UPDATE 1-Former MOL legal counsel sues CEO over share price fall
* MOL's former legal counsel sues MOL CEO Hernadi
* Says Hernadi misled MOL shareholders over INA
* Hernadi denies all accusations in court
* Case comes as MOL, Croatia in row over INA group (Adds more detail from court, comment by Hernadi)
BUDAPEST, Dec 6 (Reuters) - A former chief legal counsel of Hungarian oil and gas group MOL has launched a private lawsuit against the company's boss over a fall in the firm's share price following its move to take control of Croatian peer INA.
MOL said on Friday the case was against chairman and chief executive Zsolt Hernadi, and not the company itself.
It has been launched by Ilona Banhegyi, MOL's chief legal counsel until 2006. MOL did not confirm the identity of the plaintiff, but her name was pronounced in court.
Hernadi is accused of committing bribery in international relations, fraud causing significant damage and misappropriation of funds, the plaintiff's lawyer told a court hearing.
Hernadi denied all the accusations in a lengthy testimony.
The case is the latest in a string of disputes since MOL secured management control of INA.
Last year, Croatia found its former Prime Minister Ivo Sanader guilty of accepting a bribe in 2008 from MOL to grant it a dominant position in INA, without having to buy a majority stake.
MOL holds close to 50 percent of INA and has been in a bitter dispute with the other shareholder, the Croatian government, over management rights.
Sanader appealed against his conviction and both he and MOL deny the charges. An official Hungarian investigation in 2011-2012 found that neither MOL nor its officials took part in the alleged bribery.
In October, Croatia also issued an Interpol and European arrest warrant for MOL chief Hernadi.
It was not clear whether the new private lawsuit in Hungary and its future outcome could in any way be linked to the Croatian procedure.
"The plaintiff claims that the loss of value in possessed MOL shares was caused by alleged improper and unlawful behavior in connection with MOL's acquisition of management rights over INA Industrija Nafte d.d., Zagreb (INA)," MOL said in a statement.
Banhegyi's lawyer, Balazs Geller, told the court that Hernadi misled MOL's shareholders when he failed to include in MOL's 2008 business plan the sum which a Croatian court later ruled was a bribe, and failed to give account of the legal procedure in 2011-2012 even though it was covered widely in the international media.
The fall in MOL's shares later in 2011 caused financial damage to the plaintiff - who held some 600 million forints worth of MOL shares then - and also the MOL group, he said.
Hernadi refuted the allegations.
"I would like to state it very clearly that we never misled any of our shareholders ... and always handled MOL's assets always with care, keeping all legal obligations and rules.
"I did not commit any of the crimes presented by the accusations, I did not bribe Ivo Sanader or anyone else, I did not mislead shareholders and did not misuse the assets of MOL group," he said.
MOL told Reuters the plaintiff left the company in 2006.
"MOL has no reason to assume that the plaintiff may possess special knowledge or evidence not already known to the state prosecution," MOL said in a reply to Reuters questions.
Hernadi's lawyer Peter Zamecsnik told Reuters after the hearing that if Hernadi was acquitted in court, it might have international relevance, such as on the Interpol warrant, but not automatically, and it was too early to predict the outcome.
The next hearing in the case is due to be held in February. (Reporting by Krisztina Than. Editing by Jane Merriman and Mark Potter)
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