By Marek Strzelecki
WARSAW (Reuters) -Polish oil company Orlen sold assets of peer Lotos for at least 5 billion zlotys ($1.24 billion) below their estimated value, the Polish audit office said on Monday, adding that it would call for a probe of the two companies' 2022 merger.
Ahead of the takeover, Orlen agreed to sell some Lotos assets to companies including Saudi Aramco (TADAWUL:2222) and Hungary's MOL to fulfil European Union antitrust rulings and meet conditions for taking over Gdansk-based Lotos.
Since Poland elected a new government last October, however, Orlen has found itself at the centre of scrutiny into how state-controlled companies were run under Poland's previous nationalist government, as the new administration seeks to sweep away what it says is a legacy of cronyism, mismanagement and efforts to use state firms for political purposes.
"NIK... draws attention to the abnormally low price for the sale of Grupa Lotos' assets - at least 5 billion zlotys below the estimated value," the Supreme Audit Office (NIK) said in a statement.
Orlen's purchase of Lotos was part of a plan by the then ruling Law and Justice (PiS) party to increase control over the economy and create 'national champions'.
As a result, MOL bought over 400 fuel stations in Poland for an initially agreed price of $610 million, while Saudi Aramco bought a 30% stake in Lotos' oil refinery in Gdansk, in a deal including a fixed payment of 1.15 billion zlotys.
"The Gdansk refinery package was sold for 1.15 billion zlotys, although its value was estimated by the Supreme Audit Office at 4.6 billion zlotys," Maciej Maciejewski acting director of NIK's department of economy, state treasury and privatisation, told reporters.
Orlen rejected NIK criticism on Monday saying the company gained as much as 9 billion zloty on the merger with Lotos, without providing details
"The report isn't accurate and is harmful to shareholders and exposes the country to a loss of credibility in the eyes of foreign investors and contractors," Orlen chief financial officer Janusz Szewczak told reporters.
PROBE
Orlen's CEO Daniel Obajtek was dismissed by the supervisory board at the start of this month after Poland's new government pledged to purge state-controlled companies of people it considers political nominees of the previous ruling party.
NIK spokesman Marcin Marjanski said the office was preparing a motion to ask prosecutors to probe the Orlen-Lotos deal.
NIK also criticised the actions of the minister of state assets who recommended the merger to the then cabinet without a full knowledge of the costs and benefits of the transaction.
According to NIK, Aramco has gained a very strong position in Rafineria Gdańska and has veto power on key issues, while the state Treasury has no authority to block a potential sale of shares in the Gdansk Refinery by Aramco to another entity in the future.
NIK also cautioned that if Aramco decided to export fuel produced at the Gdańsk Refinery instead of selling to the domestic market, there was a risk of fuel shortages in the Polish market.
Following the change of government, prosecutors launched two probes into Orlen in January, one concerning alleged malpractice resulting in losses during its takeover of Lotos, and another into claims that it artificially lowered petrol prices before a 2023 election to help PiS.
($1 = 4.0286 zlotys)