selective manner and in a negative connotation,” the fact-checkers note.

A Hungarian source familiar with the government’s strategic plans told Direkt36 that Viktor Orbán’s goal is to make Hungary an important player in the Balkans, and the government is “trying to gain influence and make friends” in the region.

Orbán offers not only rhetorical support to his allies in the region, but also significant political help through the media investments of Hungarian businessmen close to the government. Media purchases are favorable options because they are not subject to party funding rules, the source added.

So as elections in North Macedonia draw near, Alfa TV continues to churn out its daily doses of pro-VMRO and Orbán news, punctuated by the olive oil ads and their now-familiar voiceover: “You can only win.”

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