POLAND: PKN ORLEN PRESIDENT WEATHERS A STORM

C O N F I D E N T I A L WARSAW 002420

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E.O. 12958: DECL: 10/19/2016
TAGS: ECON ENRG PO LI PREL
SUBJECT: POLAND: PKN ORLEN PRESIDENT WEATHERS A STORM


Classified By: Economic Counselor Richard Rorvig, reasons 1.4 b and d.


1. (C) Summary: PKN Orlen President Igor Chalupec has been
under intense scrutiny over the past few months by the Polish
government and press. Monthly press reports speculate that
he will be replaced. Recent press articles include detailed
accounts and biographies on potential replacements.
Chalupec, a technocrat appointed by the previous government,
should retain his position until the PKN Orlen purchase of
Lithuania's Mazeiukiu refinery is completed. Chalupec's
eventual removal will be part of the GOP's larger effort to
rid the government and state-owned enterprises of anyone
appointed by the previous government and is, as far as we are
aware, in no way a reflection of his job performance. End
Summary.


2. (U) For months, the Polish press has reported on PKN
Orlen (PKNO) President Chalupec's tenuous hold on his
position and conflicting GOP statements on his tenure. Most
recently, On November 9, Deputy Treasury Minister Pawel
Szalamacha publicly stated that "Chalupec's mission is coming
to an end." (Note: As a majority state-owned enterprise,
The Treasury appoints board members and supervises PKN Orlen.
End Note.) On November 10, Ministry spokesman Kozyra
back-tracked, stating "Referring to information about the
possibility of dismissing Igor Chalupec during the
supervisory board's next meeting, the ministry announces it
does not foresee such a solution." Orlen's supervisory board
next meets on November 30, when staff changes could be
discussed if added to the agenda. As of November 20, this
has not occurred.


3. (U) The contradictory statements and lack of GOP support
for Chalupec caused the resignation of supervisory board
member Maciej Mataczynski on November 9 (before the Treasury
Ministry backtracked). In a statement posted on PKN Orlen's
website, Mataczynski wrote that "The reasons why the Treasury
demanded Chalupec's departure from the company are not tied
to his professional achievements, which in my opinion should
be the only criteria taken into account by the supervisory
board". According to our sources, Mataczynski was the only
supervisory board member supporting Chalupec. Treasury
officials refused to comment on Mataczynski's statement or
allegations that the problems between Chalupec and the
Treasury Ministry have been escalating in the past three
months. Since the statement's posting, press reports have
included speculation on potential replacements, including
biographic information.


4. (C) Our sources indicate that the GOP was surprised that
PKNO won last year's tender for Lithuania's Mazeikiu
refinery. GOP officials were initally not supportive of the
purchase. Contacts at the Ministry of Economy told us that
they preferred concentrating on purchasing the Yukos stake in
Transpetrol in Slovakia to Mazeikiu. President Kaczynski's
public statements supporting the sale in May were the first
signs that the GOP would assist PKNO in the purchase and were
greatly appreciated by the company. Cezar Filipowicz, Deputy
President of PKNO told Econoff that Deputy Minister of
Economy Naimski is still not very enthusiastic about the
purchase, but because PKNO made the deal, feels he must fight
to help the company. Naimski's lack of enthusiasm for the
deal has been confirmed by his subordinates.


5. (C) Comment: Post expects that the press will continue
to speculate on when PKN Orlen's Chalupec will be removed and
who his replacement will be. However, we do not anticipate
that the GOP will make a change in the PKN Orlen President
until after the Mazeikiu deal is concluded. Despite general
GOP lack of enthusiasm for the deal, the attempts to
undermine PKN Orlen's purchase of the refinery have united
the GOP in what it perceives as a fight against Russia for
control of Poland and Central Europe's energy security. The
GOP will not want to make any moves that might undermine the
purchase. Publicly, both the GOP and PKNO are stating that
they hope to complete the transaction by December 15,
although GOP contacts emphasize to us that the final report
of the Mazeikiu fire is critical to PKNO's ability to close.
However, once the Mazeikiu deal is concluded, we expect
Chalupec to be congratulated and then shown the door.
ASHE