MOL-INA: New investigation launched, CEO appeal denied

Deals

Negotiations between the Croatian government and Hungary-based oil-and-gas giant MOL over the fate of Croatia-based MOL peer INA seem no closer to conclusion, but machinations are still happening beyond the bargaining table…

Zagreb court rejects MOL CEO appeal
Zagreb County Court spokesman Krešimir Devčić informed Croatian national news service HINA on Friday that an appeal from MOL CEO Zsolt Hernádi in an ongoing graft investigation case involving Croatia-based oil-and-gas company INA has been rejected.

Hernádi filed the appeal through his attorney, claiming that the investigation of the case entailed substantial violations of criminal law and errors of fact. Devčić said that Zagreb County Court ruled that the investigation of Hernádi’s alleged bribery of former Croatian prime minister Ivo Sanader to give MOL management rights in Croatian peer INA was well-founded and based on reasonable suspicion.

In 2012, a Croatian court sentenced Sanader to ten years in prison on corruption charges involving the alleged payment of a bribe of millions of euros. Croatian police issued a warrant for Hernádi’s arrest last autumn on suspicion of bribery in relation to the Sanader case.

Croatia Corruption Office to investigate MOL overcharges
Croatia’s Office for Suppression of Corruption and Organised Crime (USKOK) has asked the board of energy company INA for documents on suspicion that Hungary-based peer MOL overcharged for oil.

According to Croatian media, USKOK made the request of the board based on a report by an INA employee. INA declined to comment on the reports, but unofficial sources were cited in various media as saying that auditors had reviewed INA’s oil purchases a number of times and found everything in order.

Croatian government doubles INA royalty rate
The Croatian government doubled the royalty rate for hydrocarbon production on existing fields to 10% with a regulation on March 19, and INA will have to pay around HRK 250 million (HUF 10.2 billion) more in comparison to the current amount, and the effect will be around HRK 400 million (HUF 16.3 billion) in the following years, INA officials announced on Friday.

After retroactive refinery taxes and the recent continuation of regulated gas price for households which resulted in the transfer of HRK 250 million to HRK 350 million (HUF 10.2 billion to HUF 14 billion) annually from INA to national utility company HEP, this decision is the third substantial negative change in the regulatory environment within a short time, so INA will have to reconsider its future investment plans, considering that a 2011 government regulation set the rate of royalty at 5% and this is what INA based its plans on, the company said.

INA is aware that the 10% royalty is in line with most European rates, however, INA as well as any investor builds its development plans on predictable regulatory rules, which is crucial in such an investment-intensive industry, INA concluded.

Croatia-based INA is 49.08% owned by its Hungarian peer MOL, and another 44.84% is held by the Croatian state. MOL and the Croatian government are at odds concerning management rights and the gas business of INA. INA’s board said four weeks ago that MOL had made a request to open a due diligence data room in preparation for the possible sale of its stake in the company.

– material from national news service MTI was used in this article

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