Testifying in the trial of former Prime Minister Ivo Sanader, accused of receiving a bribe to enable the Hungarian oil company MOL to take over management rights in Croatia's INA, attorney Zoran Markovic said on Thursday that changing the shareholders' agreement was in the government's interest given the change in the ownership structure from the moment MOL became INA's strategic partner.
Markovic's law firm was hired to work on the amendment of the shareholders' agreement.
He told Zagreb's County Court the agreement was changed because of drastic changes in the ownership structure. After initially holding 25 per cent plus one share, MOL acquired a 47 per cent stake in INA, while the Croatian government's stake dropped to 44 per cent because of a public offering, a stock transfer to the War Veterans Fund, and a stock sale to employees.
During negotiations, MOL asked to have a majority in INA's supervisory board as well, to which the government agreed on condition that key decisions cannot be made without its three members on the supervisory board.
Although during the investigation in the case Markovic said he was surprised by that because changes to the management structure were not discussed during the negotiations, today he said the promptness of the government's reaction pleasantly surprised him, but the decision itself did not because of the ownership structure.
Markovic said that under the government's decision, INA's supervisory board comprised three government representatives, five MOL representatives and one employee representative, but key decisions could not be made without the government representatives' votes, that is by a two-third vote.
He said the current management system was more efficient, as INA made HRK 1.8 billion in profit last year.
Markovic also worked on a proposal to divest INA's gas business, saying it had to be done because INA was selling the gas imported from Russia below the purchase price, and that in late 2008 INA was in a poor financial situation and had a US$ 1 billion loan.
The anti-corruption office USKOK has charged Sanader with taking a EUR 10 million bribe so that MOL could have the dominant position in INA, including the divestiture of its unprofitable gas business.
Markovic said the possibility of exchanging shares was also being considered, but that due to legal obstacles INA could get a maximum six per cent stake in MOL, so the idea was scrapped.
The witness went on to say that he did not contact Sanader when he was working on the INA deal and that the government paid him HRK 2.7 million for his work on the amendment of the shareholders' agreement, 20 per cent less than he had requested.
During today's hearing, presiding judge Ivan Turudic warned Sanader several times not to comment on the testimony or ask questions before his turn, threatening to have him removed from the courtroom.
The trial resumes on Friday with the testimony of the Croatian Competition Council president Olgica Spevec.
Sanader is on trial for taking the bribe from MOL head Zsolt Hernadi as well as for war profiteering on charges of taking a commission from Austria's Hypo bank for a loan for the Croatian Foreign Ministry during the early 1990s, when Croatia was the victim of military aggression.
