Israeli defense officials have come out strongly against the sale of 51 percent of Israel’s communications satellite operator, Spacecom, to a Hungarian communications corporation with ties to Hungarian Prime Minister Viktor Orban.
The Defense Ministry was said to have been surprised to hear the announcement in June by the Israeli company, which markets services of the Israeli satellite Amos, that it had signed a memorandum of understanding with 4iG, a publicly traded corporation.
4iG is owned by one of the wealthiest people in Hungary Lorinc Meszaros, who is a close associate of Prime Minister Viktor Orban.
Israel’s security establishment, whose approval is required for the deal to be finalized, is reportedly concerned over the transfer of Spacecom – considered a “strategic security asset” to foreign hands, as Spacecom also provides services to government ministries and various security agencies in Israel.
“This is a bizarre deal which abandons Israel’s satellite communications to unstable and undemocratic entities,” senior defense officials said.
A main concern is that the transfer of ownership of the Amos satellite series will damage one of Israel’s strategic tools, and could lead to the exposure of classified and sensitive materials about Israeli citizens, government ministries and various security agencies to extremist elements.
Security officials also suspect that Orban himself is behind the purchase, assisted by his right-hand man Meszaros – who has claimed in the past that he amassed his wealth “with the help of God, luck and Viktor Orban.”
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A defense official familiar with the details added that since the sale of strategic assets – like the Haifa Port, desalination plants, food companies and the construction of the light rail in metropolitan Tel Aviv – to Chinese corporations, there has been a decision to change policy. According to the official, the new policy will not allow a foreign country to purchase more than 20 percent of an Israeli concern defined as having strategic importance.
Spacecom said in response that the company “is working in a managed manner with the authorized entities to receive the permits as legally required.”
The company announced that it had signed a memorandum of understanding with 4iG on June 13, ahead of the major deal in which the Hungarian company will purchase more than half of Spacecom’s shares – that is, ownership of the company, at a cost of 221 million shekels ($69.9 million).
Spacecom carries a large debt of about 1.4 billion shekels, and it lost $11 million in the first nine months of 2021. The company has only $96 million in its coffers — yet 4iG offered to buy the controlling interest at 190 percent of the value of its shares.
The reason for this high price according to various individuals is Meszaros' desire to buy it in order to give Orban control over communication satellites.
There have been claims that since Meszaros purchased control of 4iG, it has received many government contracts from Orban, and according to a report on the website intellinews.com, after Meszaros took control of 4iG in 2019 its shares went up 600 percent.
Meszaros then sold his shares in 4iG to his associate Gellert Jaszi, who according to a report to the Tel Aviv Stock Exchange, still has controlling ownership of the company.
The Hungarians have apparently realized that the deal isn’t set and that Israel’s security establishment will present obstacles to its finalization, and have hired the services of strategist Israel Bachar – who was an adviser to Defense Minister Benny Gantz when he went into politics and ran for election for prime minister.
The Hungarians want Bachar to promote the deal in Israel from a PR standpoint, but figures familiar with the details believe that Bachar is being asked among other things to use his connections to promote the deal to individuals who could influence decision-makers.
Orban is a controversial figure both in Israel and according to European countries, who are concerned about his heavy-handed conduct. A report by the Washington D.C.-based NGO Freedom House from May 2020 stated that Hungary can no longer be considered a democracy because of the unprecedented steps Orban has taken to strengthen his power.
Since his election, Orban has acted to turn Hungary into an illiberal democracy, in which he controls almost all centers of power and uses them to consolidate his hold on government.
In addition to the concern over Hungary’s control of Spacecom, security officials have emphasized in the past the importance of Israeli control of its satellites. “The launch and operation of Israeli-made and owned communications satellites will prevent dependence on foreign entities and ensure independence and freedom of operation to Israel,” a report by the National Security Council stated in 2016.
In a 2016 discussion that included members of the Science Ministry’s National Council for Research and Development, it was stated that “independent capacity in the realm of communications satellites should be seen as a national asset to be protected.” The council’s committee on space recommended that permanent government funding be granted to communications satellites, but the recommendation has not been discussed by the government.
Consequently, the 2018 state comptroller’s report was critical of the conduct of political and security officials in the realm of communications satellites. “Israeli-made communications satellites under Israeli ownership constitute strategic infrastructure for Israel. This infrastructure is of supreme importance and is required among other things to ensure the country’s communications independence, without reliance on external factors.” The state comptroller called on the relevant officials to bring the issue before the government for discussion.