The Conflict of Interest Commission has asked First Deputy Prime Minister Tomislav Karamarko to present a written submission within 15 days regarding the commission's decision on Wednesday to launch proceedings against him to determine whether he is in conflict of interest because of the business relationship between his wife's company and his friend Josip Petrovic, who is a consultant for the Hungarian MOL oil company.

Karamarko has to explain in writing within 15 days whether as a member of the government he participated in any discussion or decision making on the government's attitude and policies related to the arbitration procedures between Croatia and MOL.

The public is aware of the situation regarding the business relations between the Drimia company in which Karamarko's wife Ana owns 80% and the Peritus consulting firm owned by Josip Petrovic who at the same time has business relations with MOL, a member of the Commission and head of the inquiry against Karamarko, Davorin Ivanjek said.

The essential fact to determine public and private interest, he underscored, are the two arbitration procedures underway between Croatia and MOL.

One procedure was launched in November 2013 by MOL before the International Centre for Settlement of Investment Disputes in Washington to determine whether the agreement with Croatia on gas business was being fulfilled. According to the agreement Croatia obliged to store, sell and purchase gas at market prices for a period of 15 years.

The second procedure was launched in January 2014 by Croatia against MOL before the United Nations Commission on International Trade Law seeking an annulment of a 2009 agreement which transferred management rights in Croatia's INA oil company to MOL. Both companies are seeking compensation.

The Commission, Ivanjek said, has to determine whether, while conducting his duties as first deputy prime minister, Karamarko had in any way proposed or participated in discussions or any decisions made with regard to the arbitration procedures between Croatia and MOL, whether he participated in any other matters of significance for INA and whether any behaviour by an official could in future lead to a situation of conflict of interest. It also needs to be determined whether that official failed to publicly declare the circumstances of that business relationship and would that have lead to contempt of the principles of holding a public office.

The commission has investigated and determined the ownership shares in the Drimia and Peritus companies and the existence of business relations between Peritus and MOL and with the Drimia company. According to media reports, the Peritus consulting company has a business relationship with MOL and Peritus has a business relationship with the Drimia company, Ivanjek said.

The commission on 12 May had requested the government to explain whether the government or cabinet had discussed any possible proposal for Croatia to withdraw its arbitration complaint against MOL. The government has been requested to state whether it had considered that possibility and if so had Karamarko then declared the circumstances of these business relations.

The commission launched the procedure to determine whether to inquire into a possible conflict of interest at the request of Karamarko himself as well as receiving another request by a lawmaker for the matter to be investigated.

Nacional weekly recently published a contract between the agency owned by Karamarko's wife Ana and the company owned by MOL's lobbyist Josip Petrovic. The contract shows that Petrovic paid the agency owned by Karamarko's wife 60,000 euros for advisory and media analysis services in the period after Karamarko was elected HDZ chief and before he came to power.

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