Bosnia probes MOL CEO over Energopetrol privatisation

Bosnia probes MOL CEO over Energopetrol privatisation
By Denitsa Koseva in Sofia September 8, 2016

The Sarajevo Canton Prosecutor's Office is reportedly investigating Zsolt Hernadi, CEO of Hungarian oil and gas company MOL, and two other senior managers of MOL and Croatia's INA over the privatisation of Bosnia & Herzegovina’s major fuel retailer Energopetrol. 

A MOL-INA consortium acquired a 67% stake in Energopetrol back in 2007 for BAM10mn (€5.1mn), pledging to repay the company’s BAM60mn outstanding debt and to invest €76.7mn. In 2010, the consortium claimed it had completed all its obligations under the sale contract.

Dnevni Avaz reported on September 7 that the prosecution is investigating former MOL executive Zoltan Varady and the former CEO of Croatia’s INA, Tomislav Dragicevic, as well as Hernadi, and is seeking assistance to interrogate them.

"We have requested international legal assistance from Croatia and now from Hungary. We want those people to be interrogated … and formal information from those interrogations to be delivered to us," Dnevni Avaz quoted Dalida Burzic, Sarajevo’s chief prosecutor, as saying.

Minority shareholders suspect that the €76.7mn investment was funded with mortgages on Energopetrol’s property. According to a complaint filed in 2010 with the Sarajevo prosecution, MOL-INA took a total of €76.5mn in mortgages.

"There is an ongoing investigation and, according to the law for protection of criminal proceedings we are not able to provide further information," Azra Bavcic, spokesperson of the Sarajevo canton prosecution, told bne IntelliNews in an email.

In July, MOL sold its 33.5% stake in Energopetrol to INA for an undisclosed sum. Two months later, on September 5, INA offered a total of BAM4.2mn for the remaining 33% stake in Energopetrol that it does not already own. The Federation’s government owns 22% of this stake, while the remainder is owned by small shareholders. Energopetrol was one of the companies included in the Federation’s plan for privatisation in 2016.

Back in 2014, Sarajevo prosecutors probed the privatisation contract with MOL-INA and accused Nedzad Brankovic, former prime minister of Bosnia’s bigger entity the Muslim-Croat Federation, along with eight other top state and company officials of causing harm to the state by signing the contract at a lower sale price. According to reports in the Bosnian media, the prosecution then claimed that the nine had caused damages worth more than BAM32mn to Energopetrol, the Federation and Sarajevo canton.

Five years earlier, Mustafa Mujezinovic, then prime minister of the Federation, had threatened that the contract with MOL-INA on the sale of Energopetrol would be cancelled. Mujezinovic said at the time that the consortium had not fulfilled its obligations. 

Hernadi has been charged in Croatia with bribing former Prime Minister Ivo Sanader to help MOL obtain a dominant position in Croatian oil and gas company INA. Both MOL and the Hungarian government, which holds a 24.6% stake in MOL, have so far denied any involvement in the alleged bribery.

In October 2013, Croatia asked Interpol to issue an international warrant for Hernadi’s arrest, after Sanader was sentenced to prison for bribe taking. However, it was withdrawn in February 2014, following the Hungarian executive’s complaint. In February 2015, Croatia asked Interpol to re-issue the arrest warrant.

Croatian media reported in February 2016 that additional charges might be brought against Hernadi on suspicion of giving Sanader a €10mn bribe to give MOL management rights in INA. However, so far Zagreb has not taken any steps in that direction.