Good Business in Koprivnica

Normal people do not know that everything is possible. A famous quote that resonates on the homepage of the even more famous Totalitarianism by Hannah Arendt cynically covers all situations you wish to describe. Identifying oneself with the normals, while leaving the rest of the detestable world to the mercy of madness is not a difficult task.

A much harder job is to recognize the consequences of actions, uncover the causes, and detect the motivational thread that binds it all together. When well-hidden contracts between the Hungarian OTP and our food-political flagship Podravka surfaced, several interesting details were revealed. Podravka guarantees OTP’s loan with its own shares deposited in a specially constructed legal entity residing in Malta. Aside from that, the contract is made particularly creative by involving two oil companies.

Let us not rush to be surprised. I believe there are plenty of normals who know what is possible. More precisely, as could be read from publicly available data, Podravka managed to negotiate some form of alternative debt fulfillment. It committed to return the principal and interest to OTP, which represents a not at all strange banking arrangement, or alternatively, to acquire part of the equity of the Croatian oil company INA. The same one that is in fact owned by the Hungarian oil company MOL, which in this episode decided to take on a dual role.

First of all, MOL provided (or invested) an amount to OTP that was forwarded to Podravka, considering it a ‘business opportunity’. On the other hand, MOL also provided consulting services to Podravka’s management, utilizing the experience it gained in acquiring INA itself in Croatia. Let’s not kid ourselves, MOL enjoys credibility in consulting circles just as Podravka does in efficiency and long-term strategic planning. However, this absurdity is merely a side ingredient of a complex transaction. If it weren’t funny and sad, MOL’s idea is not a bad concept at all. Get rich and then write a book about how you got rich in Croatia. To get rich once more and meet the conditions for receiving a diploma as a swimmer in murky waters.

The cry of the chairman of the supervisory board, Ljubo Jurčić, explaining how Podravka could not take on the obligation to acquire INA shares is in vain. As far as I know, such a provision is legally perfect. It would be legally problematic, and Croatia happy, if Podravka’s management had negotiated the occupation of the Moon. But it did not. It took on the financial obligation to acquire shares that are listed on the market. Or are located somewhere else.

Let us not delude ourselves, these were completely normal people who knew what was possible. The causal relationship should be sought in what is missing. The answer to the question of what and why, under normal circumstances, MOL would even be involved in the story with Podravka is missing. The logical feasibility of benefits for all parties is also missing. Namely, on one side are OTP and MOL, the desire to place money, but also the much more important desire for complete control of INA. On the other side of the negotiating table are Podravka’s management and its political sponsors, who desperately need money to take over the flagship, and the unrealistic possibility of fulfilling the obligations undertaken. The logic of negotiation and business relations indicates that Podravka lacks the person or capital that can make the transaction normal. Either pay off the loan or cede INA.