UPDATE 2-Croatia supreme court confirms jail for ex-PM Sanader over oil deal

Fri Jun 13, 2014 11:39am EDT

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(Adds Croatia, MOL comments)

ZAGREB, June 13 (Reuters) - Croatia's Supreme Court has confirmed a guilty verdict against former Prime Minister Ivo Sanader for taking a bribe from Hungarian oil group MOL in exchange for allowing it a dominant position in Croatian oil firm INA.

The ruling will not automatically annul a disputed INA shareholder agreement that Zagreb and MOL reached in 2009, but may serve as a legal basis for Croatia to start a new court process to render it null and void.

"This verdict confirms our view that the Croatian interests were not protected in the process of INA's sale to MOL. It also confirms that the talks (with MOL) the government initiated and the arbitration procedure before international bodies were fully justified," Economy Minister Ivan Vrdoljak said in a statement.

The ruling was confirmed by Zagreb county court spokesman Kresimir Devcic.

"The Supreme Court has modified the original verdict to eight years and six months," Devic told state radio.

The Zagreb County Court originally sentenced Sanader to 10 years in prison in 2012. The court said this week it would try in absentia MOL chairman Zsolt Hernadi on the same charge, after Hungary refused to allow his questioning, citing national interests.

Sanader, Hernadi and MOL have all denied the charge and MOL voiced "utter disappointment".

"MOL has never been part of the legal process, therefore we have no legal remedy against the decision. However, MOL strongly rejects any suggestion of improper business conduct and will continue to defend against any allegations of illegal practices," MOL's statement said.

Relations between Croatia and MOL have been strained in recent years. Zagreb accuses MOL of failing to make agreed investments in its biggest utility. MOL complains about red tape and the government's failure take over INA's loss-making gas- trading business as promised.

Both sides last year began separate arbitration procedures before international courts.

Croatia also wants a bigger say in INA's decision-making. MOL has rejected giving up management control in INA and repeatedly said it was ready to sell its stock if no agreement with Zagreb was reached.

Talks between the two shareholders on improving their partnership started in September but have made little headway so far. The last round of talks was held in early May and no timetable has been set for a new round. (Reporting by Zoran Radosavljevic Additional reporting by Igor Ilic; Editing by Larry King)

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