Hungary’s Mol: ICSID ruling shows Croatia failed to prove corruption allegations

NEWS 07.07.2022 10:41
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Source: N1

Wednesday's international court ruling in which Croatian government lost the case against Hungary's oil company Mol has showed that Croatia failed to prove any of its corruption allegations rrelated to Mol's takeover of the Croatian oil company Ina, Mol said in a statement.

The International Center for Settlement of Investment Disputes (ICSID) in Washington, DC on Tuesday delivered its verdict in the case which was launched by Mol in 2013. The dispute concerned the Croatian government’s failure to divest the loss-making natural gas business from Ina, something that had been agreed upon with Mol in 2009 when the Hungarian company first bought shares in what was then the ailing state-owned company Ina.

Mol later acquired more stock and today is the largest single shareholder of the company, holding a 49.1 percent stake. The Croatian government holds 44.8 percent, and other shareholders 6.1 percent.

Meanwhile, the acquisition of management rights of the company, became subject of an endless saga of trials and re-trials and criminal proceedings in Croatia, centered on the former prime minister and former leader of the ruling HDZ party, Ivo Sanader. In the latest episode of the saga, Croatia’s Supreme Court in December 2021 confirmed an earlier guilty verdict for Sanader for receiving bribes from Mol’s executive Zsolt Hernadi in order to allow Mol to gain managing control in the company. Sanader was sentenced to six years in prison, and Hernadi – who was tried at a Croatian court in absentia – to two years in prison.

A close associate of Hungary’s Prime Minister, Viktor Orban, Hernadi is living in Hungary as CEO of Mol and enjoys protection from Hungarian authorities, who have repeatedly denied accusations from Croatia and denied any bribes or wrongdoing.

In a case filed in 2013 before the ICSID, Mol claimed that by failing to takeover Ina’s gas business Croatia inflicted financial losses to Ina and indirectly Mol itself, and also by forcing Ina to sell back a major gas storage facility at Okoli in central Croatia to the government. In Wednesday’s ruling ICSID awarded damages to Mol, which amount to around $236 million with interest.

Since Croatia’s argument before the court focused on management rights at Ina rather than the fact that their side of the bargain from the 2009 contract had never been fulfilled, later on Wednesday, Mol issued a statement interpreting the international arbitration as yet another proof of Hernadi’s innocence.

“The award clearly states that Croatia failed to prove any of its allegations,” Mol said in an unsigned statement sent to the media, adding that “the three judges unanimously found that the corruption allegations Croatia made after Mol acquired shares in Ina were completely unfounded… The award also means that president and CEO of Mol, Zsolt Hernadi, is innocent.”

“During the procedure, a full criminal investigation of all the evidence presented was conducted, dozens of witnesses were heard and tens of thousands of pages of documents were shown, including the Croatian Supreme Court’s verdict sentencing Hernadi to two years’ imprisonment,” Mol said.

This was not the first arbitration against Mol which Croatia lost, as in 2016 an earlier arbitration before the Geneva-based UNCITRAL was also won by Mol.

“The ICSID award marks the end of a long international legal dispute and all courts and prosecutions, except in Croatia, reached the same conclusion, that there was no corruption… UNCITRAL also ruled in Mol’s favor in December 2016, while the Croatian Constitutional Court found serious violations of fundamental rights during the trials in Croatia,” Mol said.

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