Croatia Court Orders Detention for Mol Chairman Hernadi

A Zagreb court issued a detention order for Mol Nyrt. Chairman Zsolt Hernadi after he missed a meeting with prosecutors to answer questions in a fraud investigation linked to Croat refiner INA Industrija Nafte d.d.

The court ruled after Hernadi, also the Hungarian oil company’s chief executive officer, didn’t appear before the Office for Suppression of Corruption and Organized Crime, or USKOK, on Sept. 25, county court spokesman Kresimir Devcic said by phone.

“Zsolt Hernadi, despite the fact he knows he is under investigation for bribery in Croatia, and that he was summoned for interrogation by USKOK, does not want to voluntarily respond and express his defense,” the court said in a statement on its website. “By doing that, he is evidently obstructing the investigation.”

Croatia and Mol have been locked in a dispute over INA’s future since the arrest and conviction of the Adriatic state’s former prime minister Ivo Sanader. He is serving a 10-year prison term for graft related to a 2009 deal that gave Mol control over the Zagreb-based oil company.

Mol General Council Pal Kara said he had no knowledge of any request from Croatian authorities to question Hernadi. He dismissed the allegations and said the court’s view that Hernadi may be a flight risk was “unreasonable and baseless.”

Shares in the Hungarian company lost as much as 1.9 percent after the court issued the order. The stock fell 1 percent from yesterday at 15,900 forint at 3:35 p.m. in Budapest. INA’s shares were at 4,230 kuna at 3:40 p.m. in Zagreb, unchanged from the open. The previous close was at 4,213 kuna.

Management Dispute

“I regard the whole case as flawed in form and substance and it appears to be influenced by interests seeking to intimidate both the company and its chairman,” Kara said in an e-mailed statement today.

Croatian authorities discussed their summoning of Hernadi for interrogation with Mol Deputy Chairman Sandor Csanyi during his visit to Zagreb on Sept. 18, the Zagreb court said.

Hungarian authorities repeatedly refused the Croatians’ request, saying it “cannot be fulfilled for security reasons and protection of their (Hungarian) national interests,” the Zagreb court said in its statement.

The detention order could be the basis for a European Union-wide arrest warrant, a decision that would fall to the USKOK anti-graft and organized crime office, Devcic said. Calls to USKOK spokesman Vuk Djuricic were not immediately answered.

INA Talks

Mol owns 49.1 percent of INA, while Croatia holds 44.84 percent of the $7.3 billion company.

Since the accord, successive governments in the European Union’s newest member have sought to re-establish the state’s influence over INA. The government earlier this month initiated talks with Mol, asking that INA be developed as an independent company, and not as a subsidiary.

The two sides met in Zagreb on Sept. 18, and agreed to meet once a month to discuss management, cost controls, investment and profit sharing, among other things.

“The court decision will probably not affect INA very much, as this investigation has been going for a while,” Jasminko Umicevic, an analyst at London-based Oil and Gas Consulting International LLP and a former INA manager, said by phone from Zagreb.