INA SUPERVISORY BOARD ON THE PRELIMINARY RESULTS OF THE INTERNAL INVESTIGATION
Damir Škugor violated internal procedure and abused his authority; the Supervisory Board requires improvement of business processes
Zagreb, August 31, 2022 – At today’s extraordinary session, the Supervisory Board of INA took note of the conclusions from the extraordinary session of the INA Management Board, held yesterday about USKOK’s investigation against Damir Škugor. The preliminary findings of the internal investigation (that will be complemented) were presented, according to which a certain number of points were identified in which Damir Škugor and his subordinates clearly violated internal rules and procedures which led to substantial financial damage of INA.
Gas sale contracts with a fixed and a variable price are a common business practice worldwide. Fixed prices are based on prevailing quotations for the future contracted period, which were 19.48 EUR/MWh at the end of 2020. At that time fixed price contracts with other customers were made at similar price level to supply the Croatian market.
However, Damir Škugor did not have the right to offer and sign a fixed price contract without issued tender by wholesale customers with such terms. Also, he did not have the right to sign fixed or variable price contracts longer than one year. Damir Škugor clearly violated internal procedures and rules, since he offered a fixed contract directly, without applying to the tender, as well as exceeded one year duration of the contract. He was also obliged to bring the mentioned contracts to the attention of the Management Board and his superiors for approval, which he did not do.
In accordance with the preliminary internal findings, the INA Management Board decided to undertake a series of personal, corrective, and preventive actions. First, it decided to suspend Damir Škugor from the position of Director of Gas and Energy, and his employment contract will be terminated. Damir Škugor will be recalled from the supervisory boards where he represents INA as a shareholder. Also, other employees who are found to have acted negligently within their responsibilities and authority in relation to this case will be suspended.
To avoid further damage to INA, the INA Management Board stopped all further payments and obligations related to disputed contracts and requested the termination of these contracts that are the subject of USKOK’s investigation, after legal review. In the meantime, all decision-making and signature rights related to any sale of gas with a fixed gas price have been temporarily suspended. Until further notice, the INA Management Board will be the decision-maker for submitting binding offers or concluding any gas sales contract with a fixed gas price.
Furthermore, INA will undertake all necessary activities to initiate proceedings with the aim of recovering financial resources. Given that the control mechanisms at INA did not function adequately in business processes, the Supervisory Board of INA requested an external audit of internal processes, decision-making principles, and gas sales and purchase contracts, all for the purpose of improvement and transparency of business processes. The final report of INA’s internal investigation is expected in the coming weeks, and additional control mechanisms will be introduced as a result.
About INA Group
INA Group plays a leading role in oil operations in Croatia and a significant role in the region in oil and gas exploration and production, oil refining and distribution of oil and petroleum products. INA Group comprises several subsidiaries fully or partial owned by INA, d.d. The Group’s seat is in Zagreb, Croatia. Apart from Croatia, INA also has upstream operations in Angola and Egypt. Oil refining takes place at the Rijeka Oil Refinery, while sustainable alternative businesses are being developed at the Sisak industrial site. INA’s regional retail network consists of more than 500 retail sites in Croatia and neighboring countries. INA Group is a member of MOL Group.
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