June 13 (Bloomberg) -- Croatia’s Supreme Court upheld a guilty verdict against former Prime Minister Ivo Sanader for taking bribes from Hungarian refiner Mol Nyrt. and Austria’s Hypo Alpe-Adria-Bank International AG, a court official told state radio.
The verdict opens the way for Croatia to seek an annulment of the 2009 contract that gave Mol control of Zagreb-based refiner INA Industrija Nafte d.d., according to Davor Adrian Babic, a professor of international law at the Zagreb University. County court spokesman Kresimir Devcic released the ruling to state radio. The Supreme Court has not published the verdict. Supreme Court spokesman Judge Drazen Tripalo said by phone that the verdict will probably be published on June 16.
“Mol strongly rejects any suggestion of improper business conduct and will continue to defend against any allegations of illegal practices,” the company said in an e-mailed statement. “Impartial fact-finding by trial courts and effective judicial review” are not guaranteed without exception in Croatia, according to Mol.
Croatia, which joined the European Union about a year ago has stepped up its prosecution of corruption cases in the last four years, targeting government officials. The binding verdict against Sanader comes as the Adriatic country seeks to re-assert control over INA, its largest energy company. Mol owns 49.1 percent of INA, while Croatia holds 44.84 percent.
The verdict also implicates Mol Chief Executive Officer Zsolt Hernadi, who was indicted on March 31 by Croatia’s anti-corruption agency for his alleged role in the same transaction. Mol said it wasn’t aware of formal charges against Hernadi. Hernadi and Sanader have denied any wrongdoing.
Hernadi enjoys the “full confidence” of Mol’s boards, the company said today.
Sanader, 60, was sentenced in 2012 to 10 years in prison after a district court in Zagreb found him guilty of taking a bribe of 10 million euros ($13.7 million) from Mol between 2008 and 2009, when he was premier. In exchange, he arranged with a “highly positioned” Mol manager to give the Hungarian company controlling rights over INA in a January 2009 shareholding agreement, the court said.
A Hungarian court on May 26 cleared Hernadi of bribery charges in the acquisition.
Sanader and prosecutors have appealed the verdict. Sanader has remained in prison during the appeal because the sentence is longer than five years. In March, Sanader was found guilty of bribery in another case involving public tenders, and sentenced to nine years in addition to an existing prison term.
Croatia in September issued an international arrest warrant for Hernadi, then a suspect in the case, after a Zagreb county court ordered his detention for missing a meeting with prosecutors.
Croatia and Mol have filed cross-claims in arbitration courts, while also trying to resolve the dispute through negotiations. Croatia claims the 2009 agreement and the related Gas Master Agreement, which obliges the government to take over the unprofitable gas unit, were signed as a result of Mol’s unlawful actions. Mol in its November claim accused Croatia of breaching obligations.
The Supreme Court also found Sanader guilty of taking a bribe of 3.6 million kuna ($646,000) from the Austrian bank between 1994 and 1995, when he was deputy foreign minister. In exchange, the Croatian government at the time took a loan of 140 million Austrian schillings ($13.9 million), the neighboring nation’s currency at the time, from Hypo bank, the court said.
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