Orlen set up Swiss trading business despite internal warning, report says
WARSAW, April 29 (Reuters) -Polish oil refiner Orlen PKN.WA set up a Swiss-based trading business despite a warning by its internal security unit that it would pose risks of fraud and could expose the refiner to a breach of oil sanctions, news website Onet reported on Monday.
Orlen cancelled contracts to buy Venezuelan oil and refined products after losing some 1.6 billion zloty ($397 million) on prepayments for deliveries it never received, a company manager said last week.
The contracts were signed by Orlen Trading Switzerland (OTS), which is now being audited. Prosecutors are probing former Orlen management activities linked to the oversight of the trading unit, the refiner said last week.
Onet cited what it said was a report by Orlen's internal security unit for its story. Orlen did not immediately reply to a Reuters request for comment.
Onet quoted a statement by the former CEO of Orlen, Daniel Obajtek, who said the decision to establish OTS was made by the entire 11-person management board of the refiner and was in line with Orlen corporate governance procedures.
Earlier this month, Orlen said its 2023 profit would be hit by the 1.6 billion writedown resulting from OTS prepaying for oil and refining products it had not received by the agreed deadlines. The refiner said getting the money back was unlikely.
Contrary to standards, the advance payments were paid without collateral to entities with which Orlen had never cooperated before, the company said on April 11.
($1 = 4.0285 zlotys)
Reporting by Marek Strzelecki;
Editing by Alison Williams
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