Vermillion, a Carlyle Group’s commodities hedge fund, has lost $400m it invested last year in Societe Anonyme Marocaine de l’Industrie du Raffinage (Samir), a Moroccan oil-refinery.

WSJ reported that the hedge fund was to receive a share of revenue at the refinery, which ran into financial trouble and was seized by Moroccan authorities later in 2015.

The refinery was put into liquidation this year.

The troubled African commodities deal highlights the risks US investors face in emerging markets with less familiar investor-protection laws.

Carlyle said it believes $400m in petroleum commodities were “misappropriated by third parties outside the US.” It didn’t identify the soured deal or name the third parties. The note, which hasn’t previously been reported on, refers to Samir, the people said.

Carlyle has spent $5min legal and professional fees trying to get its money back and expects the matter could lead to litigation and “significant additional costs or liabilities,” according to the securities filing.

It has also received a redemption request from an unnamed investor as a result of the episode.

Carlyle expects to join a group similar to creditors committees that are formed in US chapter 11 cases, the people said.

But the prospects for a recovery of its investment are less clear than they would be in a US bankruptcy proceeding. Other creditors include BP and Glencore. .

Carlyle’s hedge-fund business has suffered declines in commodity and credit investments and investor withdrawals.

The firm is pulling back from the business and plans to focus more on corporate lending.

Co-founder William Conway said on an earnings call last month that Carlyle is decreasing its “exposure to shorter-term trading businesses, areas where, frankly, we have not performed well.”

Carlyle expects to have about $1bn of hedge-fund assets by year-end, down from $14.7bn as of the third quarter of 2014.

The two former Morgan Stanley executives who oversaw Carlyle’s push into hedge funds, Mitch Petrick and Jacques Chappuis, have stepped down from the business.

Petrick remains a senior adviser to Carlyle, while Chappuis has returned to Morgan Stanley.