Croatia extends INA fight as it indicts MOL CEO

By bne IntelliNews April 1, 2014

bne -

Croatia’s anti-corruption agency said on March 31 that it has indicted MOL CEO Zsolt Hernadi in connection with the Hungarian oil and gas company’s acquisition of Croatia’s INA. The charge is a further blow by Zagreb in the resumed shareholder fight with the Hungarian oil and gas giant over fuel's group INA.

"The indictment accuses the head of MOL's management”, says a statement published on the website of Croatia's Office for Suppression of Corruption and Organised Crime (USKOK), which identifies Hernadi only by his initials. The CEO is accused “of striking a deal for Croatia's [then] prime minister, Ivo Sanader, to do everything possible for the amount of €10m to change the shareholders' agreement in INA,” says the USKOK statement.

Sanader was jailed for 10 years in 2013, after he was found guilty of taking the bribe in return for handing MOL operational control of INA, despite the Hungarian company holding a stake of 49.1%. Both the former PM and MOL deny the claim.

Croatian police issued an international warrant for Hernadi's arrest in the autumn. However, his name was recently removed from Interpol's wanted list, in a move that it was speculated may have been connected to efforts in Zagreb and Budapest to calm the issue during efforts to sell off INA. However, on March 21, as tensions re-escalated, the Zagreb County Court rejected an appeal by Hernadi against Croatia’s graft investigation. The MOL executive filed the appeal through his Croatian lawyer, claiming that the investigation entailed major violations of criminal law and factual errors.

"Mr. Hernadi has demonstrated already to the MOL board's full satisfaction why the assertions are unfounded and why the case is without merit," MOL said a statement emailed to Reuters following the announcement from USKOK. "We would therefore expect Mr. Hernadi to appropriately defend himself against any future accusations as he has successfully done in the past."  

Fight still on

"The fight is still on between MOL and Croatia and it seems that the case against Mr. Hernadi is still important for Croatian politics," Erste analysts write in a note.

MOL has been at odds with Zagreb over IMA, which is 44.8% owned by the Croatian state, for several years. While Croatia claims MOL illegally secured its management rights over the company, MOL has accused Zagreb of not honouring its commitments under the privatisation contract.

Recent hopes of resolving the issue through the potential sale of a majority stake to Rosneft or Gazpromneft were dashed after the Russian annexation of Crimea, ruling out the sale of the company to either of the Russian oil and gas majors.

That appears to have put things back to square one, with the pair resuming hostilities. The latest legal action against Hernadi appears part of that drive.

Zagreb has hit out at MOL by stripping INA of its status as a domestic gas supplier, and ordering the company to sell part of its production to its replacement at a reduced price. On March 19, the Croatian government also moved forward by a year the planned doubling of the royalty rate for hydrocarbon production on existing fields to 10%, which is expected to cost MOL/INA around HRK400m (€52.3m) a year.

From its side, MOL is understood to be considering suing Croatia for damages. Accusing the Croat government of violating its energy charter, MOL is threatening to launch the highest value litigation in Croatian history, local daily Vecernji list reported in March. According to, MOL argues it could be looking for damages of up to HRK10bn.


Related Articles

UK demands for EU reform provoke fury in Visegrad

bne IntelliNews - The Visegrad states raised a chorus of objection on November 10 as the UK prime minister demanded his country's welfare system be allowed to discriminate between EU citizens. The ... more

Erste claims Hungary is breaking peace deal with banks

bne IntelliNews - Hungary will breach its February agreement with Erste Group if it makes the planned reduction in the bank tax conditional on increased lending, the Austrian lender's CEO ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.