Mol’s Hernadi Set Up Hungary Trial, PKN CEO Says on Leaked Tape

Zsolt Hernadi, the chairman and chief executive officer of Mol Nyrt., Hungary’s largest refiner, arranged a domestic lawsuit against himself to preempt a Croatian trial, according to the transcript of a purported leaked recording of PKN Orlen CEO Jacek Krawiec.

Krawiec said Hernadi told him at a meeting in Hungary that the wife of a “trusted associate” by the first name of Abel, who was present at the purported meeting, would be filing the lawsuit against him in Hungary and he would have a not-guilty verdict by April, according to the illegally taped conversation in Warsaw in January allegedly between the PKN CEO and Polish Treasury Minister Wlodzimierz Karpinski. The recording was made public by Wprost magazine today. Mol declined to comment directly on the alleged meeting.

Croatian authorities issued an international arrest warrant against Hernadi on suspicion that he bribed former Premier Ivo Sanader in order for Mol to obtain management control over Zagreb-based oil company INA Industrija Nafte d.d. in 2009. Sanader is serving a prison term in Croatia, while Hernadi, who denies wrongdoing, was acquitted on the same charge in Budapest on May 26 in a lawsuit brought by a former Mol employee. Croatia’s government is trying to wrest control of INA and Mol has said it may sell its Croatian unit.

“My lawyers found out that if there’s a case brought on the same matter in any EU country and there’s a not-guilty verdict, then all EU countries have to respect it and I’m free to travel to Europe,” Krawiec quotes Hernadi in the transcript.

‘Done and Dusted’

“So the wife” of Hernadi’s associate “is the one pressing charges” that lead to a “not-guilty verdict and it’s all done and dusted,” Krawiec allegedly said to his lunch companions at a Warsaw restaurant where the eavesdropping took place. “Can you imagine something like that happening here?”

Mol, in an e-mailed response to questions from Bloomberg, declined to confirm or deny whether the Hernadi-Krawiec meeting took place or to go into detail about what may have been discussed. Mol also didn’t answer questions about whether the lawsuit in Hungary went ahead with Hernadi’s knowledge.

“During the last years, numerous rumors and speculations –- which all turned out to be false –- have been published in various local media,” Mol said in a statement. “Mol has never commented on any of these pure speculations and it does not intend to start doing so now, especially not when they originate from third parties.”

Hernadi’s defense team on May 26 in Budapest argued that Croatian authorities will have to accept his acquittal in Hungary.

Court Verdict

Two weeks later, Croatia’s Supreme Court upheld a guilty verdict against Sanader for having taken a 10 million-euro ($14 million) bribe, implicating Hernadi for his alleged role in the same transaction. Mol rejected “any suggestion of improper business conduct,” the company said on June 13.

Mol’s shares have tumbled 42 percent since June 2011, when Croatia’s government first said it wanted to review Mol’s management agreement. Mol shares rose 0.4 percent to 12,955 forint at 4:50 p.m. in Budapest.

On the tape, Krawiec is heard saying he traveled to Budapest to ask Hernadi about the price Mol is asking for its INA stake, according to Wprost.

“He told me they’re trying to sell it to the Russians,” Krawiec allegedly said on the tape, Wprost reported. “The way they value it is a couple of billion too much. What we would have to pay now is 15 billion and you know we can’t afford to be that leveraged.”

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