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Friday, 8 February, 2002, 14:58 GMT
Finance scandal rocks Poland
Orlen's gas station
Orlen is the largest oil company in Poland
The head of Poland's biggest oil company has been arrested, as part of an insider-trading scandal that has gripped the country's political and financial communities.

Andrzej Modrzejewski, chief executive of PKN Orlen, was sacked on Friday after being detained a day earlier on charges of financial wrongdoing.

According to a prosecutor's representative, Mr Modrzejewski is accused of insider trading and disclosure of confidential information

His detention and charges happened less than 24 hours before the meeting of the supervisory board of PKN, of which the state owns a 28% share.

The affair has taken on a political aspect, as government critics it of having cooked up the charges, in order to force Mr Modrzejewski to step down.

The government has made several previous attempts to oust Mr Modrzejewski, dubbing him incompetent.

'Provocation'

Mr Modrzejewski described the detention as a pure provocation and said that the accusations concerned his activity four years ago, when he worked for a large investment fund.

Andrzej Modrzejewski
The ousted CEO calls the charges provocation
The company has accused the state of manipulating the supervisory board, and referred to similar cases in January and September 2001, when reports on investigations of Orlen's financial activity coincided with board meetings.

Both charges were dropped afterwards, the company said.

The Treasury Ministry, which is in charge of state stakes in firms, denied the allegations.

"My advice would be to refrain from insinuations in statements by a company which is an economic entity and not an entity pursuing politics. It looks like someone overshot the mark," Treasury Minister Wieslaw Kaczmarek.

Mr Modrzejewski was appointed to PKN in 1999 under the previous, right-wing government and, as Polish media reports, supported a right party, which have lost to the ex-communist Democratic Left Alliance during the parliamentary elections in September 2001.

Volatile emerging markets in East Europe are extremely sensitive to scandals around large companies, which are usually involved in domestic politics.

See also:

30 Jan 02 | Europe
Poland's farming woes
30 Jan 02 | Business
East Europe rate cuts promise boost
25 Jan 02 | Europe
'Patients left to die' in Poland
09 Nov 01 | Country profiles
Country profile: Poland
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