(Bloomberg) -- Poland’s largest refiner said it will take a write-off equating to about $400 million as a result of oil that its Swiss trading unit paid for but never received. 

Orlen SA said its subsidiary, Orlen Trading Switzerland GmbH, didn’t receive barrels that it undertook prepayments for. The total value of the write off is 1.6 billion zloty, or $400 million. The amount of undelivered supply wasn’t stated. 

Orlen said it asked for the prepayments to be returned, which hasn’t happened, and that recovery of the funds looks unlikely. The payments were made to oil intermediaries with which the company had never dealt before and without security, it said in a follow-up statement.

The loss, and the unusual nature of the payments, call into question the company’s corporate controls.

Poland’s government has been piling pressure on Orlen, with Premier Donald Tusk previously raising the prospect of irregularities at its Swiss trading unit. Tusk said last month that the company could be in “very serious trouble”, without elaborating. 

It was unclear exactly what cargoes were involved, but until recently at least two giant supertankers chartered by Orlen were anchored off the coast of Venezuela. Those ships were due to load in December but instead sat idle for several months, racking up large waiting fees.

Orlen’s follow-up statement in full:

  • “Since May 2023, ORLEN Trading Switzerland, a subsidiary of the ORLEN Group, has paid approximately PLN 1.6 billion in advances to oil trading intermediaries. Most deliveries were to be completed by the end of 2023, and the remaining deliveries by the end of January 2024”
  • “These companies neither fulfilled their obligations nor, when asked to return advance payments, did not settle accounts with ORLEN Trading Switzerland. From the beginning of March 2024, the new authorities of ORLEN Trading Switzerland sought to enforce contract provisions or recover advance payments. This turned out to be impossible due to the intermediaries’ evasion of these obligations. It should be noted that, contrary to standards, the advance payments were paid without security and went to entities with which ORLEN SA had never cooperated before.”

It didn’t answer a question about where the oil came from that it didn’t receive.

 

(Updates with additional statement from Orlen from third paragraph.)

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