Fugitive CEO Shows Hungary-Croatia Energy Battle

Fugitive CEO Shows Hungary-Croatia Energy Battle

After pushing to kick foreign energy companies out of Hungary, Prime Minister Viktor Orban is getting a taste of his own medicine from neighboring Croatia.

The affair features a Hungarian chief executive officer who is wanted by Interpol and sheltered by his home country, a Croatian bribery probe that put a former prime minister in jail, a possible downgrade for Hungary’s largest refiner and a battle over control of a $7.2-billion Croatian energy company that one analyst calls a “gem.”           

“This is where things can get dirty,” Andreas Goldthau, an associate energy-policy professor at Central European University in Budapest, said by phone yesterday. “Hungary and Croatia will test the limits, given the prominence of the energy sector. The message is, don’t mess with our national champion.”

The dispute comes amid Orban’s effort to buy out foreign-owned energy companies after winning a two-thirds parliamentary majority in 2010. His goal is to extend government influence and lower utility prices before elections, part of a return to state control in some eastern European countries, according to Candole Partners, which specializes in regional energy. The losers may be foreign investors who were courted after the fall of the Iron Curtain more than two decades ago.

“Governments in central Europe increasingly want to control their national champions and use them as political instruments for various things, including keeping end prices low for consumers,” said Guy Burrow, a Bucharest-based partner at Candole Partners. “There’s definitely irony” for Hungary.