Hungary Court Clears Mol CEO as Croatia Probes INA Deal

A Hungarian court cleared Mol Nyrt. Chairman Zsolt Hernadi of bribery charges in the acquisition of Zagreb-based refiner INA Industrija Nafte d.d., as Croatian authorities pursue the company’s chief in a parallel case.

Budapest Metropolitan Court Judge Levente Nyilas acquitted Hernadi on a charge of fraud and dismissed a charge of bribery. In announcing the ruling, Nyilas said he had taken Croatian evidence into consideration in reaching his verdict. The prosecution appealed.

A former Mol employee filed a lawsuit in December, alleging Hernadi’s company bribed former Croatian Premier Ivo Sanader to gain control INA’s management rights in 2009 and failed to tell Mol investors about it, causing them losses once Mol shares plunged after Croatia started investigating the deal.

“I’m collateral damage in this,” Hernadi told reporters after the verdict. “This was about Mol, which became big and successful.”

The lawsuit emerged two months after Croatia issued an arrest warrant for Hernadi in connection with a 10 million-euro ($13.7 million) bribe that Sanader, in power in 2009, was convicted of taking to help Mol buy INA’s management rights. Sanader, who is serving a 10-year prison term, has appealed, as have the prosecutors. The Croatian Supreme Court’s ruling in the case is pending.

Mol’s shares have tumbled 42 percent and INA’s 21 percent since June 2011, when Croatia’s government first said it wanted to review Mol’s management agreement. Mol shares fells 0.8 percent to 13,675 forint by 4:30 p.m. in Budapest.

Matching Charges?

The charges were “almost a word-for-word match” of the Croatian allegations, which formed the basis of the arrest warrant against the Mol chief, defense attorney Peter Zamecsnik said. He said the defense team wants Croatian authorities to drop charges against Hernadi as he shouldn’t be tried on the same allegations in Croatia, another European Union member.

“This ruling won’t in itself serve as a precedent in the Croatian proceedings,” Adam Bekes, an associate professor at Pazmany Peter Catholic University’s Faculty of Law, said by phone today before the ruling. “It can be be taken into consideration during the Croatian court case but it puts no obligation on the judge there.”

Croatian Court

Hernadi has failed to appear before a Croatian court and maintains his innocence, citing an earlier Hungarian probe that found no evidence of wrongdoing.

Croatia’s government holds 44.8 percent of INA and has fought with Mol, which owns 49.1 percent, for three years. It says Mol’s management has hurt INA, while Mol denies the accusation. Both sides have filed cross-claims in arbitration court and met four times since September in an attempt to resolve the issue through talks.

Mol has considered the sale of INA as the Croatian government seeks to regain management control. Talks between the two sides have failed to resolve the impasse. Hernadi’s position at the helm of Mol is “steady,” Sandor Csanyi, the chairman of Mol’s board of directors, said on April 23.

Before it's here, it's on the Bloomberg Terminal.