Though the Hungarian media are toying with the question if Zsolt Hernádi – who is pursued by a European Arrest Warrant (EAW) but due to a decision of the Budapest Metropolitan Court may avoid arrest within Hungary – may go to ski in Austria, the MOL–INA case boils down to the question whether or not there is evidence against him. Or, put in another way, how could a corporate CEO’s name get to Interpol’s wanted list – which includes murders and con men – if the prosecution services of Croatia and Hungary are just “debating” the case?

The Croatian law enforcement agencies would like to charge Hernadi and send him to jail (as it has happened to former Croatian Premier Ivo Sanader when he was sentenced by a court of first instance) because in their opinion in 2009 Hernadi bribed Sanader so that MOL could obtain management rights over INA.

While the Croatians have a dubious “star witness’s” testimony as evidence, some meetings between Sanader and Hernadi and a silent recording of the security camera of Marcellino restaurant in Zagreb, the Hungarian prosecution service has revealed the entire background of money transfer, which started in Cyprus, and has closed its proceedings. It has closed the investigation in the absence of crime – and not because of absence of evidence.

Russian connection

If the Hungarian authorities had not carried out investigation, no one would have learned that the two firms that allegedly mediated in the bribe case are not owned by Hernadi or MOL – contrary to the “star witness” Robert Jezic’s allegations – but belonged to Mikhail Gutseriev, who is thought to be the 17th richest Russian.

Gutseriev, the Chairman of Rosneft Russian oil company, flew to Budapest (and then appeared at a court in Zagreb) to testify that he had sent millions of euros via Cyprus to Jezic (who was considered as Sanader’s confidant), that is, to Jezic’s firm in Switzerland, because he wanted to buy land on the Island of Krk and to obtain lobbying influence. (Moscow has been showing interest in the Adriatic pipeline and things related to it. By reversing the direction of transport, that pipeline could be used to send Russian oil to the Adriatic and from there to other destinations. Gutseriev meant to oil the wheels of that project with the money sent to Jezic.)

Gutseriev’s lead representative in Central Europe is Imre Fazekas, a Hungarian citizen, who is a contracted advisor to MOL. Obviously, that fact on its own does not prove that Hernadi is corrupt. Moreover, Jezic – who had been jailed and then released upon a plea bargain and began to “sing” – couldn’t convincingly state that the bribe money was meant to Sanader as eventually it was he (Jezic) who channeled the millions of euros from Cyprus into his own ventures.

That’s why it is strange that the Croatian prosecution service has repeatedly described the Hungarian prosecution service – which has had a lion’s share in the investigations – as an “accomplice” of Hernadi.

This weekly has learned that, as arranged by the Hungarian National Bureau of Investigation, two Croatian prosecutors interviewed Hernadi personally in Budapest on February 9, 2011. Though ostensibly the hearing was related to the Podravka-case [an Austrian business daily has suggested that MOL obtained management rights in INA in exchange for some earlier assistance it had granted to Podravka Croatian firm], the minutes of the hearing – which this weekly has obtained – show that the Croatian prosecutors were only interested in the details of how MOL received the management rights of INA.

It is also strange that, although the investigative arm of the Hungarian prosecution service (KNYF) has sent to Zagreb all the documents of its investigations, when Sanader was tried, the judge did not allow using those documents.

A testimony Hernadi gave on November 29, 2011, makes it clear that Jezic, the “star witness” is the most biased personality in the whole of the MOL case. Once a prosperous businessman, Jezic was prevented from making further huge profits from his dealing with INA when the Hungarians became co-owners of INA. Later on Jezic ran into a massive debt owed to INA and in fact his firm became INA’s biggest debtor.

As could be seen Hernadi’s testimony made at KNYF is in Zagreb unused but this weekly has come into possession of a copy of that document. There is an abridged and edited version of the testimony below.

About Jezic and Sanader

“I have regularly visited Croatia since 2001 and have met plenty of businesspersons, including Robert Jezic. He is among the 20 richest Croatians and his Dioki chemical company is one of INA’s key accounts and INA’s biggest debtor. Before I had a business meeting with Mr Jezic, I had always been approached to see him [that is, Jezic]. The requests [to see Jezic] came from Croatian government officials. As a rule, Jezic attempted to persuade me to amend a contract and modify the terms of payment. I always promised him to forward his requests for scrutiny but INA’s management usually turned them down.

“At times I met Jezic at Sanader’s or Vice Premier [Damir] Polancec’s proposal. However I didn’t notice any fact that would have suggested that there was some special relationship between Jezic and said governmental personalities. Neither did I get any comment from Croatian governmental circles when Jezic’s requests were turned down.

As far as Sanader is concerned, the first contact occurred in 2004. Wim van Velzen of Belgium, a former vice chair of the European People’s Party and MOL’s advisor, helped broker the meeting. Velzen was Sanader’s advisor in international affairs. By that time MOL had purchased a 25 percent stake in INA, which, by the way, Sanader, then in opposition, strongly opposed. It follows that our first meeting was formal because his interpretation of the first stage in INA’s privatization was that it limited the Croatian government’s room of maneuver.

“In 2008 the Croatian state’s stake in INA dropped below 50 percent and key provisions in the stockholders’ agreement attached to our possession of a stake of 25 percent had expired and for that reason a new round of talks began. Then, until summer 2009, when Sanader resigned, I had five or six personal meetings with Sanader but none of them were private (tête–à–tête). Obviously, we discussed INA’s abominable financial predicament.

