(Bloomberg) -- A Croatian court convicted the head of Hungary’s biggest energy group on bribery charges relating to the acquisition of the Balkan nation’s oil company, complicating what’s been one of eastern Europe’s most intractable cross-border corporate conflicts of the past decade.
A court in Zagreb on Monday sentenced Zsolt Hernadi, the chairman and chief executive of Hungarian oil and gas company Mol Nyrt., to two years in prison for the offense related to the obtaining of management rights of Ina Industrija Nafte DD in 2009, according to N1 TV in Croatia. Mol reiterated its denial of wrongdoing, saying it will defend itself and continues to stand by Hernadi.
The judge also handed a 6-year sentence to Croatia’s prime minister at the time, Ivo Sanader. The ruling can be appealed.
The legal dispute has been at the center of a tug-of-war between Mol -- which owns 49% of Ina but has had management rights over the Croatian refiner for the past decade -- and the Croatian state, which owns 45% of the Zagreb-based company. Hungarian Prime Minister Viktor Orban, whose government owns a 25% stake in Mol, has gone as far as to advise Croatia to buy out Mol to resolve the conflict that’s become an obstacle to closer relations between the two European Union neighbors.
Strategy Unaffected
The charge related to an alleged bribe, which according to Croatian prosecutors was paid by Mol’s chief to Sanader to influence the Mol-Ina shareholding agreement of 2009. Sanader has also consistently denied wrongdoing. Hungary has also rejected extraditing Hernadi to face trial, despite a European arrest warrant based on Croatia’s request and which has limited Hernadi’s ability to travel abroad. Hernadi has stayed on at Mol’s helm throughout.
Croatia has hired advisers in the meantime for the purchase of Mol’s stake in Ina and Mol has also said it was open to selling. Both Croatia and Mol have also reached out to international arbitration panels.
Away from the court battles, though, there have been signs of a thaw. Mol this month announced a $600 million investment in Ina’s refinery in Rijeka as well as plans to re-purpose another one at Sisak. Mol cited that investment on Monday to show its commitment to Ina.
“The Chairman and CEO continues to have the full support and confidence of the Mol Group boards,” Mol said in a statement. “Mol’s strategy towards INA remains unaffected.”
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