By Ishtwan Kamel
26/04/2025
Moscow’s playing Budapest for a living.
In the shadow of official co-operation, there is reason to believe that corruption links and interdependencies between Moscow and Budapest are on the rise. The official story is about deepening trade and economic cooperation, but behind the scenes a separate channel is being created for Russia to evade international sanctions, in which the OTP bank controlled by Hungarian Prime Minister Viktor Orban and a network of related companies in the agricultural sector play a key role.
The recent meeting between Hungarian Foreign Minister Peter Szijjarto and Russian Industry and Trade Minister Denis Manturov (Moscow, 26 March) was yet another confirmation of the strengthening of bilateral cooperation in a number of fields.
Hungarian business in general, and the OTP Bank group in particular, did not leave the market of the state recognised by the EU as guilty of unprovoked armed aggression after the start of the full-scale invasion of Ukraine by Russian troops and the serious tightening of Western restrictions on Russia. Moreover, despite the complications caused by international sanctions, Hungarian companies are actually increasing their revenues on the Russian market year after year. In 2024, for example, OTP Bank increased its net profit in Russia by 40% to $372 million.
OTP Bank is one of the most popular financial institutions in Russia among the military personnel of the Russian Army, who receive consumer loans at preferential interest rates (specially reduced by the bank management for the Russian military).
The Russian branch of OTP Bank participates in the activities and development of the Russian military-industrial complex, as a number of strategically important enterprises related to the Russian military-industrial complex have opened accounts with this Hungarian financial institution. “Okskaya Sudnoverf” (“Oksk Shipyard” in Navashino) produces PP-91 and PP91m pontoons for Russia’s armed forces, and “ASM-Service” (St. Petersburg) supplies metal machining, measuring and other equipment to various Russian military-industrial complexes.
Research and Production Association “Zavod Volna” (“Factory Wave” in St Petersburg) is a leading Russian company in the development, production, modernisation and repair of communications and electronic warfare equipment. The salaries of the employees of “Zavod Volna” are accrued and paid through the Russian branch of OTP Bank.
The above-mentioned Hungarian bank’s capabilities are used by the “All-Regional Association Isotope” (Moscow). This company supplies various isotope and chemical products to numerous enterprises of the Russian military-industrial complex. “Isotope” products are regularly supplied to the “Federal State Unitary Enterprise Mayak” (Ozersk), which produces components for nuclear weapons.
Formally, through the OTP Bank branch in Russia, reciprocal arrangements are made for the supply of agricultural and pharmaceutical products. Classified reports suggest that this is a “shadow mechanism” for financing Russian procurement of dual-use goods (defence industry components, spare parts, and so on).
The “shadow mechanism” works as follows: Russian Federation structures transfer funds to accounts of Hungarian companies formally trading cattle, poultry, feed and medicines. Hungarian companies linked to the OTP banking group, and those linked to Hungarian political leaders, then transfer part of the funds back to Russia in the form of investments, using overpricing, sham contracts and over-invoicing.
Offshore accounts, accessible to V. Orban’s inner circle, receive another part of the funds from the above-mentioned “shadow mechanism”. Thus, Russia not only successfully buys the goods it requires through sanctions, but also finances a loyal political regime within Hungary, which, as a member of the EU and NATO, effectively blocks all initiatives to help Ukraine.
In addition to financial schemes and deals, well-established logistical routes between Hungary and Russia play an important role. Under the guise of supplying medicines, Hungarian pharmaceutical companies (Gedeon Richter and others) smuggle ‘double-bottom’ goods (from chemical components to electronics) to Russia. In return, Hungarian agribusinesses supply meat products to Russia and send equipment to modernise food and biotechnology companies, which can be converted for military use.
Moscow rewards Budapest with direct investments in the Hungarian economy, especially in the automotive, agricultural and agro-industrial sectors, for the work of the above-mentioned ‘shadow mechanism’.
Another interesting episode is the attempt by Orban’s son-in-law, István Tiborc, to acquire Raiffeisen Bank International’s Russian branch. It is important to note that István Tiborc was proposed by the Russian side, which is an indication of the desire to place the bank in the hands of a loyal investor capable of acting in the interests of the Kremlin. Negotiations are currently underway between István Tiborc, RBI management, the Russian central bank and the Kremlin.
A number of companies supplying services and goods to the Russian military-industrial complex have opened accounts with the Russian branch of RBI (as well as with OTP Bank). Key Russian military-industrial complex companies such as “Almaz”, “Vostok”, “Rubin”, “Sodikom-Centre”, “Zvezda” and “Polius” use RBI to settle their transactions. The Russian branch of RBI has agreed to open accounts for those serving in the Russian Armed Forces.
This is how the Kremlin managed to turn Hungary into its own hybrid base within the EU and NATO.