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Croatia Seeks Talks With Mol on INA as Warrant for Hernadi Looms

Aug. 1 (Bloomberg) -- Croatia proposed talks with Hungary’s Mol Nyrt. over the “future and history” of the jointly owned INA Industrija Nafte d.d. just weeks after Croatian prosecutors renewed investigation into Mol’s Chairman Zsolt Hernadi’s role in the 2009 acquisition.

Croatia’s government appointed Economy Minister Ivan Vrdoljak chief of the negotiating team, it said in the capital Zagreb today. Mol, which owns 49.1 percent of the Croatian refiner, won control of the company in the 2009 shareholding agreement. Ivo Sanader, Croatia’s Prime Minister at the time, is serving a 10-year prison term for corruption over his role in the agreement, as well as in a separate case involving Austria’s Hypo Alpe-Adria-Bank. He is appealing the verdict.

The Croatian Office for Suppression of Corruption and Organized Crime on July 4 asked Hungarian authorities to assist with the interrogation of Hernadi, adding that further action, possibly involving an European Union-wide arrest warrant for Hernadi, depends on the response from Budapest. Mol has denied the allegations.

“We need to talk with our strategic partner about INA’s strategic aims and its future, and to be able to do this we also need to talk about INA’s history over the last 10 years,” Vrdoljak said at the Cabinet meeting today.

Croatia, which joined the EU on July 1, seeks to increase its influence in the Zagreb-based company. The Adriatic country, through a supervisory board, appoints three members in the six-member management board and it holds 44.84 percent of the company’s stock. Board President Zoltan Aldott, a former Mol executive, has a swaying vote.

Stake Sale Possible

Mol may sell its stake in INA if final talks with Croatia on cooperation fail, Austria Press Agency reported today, citing an unidentified Mol executive. The government said Mol is not efficient in running the company, it said in materials distributed to reporters before the cabinet session today.

“Although INA has positive financial results, they are very modest for an oil and gas company of its size and potential,” the Cabinet said, adding Mol has delayed its obligation to complete the rehaul of INA’s Croatian refineries in Sisak and Rijeka.

The government also said it wants to re-examine conditions in the agreement under which Mol acquired a controlling position in the company.

“In order to discuss Mol’s rights, it is necessary to examine the history and the reasons why control over INA was delivered to Mol,” said Jasminko Umicevic, an analyst at London-based Oil and Gas Consulting International LLP and a former INA manager.

“This also includes the 2009 shareholding agreement that Judge Ivan Turudic in the sentencing of Ivo Sanader last year described as a product of corruption and detrimental for Croatia,” Umicevic said by phone.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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