This is not the first time that controversies of the Jeremie programme are exposed. Direkt36 and Forbes recently revealed that Zsolt Hern\u00e1di, president and CEO of the Hungarian oil company Mol, financed his own relative\u2019s business through the programme. The European Commission found such grave violations that it blocked the payments for months and imposed a fine of 4.3 billion forints (14 million euros). That article was based on leaked documents that contained details of businesses activities between Garancsi and Scheer.<\/p>\n
Garancsi emphasized that he and Scheer were not business partners at the beginning of the investment, and claimed that his investment did not violate any rules. The factory manager blamed the ir troubles on the sharp decrease of crude oil prices, arguing that it directly affected their business model.<\/p>\n
Garancsi steps in<\/h3>\n
The European Union launched the Jeremie venture capital programme in Hungary in 2009. A subsidy totalling 130 billion forints (422 million euros) is allocated to fund managements companies operated by private investors who have to provide 30% of the investment. The fund managers must repay the subsidies within 10 years, but not to the EU, but to the Hungarian state. If the fund management company exits the start-up with a profit, most of the gain goes to the private investor. In case of significant loss, however, it has to share at least part of that, too.<\/p>\n
![\"\"](\"\/\/www.direkt36.hu\/wp-content\/uploads\/2017\/03\/B\u00e1lint-e1490263266850.jpeg\")
<\/a>The factory at B\u00e1tonyterenye – Photo: Fab\u00f3k B\u00e1lint<\/p><\/div>\n
Garancsi was selected in 2013, and his fund, Garangold received 3 billion (9.7 million euros) worth of EU subsidy to support start-ups. Garancsi and Scheer became business partners in November 2014 when Garancsi became the co-owner of a notable construction company, Market \u00c9p\u00edt\u0151 Zrt. A few months before, Garangold had supported the waste processing factory belonging to Scheer with 285 million forints (0.9 million euros). A year after they became co-owners at Market, Garangold once again gave the factory 400 million forints (1.3 million euros). By supporting his business partner\u2019s company, Garancsi did not violate any Jeremie rules.<\/p>\n
According to the economic news outlet Napi.hu, Scheer is among the 100 richest people in Hungary thanks to his 7.3 billion forints (24 million euros) wealth. Market \u00c9p\u00edt\u0151, exclusively owned by him and Garancsi, has received several public contracts since Garancsi\u2019s involvement in the company. In 2016, Market\u2019s revenues have increased by 65 per cent. It constructed, for example, the Dag\u00e1ly Swimming Arena for more than 50 billion forints (15 million euros), which will host swimming contests during the FINA World Championship in 2017.<\/p>\n
Money made of tire<\/h3>\n
The supported factory is operated by Scheer\u2019s business interest, KGF Hungary and it is located in B\u00e1tonyterenye, a town in Northern Hungary. Based on the initial plans, the factory was aimed to manufacture oil and carbon black out of used car tires through pyrolysis. The investment was supported with an additional EU subsidy of 1 billion forints (3.2 million euros) and its construction cost with a subsidy of 2.4 billion forints (7.3 million euros).<\/p>\n
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