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MOL denies corruption rumors, stock falls far regardless

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A report from local media had MOL representatives scrambling to do damage control yesterday, but share prices fell significantly despite all efforts.

The troubles for MOL began with a story in the morning edition of local business daily Napi Gazdaság, which alleged that the Norway-based Oil Fund was considering selling its 1.6% stake in MOL due to rampant corruption in the Hungarian company. According to the ‘paper, MOL is in violation of certain ethical guidelines for the Oil Fund as prescribed by the Norwegian Ministry of Finance; reviews there of investments in Royal Dutch Shell and Eni are currently ongoing.

A few hours after the report broke, MOL spokesman Domokos Szollár was quoted in a Reuters story as stating that the report “is mere speculation [and] lacks any foundation.”

Nevertheless, MOL’s stock value decreased steadily throughout the day thanks at least in part to the rumor. MOL stocks ultimately lost 4.39% to HUF 14,600 on an exchange-high turnover of HUF 8.58 billion by the end of yesterday's trading on the Budapest Stock Exchange; this was enough of a drop to drag down the entire BUX index some 1.57% for the day.

The aforementioned Reuters report quoted an unnamed Budapest broker as saying, “…who knows whether [the Norway rumor] is true or not? In any case, the market in MOL has been nervous for weeks because of INA,” the Croatia-based oil-and-gas company about which MOL is currently in negotiations with the Croatian government.

MOL chairman/CEO Zsolt Hernádi is still wanted for questioning related to a 2009 bribery case involving MOL, INA ownership and former Croatian prime minister Ivo Sanader; the Napi Gazdaság speculation contends that charges against Hernádi are enough to envince an Oil Fund regulation that disallows partnerships with firms suspected of corruption.

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