Hungary Contests Mol CEO Warrant, Pushes INA Sale Option

Hungarian Prime Minister Viktor Orban’s government said it would fight a Croatian arrest warrant against Mol Nyrt. Chief Executive Officer Zsolt Hernadi and told the company to consider selling its Zagreb-based unit.

Hungary’s government, the biggest shareholder in Mol, also canceled Foreign Minister Janos Martonyi’s trip to the Croatian resort of Dubrovnik tomorrow, escalating a dispute in which the refiner is battling to keep its management rights over INA Industrija Nafte d.d. into a diplomatic row.

Croatian police issued an arrest warrant against Hernadi in connection with a corruption investigation relating to Mol’s 2009 acquisition of INA. Hungary accused Zagreb of issuing the warrant to intimidate Mol. Croatia started talks with Mol last month and is trying to reassert control over INA since management rights went to the Hungarian company in 2009.

“These methods are unacceptable in the European Union and Hungary can’t leave these unanswered,” Hungary’s government said in an e-mailed statement after a cabinet meeting, citing “the employment of tools outside of the economic realm,” including the pursuit of Hernadi.

Mol has denied any wrongdoing tied to the 2009 case, and the company said today an earlier Hungarian probe had found no evidence of misdeed. Its shares dropped 1.9 percent to 15,700 forint by the end of trade in Budapest, the lowest close since June 2012. The stock declined 12 percent year-to-date.

Urges Sale

“Croatia’s government has no influence on decisions taken by its judicial bodies,” Croatian Prime Minister Zoran Milanovic’s spokeswoman, Zinka Bardic, said by phone. “Otherwise, we decline to comment on the statements from the Hungarian government.”

The Adriatic country is investigating the contract that gave Mol management control in 2009 after a court ruled the deal corrupt and convicted former Prime Minister Ivo Sanader to a 10-year sentence for graft. Sanader is appealing.

Orban’s government asked Mol’s management today to consider selling its INA stake to the Croatian government “or a third party” and suing for damages, it said in the statement.

Mol owns 49.1 percent of the $7.3 billion company, and Croatia, which complains Mol runs INA as a subsidiary rather than an independent company, holds 44.84 percent.

Mol, in a statement today, said Hernadi can continue to lead the company even as the warrant may keep him from traveling abroad and be “inconvenient” for him as an individual. Hernadi is also a member of the board of OTP Bank Nyrt., Hungary’s largest lender. He previously served as chairman of Hungary’s former national airline Malev.

Officials from Croatia’s government and Mol began talks over the management of INA in Zagreb on Sept. 18. They agreed to meet once a month to discuss cost control, investment and profit sharing, and other issues.

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