Polish police raided the Warsaw Stock Exchange and the treasury ministry on October 14, reportedly questioning the chief executive in connection with the privatisation of chemicals company Ciech.

The action appears to have done little damage, initially at least, to the Polish stock market. However, a probe into the government's handling of a large privatisation deal will likely have significant political ramifications, with the raids carried out just nine days before a general election.

Poland's anti-graft police unit CBA searched the headquarters of the Warsaw Stock Exchange (WSE) and the treasury. The authorities are reportedly probing irregularities during the sale by the treasury of a 37.9% stake in the market-listed chemicals group to Kulczyk Investments in June 2014.

Police have released few details concerning the operation. "I confirm that agents of the CBA, on behalf of the prosecutor's office, are conducting a search of the premises of these institutions," a spokesman for the CBA told TVN24.

The bourse's CEO, Pawel Tamborski, a former investment banker, served as a deputy treasury minister during Ciech's privatisation. He left that role in 2014 to take control at the WSE. The WSE said in a statement that Tamborski merely turned over electronic equipment that he had held at both the treasury and the WSE. Tamborski was swift to tell media that he had returned to work immediately after handing over the equipment.

The privatization of Ciech in 2014 saw the late Polish billionaire Jan Kulczyk as the sole bidder via KI Chemistry, a company of his Kulczyk Investments group. In April, prosecutors began investigating the deal following alegations of opaque negotiations between then deputy treasury minister Rafal Baniak and Kulczyk representative Piotr Wawrzynowicz.

Commentators have been quick to link the raids – and in particular early reports Tamborski had been arrested – to the upcoming parliamentary elections. There has also been mention of "Waitergate", the series of secretly taped conversations of senior government and other officials that hit the headlines last year and caused huge embarassment to some and ended the careers of others.

It has been widely reported that there are many other tapes aside from the handful already released in the collection. Some were released earlier this year, leading to the ousting of several ministers. Baniak's name surfaced in some media reports in connection to the recordings, but there has been no publication of any taped conversations he might have had.

Speculation has been rife since that a further release or more spillover was likely ahead of the October 25 election. The apparently erroneous reports of the arrest of Tamborski and the raids will certainly do little to help the ruling Civic Platform as it tries to close the lead of the opposition Law & Justice (PiS). 

While the main indices on the WSE appeared unfazed by the news, the stock of GPW – the company that operates the bourse – is down 1.5%. Ciech's share price was also hit, dropping 2.7% in late afternoon trading.

However, there appears no immediate palpable impact on the wider bourse. It may be likely that the reputation of the WSE could suffer with small and retail investors, Zbigniew Porczyk of Trigon brokerage house suggested to bne IntelliNews.

At the same time, an ongoing probe into a major privatisation deal will do little to raise confidence in the struggling bourse, or help future state selloffs. "No law enforcement services carry out any activities in the premises of the Exchange," GPW curtly announced in its statement. "This case does not involve GPW."

However, the political ramifications appear more certain. Even if the events prove a storm in the teacup, a widely publicised police case involving the treasury's handling of a privatisation deal just 12 months ago will inflict damage on the government as it struggles to catch up in the polls. The widespread claim the former deputy minister had been arrested just nine days ahead of the vote was manna from heaven for PiS.

The conservative party made no bones over its opposition to Ciech's privatisation at the time. In line with its statist economic policy approach, PiS argued Poland should instead develop a strategy to grow its chemical industry under government control.