Bloomberg News

Croatia Ex-PM Sanader Guilty of Bribery in Mol, Hypo Case

November 20, 2012

A Croatian district court found former Prime Minister Ivo Sanader guilty of bribery and abuse of power involving Hungarian refiner Mol Nyrt. and Austria’s Hypo Alpe-Adria-Bank International AG.

Judge Ivan Turudic today sentenced Sanader to 10 years in prison. He will appeal, according to his attorney, Cedo Prodanovic. The Supreme Court would deliver a final verdict following the appeal. Sanader, who was taken to Remetinec prison after the verdict, will remain there during an appeal because the sentence is longer than five years.

“Without a doubt, you have committed these criminal acts, abusing the powers of your office as prime minister and, earlier, as deputy foreign minister,” said Turudic after reading out the verdict in the Zagreb court.

Croatia, which is set to become the 28th member of the European Union in July, has prosecuted corruption cases in the past three years, targeting government officials and members of the former ruling party. The nation needs to improve its judicial system and fight corruption as it approaches a final assessment by the European Commission early next year.

Sanader, 59, was the leader of the Croatian Democratic Union, which ruled the country for 17 of 22 years after the end of communism in 1990. He was elected premier in 2003 and 2007, and left office without saying why in 2009. He was arrested in December 2010 in Austria on an international warrant and was extradited to Croatia in July 2011.

EU Drive

“A positive for Croatia as the EU had criticized the country for not doing enough to rein in graft and corruption, and this will further cement the country’s drive for EU accession by July 2013,” Timothy Ash, the London-based chief emerging-market economist for Standard Bank Group Ltd., said in a note.

The yield on the bond maturing in 2017 declined to 4.322 percent at 1:37 p.m. in Zagreb from 4.399 percent yesterday, according to mid-pricing data compiled by Bloomberg.

Sanader was indicted for allegedly taking a bribe of 10 million euros ($12.7 million) from Hungary’s largest refiner Mol Nyrt. between 2008 to 2009, when he was premier. The judge found him guilty of taking 5 million euros. In exchange, he arranged with Zsolt Hernadi, Mol’s chief executive officer, to give the Hungarian company controlling rights over INA in a January 2009 shareholding agreement, Judge Turudic said.

Turudic said Sanader had been behind the 2009 shareholding agreement in which Mol won control of INA, adding that Croatian officials who were negotiating with Mol at the time were acting under Sanader’s instructions.

‘Criminal Act’

“Since then Mol has been completely in charge in running and controlling INA,” Turudic said. “While it is completely understandable why this was Mol’s aim, it was against the interest of Republic of Croatia and was achieved through a criminal act.”

Turudic said it was “proved without a doubt that you have received bribes, as a result of your agreement with Zsolt Hernadi.”

Mol said it “categorically rejects” the accusations, which were formed as part of a “political case” and were lacking evidence, crime or motive, the company said in a statement on its website after the verdict.

Sanader was also found guilty of taking a bribe of 3.6 million kuna ($610,000) from the Austrian bank between 1994 to 1995, when he was deputy foreign minister. In exchange, the Croatian government at the time took a loan of 140 million Austrian schillings ($14 million), the Alpine nation’s currency at the time, from Hypo bank, the court said.

Appeal Chances

Sanader also has to return 5 million euros and 3.6 million kuna of received bribes, and pay court costs of 36,000 kuna, Judge Turudic said.

“We have a real basis for appeal and real chances to succeed,” Sanader’s lawyer Prodanovic said today outside the courthouse.

Prosecutors asked for a 15-year sentence. Sanader has maintained his innocence. Either party can appeal the verdict within 15 days.

“The verdict holds a promise that the kind of government that we had with Sanader is not possible anymore,” said Jelena Lovric, the chief political analyst at Europa Press Holding, Croatia’s largest newspaper publisher. “The question now is whether the anti-corruption fight has boiled down to the fight against Sanader, or whether it shall go on.”

More Charges

Sanader is also being tried, along with his former political party, on bribery and corruption charges in another case, related to allegedly siphoning money from state companies. The party is accused of illegally gaining 31.6 million kuna, while Sanader received 15 million kuna, prosecutors have alleged.

The government in October 2011 asked the prosecutor general to “take all necessary measures” to protect its ownership and management rights in INA until the verdict is reached in Sanader’s case.

The verdict has to be binding to have any effect on the contracts linked to Sanader’s briberies, said Davor Derencinovic, professor of criminal law and criminology at Zagreb’s Faculty of Law.

To contact the reporter on this story: Jasmina Kuzmanovic in Zagreb at jkuzmanovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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