Milford Holdings, the Irish subsidiary of Russia's Gazprom, has sold its 24.8 per cent stake in BorsodChem Rt, a Hungarian chemicals maker. Milford Holdings, controlled by several Cyprus-based entities, had been investigated by the Department of Finance following allegations that its Russian parent was trying to circumvent stock exchange rules.

Using Milford and other allies Gazprom has built up a 50 per cent stake in BorsodChem without triggering a full takeover bid. The sale comes ahead of an extraordinary general meeting of the Hungarian group on January 24th which might have resulted in a legal challenge to Milford Holdings's attempts to force through board changes. Under Hungarian law a full bid must be initiated once an investor has acquired more than 33 per cent of a company.

Milford Holding's stake has been sold to CIB Bank Rt, a Hungarian bank that is supportive of Gazprom. No price was disclosed and the Russian group's stake is now below 33 per cent.

The company came to the attention of the Irish authorities late last year when details of the affair surfaced in the Hungarian press. In recent years the Government has tried to clamp down on the use of Irish-registered non-resident companies as it was damaging the State's reputation as a business location. Company office filings show that Milford Holdings made profits of $33 million (€35 million) last year and paid $1.5 million in corporation tax. Gazprom also used it to acquire a 13.5 per cent stake in TVK, another Hungarian chemicals company. Milford Holding's registered address is 17 Earlsfort Terrace in Dublin - the same address as its auditors, Joy MacNabola Murray.