HEP affair

Mravak indicted for EUR 86.7 mln power company fraud at ex PM's order

23.01.2012 u 22:37


The Zagreb County Prosecutor's Office has indicted Ivan Mravak, former management board chairman of the HEP power company, in a case involving the sale of electricity below the market price to the TLM light metal factory and Bosnia's Aluminij company, in which HEP was allegedly defrauded of HRK 650 million.

The indictment has been filed after more than 18 months of investigation. The other accused are Mravak's former advisor, retired general Ivan Kapular, and former HEP Supervisory Board member Zdenko Juricic.

Mravak is accused of abusing office at the orders of former Prime Minister Ivo Sanader, who is still under investigation in the case, the prosecutor's office said in a statement on Monday. He is expected to be interrogated on Friday.

Mravak is accused of signing contracts to the detriment of HEP and the benefit of the Mostar-based Aluminij, contrary to the law on companies, HEP's statute and a 2004 decision of HEP's management board and without a decision of HEP's assembly.

The prosecutor's office contends that at management and supervisory board meetings on 12 April 2007, Mravak presented contracts with Aluminij and TLM as good, justified and in HEP's interest so as to obtain consent for selling electricity to Aluminij at the fixed price of 34.33 euros per MWh until the end of 2007.

Mravak is also accused of signing at the same time a contract stipulating that from the beginning of 2008 through 2011, 100 MWh of electricity was intended solely for Aluminij and was charged on the basis of the price of aluminium.

Because of those contracts, HEP had to increase its electricity imports at market prices that were significantly higher than those agreed with Aluminij and TLM. The prosecutor's office contends that HEP was defrauded of HRK 650 million until the termination of the contract on 19 January 2010.

Kapular is accused of asking Mravak to enable him and his family to spend summer vacations costing HRK 41,000 at HEP's expense, which Mravak approved.

Mravak is also accused of ordering and approving payments based on fictitious contracts, at Juricic's urging, which enabled the latter to illegally gain HRK 131,000 and whereby HEP was defrauded of HRK 266,000.

Before filing the indictment, the prosecutor's office dropped the prosecution of former Deputy PM Damir Polancec and former TLM director Ivan Kostan. They will testify against Mravak.