Croatian courts are currently holding the biggest trial of the decade to determine the guilt of former Croatian Prime Minister Ivo Sanader and Hungarian industrialist Zsolt Hernadi, the Chairman and CEO of MOL Hungarian Oil, the largest foreign investor in Croatia (accused of bribing the former). The accuser? A businessman called Robert Jezic who according to the Croatian press was accused by the defence of ties to Russian’s energy interests in Europe.
This is not just any trial, but one that could determine the energy future of Croatia, the resource map of central Europe, and even the future integrity of the Eurozone. The landmark case has driven a wedge between Hungary and Croatia, whose cooperation is essential for an alternative gas route via the Croatian port of Krk, that could wean both countries and Europe off dependence on Russia.
In 2009, MOL became the largest shareholder in the Croatian national energy firm INA. The restructuring was unanimously approved by Sanader’s Cabinet, contrary to old guard interests in the previous status quo. Soon after Sanader’s resignation in July 2009, media and political attacks on MOL became commonplace. In 2014, Croatia’s state anti-corruption taskforce USKOK accused Hernadi of having arranged the MOL buy-out of INA by bribing former Sanader to the tune of €10 million.
In 2014, an arbitration tribunal convened by the UN Commission on Trade Law (UNCITRAL) and initiated by Croatian prosecutors came to the “confident conclusion” that Croatia had failed to prove the bribery allegation. The claim was thrown out as there was no material evidence other than "inferences and the testimony of a witness," namely Robert Jezic.
In a previous article for Euronews, I warned that Croatia’s gambit to join the Eurozone could serve as a Trojan horse for Putin’s ambitions in Europe. A number of commentators in response asked how this nexus of corruption can be proven. Although their scepticism is understandable, the Croatian press has raised serious questions about the credibility of Croatia’s judiciary.
In a trial that could determine whether the future of central European energy falls under the Kremlin orbit, there are two big questions. Is Jezic – who says he was the go-between in the alleged €10 million bribe – reliable? And can the Croatian judiciary be trusted?
In 2010, Jezic was arrested by Croatian authorities, according to the Croatian press. He had been suspected by USKOK of illegally acquiring 6.3 million kuna (€850,000) by conspiring with Sanader to force the state electricity firm HEP to sell cheap electricity to Dioki, Jezic’s petrochemical company, at below market prices. As Euractive reported, “the State Attorney’s Office in Zagreb accused Sanader and Croatian businessman Robert Ježić of enticing a former CEO of HEP power utility, the late Ivan Mravak, to sell electricity at lower prices to Ježić’s petrochemical companies Dioki and Dina in 2008 and 2009. According to prosecutors, this caused damage to the tune of some 3.8 million kuna (€512,000) to HEP.”
Jezic and Sanader were eventually declared not guilty of the HEP-Dioki scandal last October. But the chief witness in that case, HEP’s former director Ivan Mravka, was unable to testify because he had died before proceedings concluded. According to Euractive, the case was dropped because Mravka’s “pre-recorded testimony was ruled as inadmissible.”
It is not unreasonable to wonder how USKOK can brandish the same man as the star witness against Hernadi in this pivotal trial.
This question is made more pertinent when we consider that TPortal reports that Jezic’s bribery claim against Hernadi has been challenged by the court testimony of Russian billionaire, Mikhail Gutseriyev, owner of the seventh largest Russian oil company Russneft, who is also named in a US Treasury list of oligarchs close to Putin.
Gutseriyev told a Croatian court in 2012 that Jezic was his business partner – but that Jezic had stolen €5 million from Gutseriyev’s own investment. The Russian oligarch said that his money had nothing to do with Sanader, but had gone through Jezic’s company to invest in Krk. According to Gutseriyev, the money was to lobby for the Druzba Adria oil pipeline, a Russian gas transshipment route that is the exact opposite of the US-EU backed route, aimed at using Krk to transport Russian energy to world markets. But Gutseriyev accused Jezic of ruining the scheme by taking his money.
To prove his bribery claim against Hernadi, seven years ago Jezic was ordered by a Croatian court to return the €5m to Croatian authorities within 30 days. Asked why he hadn’t returned it, his excuse was that the money was in the account of his Swiss company, Dioki Holding. The money never materialised. Now when asked in the latest hearing about the money, as Croatian daily Večernji list pointed out, Jezic claimed the money had been used to pay off Dioki’s loans; insisted that the money does not “physically exist” but simultaneously “still exists” as a claim against third parties; and somehow promised that he would return the same disappearing money.
Of course, we do not know the truth – but this testimony has become a subject of ridicule among even Croatia's leading broadcast journalists. That it is assumed credible by Croatian prosecutors raises questions about how corruption in the Croatian judiciary threatens to pull Europe into the arms of Russia. Croatia is clearly not ready to join the Eurozone. The EU has enough challenges without throwing itself into a Balkan quagmire from which it may never emerge.
Dr Theodore Karasik is a Non-Resident Senior Fellow at the Lexington Institute and a national security expert. He worked for the RAND Corporation and is widely published in international media outlets.