Croatia: Detention Order Issued for CEO Connected to Sanader

Published: 30 September 2013


Croatian legal authorities issued a detention order for Hungarian energy company MOL chief executive officer Zsolt Hernadi on Friday. Hernadi is wanted for questioning by USKOK, Croatia's anti-corruption and organized crime agency, in connection with a bribery case against former Croatian Prime Minister Ivo Sanader, according to The Wall Street Journal.

A court in the Croatian capital of Zagreb issued the detention order after Hernadi failed to attend a hearing regarding dealings between MOL and Sanader, who was convicted in 2012 of accepting a US$6.75 million bribe from MOL in exchange for management control of Croatian energy company INA. Sanader, who denied any wrongdoing, allegedly accepted the bribe in 2008 towards the end of his tenure as prime minister from 2003 to 2009. He was given a 10-year sentence.

MOL, the largest refiner in Hungary, saw a 1.3% drop in share price on Friday following the announcement. According to Bloomberg, the stock price of the US$7.3 billion company closed at a one-month low. Hungary, which holds a 24.6% stake in the oil and gas company, was criticized by Croatia for not aiding the legal process.

"The Hungarian authorities failed to cooperate, saying MOL is in their national interest, and therefore it is a question of state security," said Kresimir Devci, a spokesman for the Croatian court.

The court labeled Hernadi as a flight risk, although it declined to say whether Croatia would seek to extradite him. As a member of the European Union, Croatia may issue a European Arrest Warrant in order to force Hernadi to travel to Zagreb.

Pal Kara, general counsel at MOL, said:  "I have no knowledge of any request from any Croatian authority for the chairman of MOL to be questioned on the subject. Rumors in the media have never been a sound basis for any reaction from our side."

The case involves negotiations between the Croatian state and MOL over INA.  MOL owns a controlling stake, while the Croatian government holds 44.8 percent. MOL has denied any wrongdoing in connection with INA or Croatia, a position supported by Hungarian legal authorities.