Sept. 27 (Bloomberg) -- Mol Nyrt., Hungary’s largest refiner, fell to a one-month low as a court in Croatia ordered the detention of Chief Executive Officer Zsolt Hernadi.
Croatia and Mol have been at odds over the Budapest-based company’s control of INA Industrija Nafte d.d. Former Croatian premier Ivo Sanader is serving a term for corruption related to a 2009 agreement that gave Mol control over INA. Hernadi failed to appear before Croatia’s Office for Suppression of Corruption and Organized Crime on Sept. 25, court spokesman Kresimir Devcic said by phone today. Mol lawyer Pal Kara has no knowledge of a request to question Hernadi and regards the case as “flawed in form and substance,” he said in an e-mailed statement to Bloomberg today.
The shares dropped 1.3 percent to 15,860 forint by the close in Budapest, extending the loss this quarter to 6.4 percent. The benchmark BUX Index, in which Mol has the biggest weighting at 30 percent, fell 0.4 percent today, bringing its decline in the past three months to 1.9 percent.
“The news is negative as the Hernadi case could weaken Mol’s position in ongoing negotiations between the Croatian government,” Peter Szentirmai, a Budapest-based analyst at KBC Securities, a unit of KBC Groep NV, said in an e-mail today.
Croatia, which joined the European Union in July, has 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 control, investment and profit sharing, among other things.
Hernadi, who has been chairman of Mol since 2000, also became CEO the following year, according to Mol’s website.
The Croatian case “appears to be influenced by interests seeking to intimidate both the company and its Chairman,” Kara said in the e-mail. “The Croatian court appears to be justifying the issuing of a detention order by an alleged danger of escape, a claim which is both unreasonable and baseless.”
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