* Convicted of taking bribes from Hungary's MOL, Austrian
* Croatia's anti-graft effort remains under EU scrutiny
* Verdict may have implications for MOL, Croatia's INA
By Zoran Radosavljevic
ZAGREB, Nov 20 Former Croatian prime minister
Ivo Sanader was sentenced to 10 years in prison on Tuesday for
taking bribes from two foreign companies, becoming the highest
state official to be convicted of corruption in the future
European Union member state.
Croatia is due to join the EU in July 2013 and Sanader's
conviction is likely to be seen as evidence it is cracking down
on corruption. Its efforts to fight crime and graft are being
carefully monitored before it formally joins the bloc.
A Zagreb county court found Sanader, 59, guilty of agreeing
in 2008 to accept a payment from Hungary's energy group MOL
of 5 million euros in exchange for granting it full
management rights over Croatia's oil concern INA.
The ruling, against which Sanader is likely to appeal, sent
MOL shares 2.6 percent down by 1045 GMT in Budapest, amid
concerns that it might prompt Croatia to review MOL's
shareholder agreement with INA.
Judge Ivan Turudic also said Sanader had taken a fee from
Austrian Hypo Alpe Adria Bank in 1995, when he was deputy
foreign minister, that prosecutors had described as "war
profiteering". Croatia's war of independence from Serbian-led
federal Yugoslavia was winding down at the time.
Sanader, who looked drawn and thoughtful in court, has
strongly denied wrongdoing and dismissed the trial as
politically motivated. He will be detained until the appeal.
"You have damaged Croatia's reputation. Because you were a
top state official, this verdict is a message to those engaged
in politics that crime does not pay," Turudic said.
"This verdict will certainly be welcomed in the EU, and it
sets a benchmark for all EU candidate countries," said Drazen
Rajkovic, author of the book "How Sanader Stole Croatia".
As prime minister between 2004 and 2009, Sanader was the
most powerful man in Croatia, known for smart suits and
expensive watches, and his fall from grace coincides with
Croatia's campaign to root out corruption.
Sanader resigned in July 2009, unexpectedly and without
explanation. Jadranka Kosor, his hand-picked successor, then
launched an anti-graft drive that helped Zagreb complete
European Union entry talks in June 2011.
Sanader is on trial separately - together with his former
conservative HDZ party, which is now in opposition - on charges
of creating slush funds for the party by skimming off profits
from state companies and by manipulating public tenders.
Despite the market jitters over MOL's future in INA,
Croatia's biggest utility engaged in exploration, drilling,
refining and retail, analysts said there was no alarm yet.
In a brief statement, MOL said it "continues to
categorically reject" accusations made in the trial and vowed to
work further to make INA more profitable and successful.
"The chance of a retroactive break-up of MOL and INA is less
than one percent," Raiffeisen Bank equity analyst Levente Blaho
told Reuters. "The verdict is at the first instance, this might
very well change further down the line."
"MOL has said time and again that it did nothing wrong and
that it would defend this in open court. It is not positive that
the company was named in the verdict but it should have no
dramatic effect on the share price now," he said.
MOL has slightly more than a 49 percent stake in INA and the
Croatian government almost 45 percent. Relations over management
rights have been strained for the past few years.