Orlen Trading Switzerland, the Swiss business of Poland’s listed energy conglomerate Orlen, paid PLN1.6bn (nearly $402mn) to an unchecked company that turned out to be a scam, Polish media reported on April 11.

The news reports come in the wake of an Orlen stock exchange report, published on April 10, which said in veiled corporate language that it expected an “accounting one-off” coming from an oil deal that the company’s Swiss subsidiary had signed.

“In lack of deliveries of crude oil and refining products in accordance with the deadline provided in the certain agreements, the subsidiary requested reimbursement of the prepayments,” Orlen said in a market filing. 

“The prepayments have not been returned in the deadlines and the subsidiary assessed the possibility to recover the owed funds as unlikely,” it also said.

Orlen Trading Switzerland’s CEO was detained in Poland as he flew in to meet the company’s new management, which the government-controlled supervisory board has recently appointed, Radio Zet reported.

Even though the arrest had to do with an investigation into an alleged VAT extortion scheme, it cast a stronger light on Orlen Trading Switzerland and Orlen under the leadership of the previous CEO Daniel Obajtek, a political nominee of the previous government of Law and Justice (PiS).

Prime Minister Donald Tusk hinted at trouble brewing at Orlen because of its Swiss subsidiary in March.

“There are justified concerns that in connection with the activities of this company, Poland will face very serious problems,” Tusk told a press conference at the time. 

The scandal is now prompting questions about internal procedures for verifying business partners at Orlen, as it “was already clear in late 2023 that a contract had been signed with a random supplier who turned out to be a fraudster”, Poland's business and industry news website wnp.pl wrote on April 12.

Another issue is “why such important information was only published in April”, it added. Orlen’s consolidated annual report for 2023 is scheduled for publication on April 25.

The company’s share price fell 2.17% to PLN68.2 on the Warsaw Stock Exchange on April 12.