“The Croatian press reacted negatively to a case when, upon an official meeting with Sanader, which was attended also by Josip Petrovic, a director of INA, I suddenly returned to the prime minister’s office. This what happened: I went to a cafe with Petrovic and then, responding to Sanader’s phone call, we returned to him. But that development had an antecedent. When earlier we were leaving the prime minister office, we met Jezic. When we returned to Sanader, Jezic wasn’t there anymore but Sanader wished to talk with us to promote the interests of Jezic’s firm, Dioki. Dioki used ethane as raw material, which was supplied by INA. But there was a problem both with its price and quantity: Jezic wanted more for less. Sanader asked me to broker a compromise. All I said was that we would look into the problem.

“Sanader and I continued contacts after his resignation – our latest meeting occurred in summer 2010. He entered consulting and asked me to expand his network capital. Our conversations were informal: we met in public places and restaurants – once perhaps in Hungary. In August or September 2009 we met in the national office of HDZ, Sanader’s party, and the new prime minister, Jadranka Kosor was also present.

“In October 2009 I met Sanader in Marcellino restaurant. The meeting could take place because I was in Zagreb for some talks anyway. Sanader had not informed me in advance that Jezic would also be there. Jezic put forward an alternative proposal about the purchase of ethane. He proposed to take over the plant that produces (separates) ethane from INA for operation. Unable to find any notepaper, I recorded Jezic’s proposal on one of my business cards. I am now handing over to the prosecution service in original copy that business card and Robert Jezic’s business card of Dioki, which he handed over to me on that occasion. The text on my own business card is as follows: ‘Maintenance of Ivanicgrad–Molve is unsatisfactory. They don’t get the required quantity. To be transferred for operation.’ That’s how I summed up Jezic’s request. I even underlined his cell number on his business card because I made the general promise of looking into the case and that I would come back with an answer.

“INA’s management looked into the issue and an in-house recommendation was drawn up: it was negative. Besides, Sanader went to that restaurant with his security escort, to which he was entitled as a former premier.”

Possible future scenarios

What about the questions whether Hernadi is removed from Interpol’s wanted list and whether or not he can go to Austria to ski any time soon? Experts say that it can only happen if Sanader is found innocent in the “MOL bribe case” by an appeal court. That however would cause an identity crisis among Croatian political forces. Ever since 2010 the Croatian public discourse has been dominated by demands for punishing Sanader and retaking if not INA’s majority stake, at least the management rights over it.

The Hungarian government’s response to the arrest warrant against Hernadi is clear: Viktor Orban’s government does not rule out MOL’s expansion in such a way that MOL would sell its stake in INA but Hungary rejects the criminalization of this case. Only MOL is entitled to decide who can buy INA’s stake of 49.1 percent (alongside the management rights). It goes without saying that only the Russian side can be expected to come up with so much money.

As Moscow’s feelers are already present in that region, they will probably not be interested in buying loss-making refineries of INA but only the Croatian market. It has yet to be seen whether there is any politician in Zagreb to have the courage to announce reconciliation with MOL if that is the price to be paid to avoid plant closures and massive layouts.

MOL and INA – a chronology

July 2003 – MOL buys an INA stake of 25 percent plus one vote for USD 505 million.

September 2008 – MOL raises its stake in INA to 47 percent by buying stocks from small investors. As the Croatian state only has a stake of 44.8 percent, MOL becomes the principal co-owner.

January 2009 – The global financial crisis pushes INA to the brink of bankruptcy. (MOL has to pay the wages of Croatian employees.) To avoid INA’s bankruptcy, MOL agrees to bail out INA in exchange for assuming its management rights from the Croatian government. MOL and INA agree that the Croatian government will take over the gas storage and gas distribution divisions. (Eventually the Croatian government only took over the profit-making gas storage division. As natural gas has controlled prices, that division remained loss-making and the Croatian government has not taken it over ever since. MOL has recently warned the Croatian state that it might decide to claim damages of HUF 80 billion for the Croatian government’s non-performance of its contractual obligation.)

February 2010 – An Austrian business daily claims MOL got INA’s management rights because MOL “saved” a Croatian food company, called Podravka. MOL helped Podravka draw a loan from OTP Bank of Hungary. (When Podravka could not repay its debt, OTP temporarily came into possession of its stocks.)

December 2010 – MOL offers to buy INA stocks in public float. Croatian pension funds start preventive purchases so MOL’s stake only rises to 49.1 percent of the stake. (The Croatian authorities labeled a minor Hungarian purchase of stocks as market manipulation. Sandor Csanyi, vice-chair of the board of MOL, has since been interviewed in Croatia about that case. Csanyi was told that the Croatian authorities intend to hear Hernadi about the Sanader case.)

July 2011 – Citing the “loss” of INA’s management rights and an alleged bribe to the former Croatian premier, the Croatian prosecution service requests that the Hungarian prosecution service should hear Hernadi as an accused. Citing national security considerations, the Hungarian prosecution service refuses to go along but launches its own investigation into the case. (KNYF drops proceedings in early 2012 in the absence of crime.)

November 2011 – Former Premier Ivo Sanader’s trial opens. Among other things he is charged to have taken a bribe in exchange for “selling out” INA. (A year later a court of first instance sentences him to 10 years in jail.)

July 2013 – Croatia having joined the European Union, the Croatian prosecution service approaches its Hungarian counterpart to subpoena Hernadi. (The request is turned down once again.)

October 2013 – Hernadi having failed to show up in Zagreb in late September, a European Arrest Warrant is issued against him. Viktor Orban’s government responds stating Croatia is applying pressure on MOL by using non-economic measures so MOL is advised to take steps to sell its stocks of INA to Croatia or a third party. MOL makes it clear that, though it considers the Croatian state a potential buyer, Croatia does not have preemptive rights. The Municipal Court of Budapest once again refuses to extradite Hernadi to Croatia stating that criminal proceedings have already taken place into the allegation that is the basis of said arrest warrant.

Source: Heti Válasz

Translated by Budapest Telegraph

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