MOL communications director Andrea Panczel was also quoted by national news agency MTI as saying earlier that neither oil and gas group MOL, nor Hernadi, had received formal notification of such a request. The ministry added it had no information that Croatian authorities would have offered to question Hernadi in Hungary And after that, Croatia’s prosecutor general told Bloomberg in an emailed statement that it had not issued a request to extradite Hernadi. Earlier on Tuesday the newspaper Nepszabadsag had said Croatia asked Hungary to extradite Hernadi in a case involving former Croatian premier Ivo Sanader.
Asked about the report at a press conference in Strasbourg on Tuesday, Hungarian Prime Minister Viktor Orbán said "we know of the charges". "We do not see it as an intergovernmental question; clearing up the charges is the task of law enforcement bodies," he added. Orbán said the state of Hungary would not agree to any changes in the contract between MOL and INA, commenting on an earlier report in the Croatian press that the Croatian government could cancel the contract. Hungarians has a 25% stake in MOL and it is "our firm stance as an owner that we will not agree to any modification of the contract," Orbán said.
Croatia is investigating allegations that Sanader was paid a 10 million euro ($14.5 million) bribe by MOL to gain management control at Croatian energy group INA , in which MOL has a 47.46 percent stake, local media reported last month. MOL and Sanader have denied any wrongdoing.
The Croatian prosecutor general's office said it did not have any information and local anti-corruption police unit USKOK declined to comment on the report. Sanader is in custody in Austria awaiting extradition to Croatia over a number of corruption investigations.
Financial analysts find all this rather unsettling. Attila Vago, equity analyst with Concorde Securities in Budapest, told the Financial Times: “If this [legal] process [against Hernadi} really begins, it would be very difficult to imagine a situation that is not accompanied by Hernadi’s resignation. This is why investors are very nervous. This management team has built Mol into a very profitable company in the past ten years.” “Earlier this year there was positive news, for example, from [Iraqi] Kurdistan [with an upward estimation of reserves], but since then there have been a lot of things affecting the share price performance,” Vago said. First came the Hungarian government’s decision to buy back a 21 per cent stake held by Surgutneftegaz, the Russian energy company, at the end of May. “This raised the question as to whether the state would influence the company in the wrong way, against the former management line,” says Vago.
Meanwhile, trouble was brewing in Croatia, after Mol tried to gain a majority stake in INA. This prompted a defensive reaction in Zagreb, followed by allegations by the Croatian regulator that Mol was using proxies to buy up INA shares – a charge stoutly denied by the Hungarians. Then, last month, Croatian media first raised allegations that Hernadi was implicated in bribing Sanader.
Whatever Croatian prosecutors now do, the whole affair has hit confidence in Mol. “It’s an awful situation there. It’s raised the question of whether Mol will retain its controlling rights over INA. Without Mol in charge, INA will not be the same company; Mol has done a lot to improve INA’s profitability,” says Vago.
Tamas Pletser, an EMEA oil and gas analyst with ING in Budapest, agrees. “Mol has cleaned up a lot of things at INA and hit the interests of many people in the process.” Pletser argues the attacks on Mol are primarily the result of “political games” prior to general elections in Croatia. “I think the tensions will be less after the elections in the autumn.” But if the worst comes to the worst, the consequences would go far beyond a criminal case against Hernadi. Should a Croatian court decide against Mol, it would allow the government to annul the INA shareholders’ agreement. That would be bad news for the company – and for Croatia. Pletser says: “Croatia is in economic trouble as it is. To change the shareholders’ agreement would send a very negative message to potential foreign investors.”
Last Updated on Friday, 30 August 2013 09:11