(Want to receive more corruption report updates? Subscribe here!)
Corruption is a problem for businesses operating in Poland, although its levels have decreased in recent years. Political corruption constitutes a challenge to fair business as politicians use their positions to gain benefits, and practices of nepotism and cronyism are widespread. Poland's Criminal Code offences include active and passive bribery, bribery of foreign officials, extortion and money laundering. However, the government does not prosecute these offences effectively, and officials engage in corruption with impunity. Sectors most prone to corruption are public services and public procurement. Despite facilitation payments and gifts being criminalised, these practices are widespread.
Businesses face a moderate corruption risk when dealing with the judiciary in Poland. The levels of corruption within the courts are quite high (BTI 2014), and almost one-quarter of citizens believe bribery and abuse of office are widespread in the courts (European Commission, Feb. 2014). Few businesses perceive the judiciary to be a constraint to doing business (ES 2013). Companies believe the judiciary to be largely independent from political interference but feel the effectiveness of the legal framework to challenge government regulations or to settle commercial disputes as weak (GCR 2015-2016). Court decisions are also delayed by lengthy procedures (HRR 2014). Foreign companies generally rely on a third-country court or offshore arbitration to settle legal matters (ICS 2015). Foreign arbitration is generally recognised in Poland, but there are many exceptions; delays in recognition are mainly due to the lack of specialised judges in specific commercial matters (ICS 2015). Poland is a party to four international agreements for dispute resolution: the Geneva Protocol on Arbitration Clauses, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (UNCITRAL), the Geneva European Convention on International Trade Arbitration and the Moscow Convention on Arbitration Resolution of Civil Law Disputes in Economic and Scientific Cooperation.
Businesses face a very low corruption risk when interacting with the Polish police. Poland's government has effective mechanisms to investigate corruption and abuse within the police force (HRR 2014). There is a high level of public trust in Poland's police: Almost three quarters of respondents express their trust (BTI 2014), and most citizens trust the police to deal with corruption complaints (European Commission, Feb. 2014). Companies perceive the security apparatus to be moderately efficient in protecting business from crime and in enforcing the rule of law (GCR 2015-2016). Nonetheless, more than two-thirds of companies pay for security in Poland (ES 2013).
Poland's public services sector carries a high corruption risk for business. A sweeping majority of businesses believe that bribery and the use of connections are often the easiest way to obtain certain public services (European Commission, Feb. 2014), while almost two in every ten companies have paid a bribe 'to get things done' (ES 2013). A quarter of citizens believe that bribery and abuse are widespread among officials issuing business permits in Poland (European Commission, Feb. 2014). Inefficient government bureaucracy and the burden of government regulations are identified as competitive disadvantages to business (GCR 2015-2016), and regulatory unpredictability, high levels of red tape, and practices of favouritism are areas of concern (ICS 2015). Poland has eased the burden of starting a business, but the required time and costs are still above OECD averages (DB 2016). In 2014, Poland's Anti-Corruption Bureau investigated 477 corruption cases, one quarter of which were related to local government (NiT 2015).
The land administration carries a low corruption risk for businesses investing in Poland. A insignificant percentage of companies expect to give gifts in return for a building permit (ES 2013), and one-third of citizens believe that bribery and abuse of office are widespread among officials issuing building permits (European Commission, Feb. 2014). Property rights and regulations relating to the acquisition of property are well defined (BTI 2014), and businesses believe property rights are well protected (GCR 2015-2016).
Corruption does not carry a high risk for businesses operating in Poland. Companies do not expect to give gifts in meetings with tax officials (ES 2013), while only one in ten citizens believe that bribery and abuse of office are widespread among tax officials (European Commission, Feb. 2014). Firms rank tax regulations as the most problematic factor for doing business in Poland (GCR 2015-2016), and the time required to deal with tax payments is higher than OECD averages (DB 2016). Poland has eased the process of filing and paying VAT and transport taxes by introducing an electronic filing system (DB 2016).
Poland, with 50 other countries, has signed the Multilateral Competent Authority Agreement, under which the national tax authorities of all signatories will be able to exchange information automatically from 2017. The agreement is aimed at ending banking secrecy and is considered a major step in the global fight against tax evasion and fraud (EU Business, Oct. 2014).
The Polish border administration is transparent and efficient (GETR 2014), and no companies report being expected to give a gift to obtain an import licence (ES 2013). Irregular payments in relation to trading across borders is not common (GETR 2014), and allegations of corruption amongst customs officials is reportedly declining (ICS 2015). Poland performs well regarding the burden of customs procedures (GCR 2015-2016). Trading across borders does not require any time and only one document is needed for both exporting and importing; a significantly low number compared to the OECD averages (DB 2016). Businesses can prepare and submit customs documents electronically (DB 2016).
Poland's public procurement sector suffers from high levels of corruption. Among the most important corruption risks in the sector are tailor-made specifications for particular companies, unclear selection or evaluation criteria, collusive bidding, and conflicts of interest (EUACRP, Feb. 2014). Another report finds that the artificial division of orders are among the most common violations in the sector. The division of orders allow for the employment of less transparent, discretionary and non-competitive tender procedures (ACPR, Feb. 2014). The procurement sector also suffers from weak internal control of public tenders, inefficient supervision in state-owned companies, practices of nepotism and bribery. Corrupt officials have been found to favour certain companies when preparing tenders in return for bribes (EUACRP, Feb. 2014). Businesses believe public funds are sometimes diverted to companies due to corruption (GCR 2015-2016). There have been appeals based on discrimination in public procurement contracts favouring specific local companies (ICS 2013). Most defence procurement in Poland is non-competitive (GDACI 2012).
A number of cases have revealed corruption in this sector. For instance, the Central Anti-Corruption Bureau arrested several public officials for fixing public procurement procedures (NiT 2014). In an ongoing case, Poland’s Anti-Corruption Bureau is investigating the head of the Polish stock exchange, Paweł Tamborski. The Bureau also raided the former office of Tamborski at the Treasury Ministry, which supervises privatisations in Poland. The investigation is connected to the privatisation of the state-owned chemical maker company Ciech SA (Radio Poland, Oct. 2015). Tamborski was serving as deputy treasury minister when 38 percent stake in Ciech was sold to the businessman Jan Kulczyk. Meetings held between Tamborski and Kulczyk at the time of the sale are being particularly scrutinised (Reuters, Oct. 2015). Companies are recommended to use a specialised public procurement due diligence tool to mitigate the corruption risks associated with public procurement in Poland.
Companies may face corruption in Poland's natural resource industries. Investors complain about the variety of laws in this sector, which reportedly lack clarity and provide for strict penalties for minor errors (ICS 2015). In one case, a court in Katowice initiated a trial against former presidents of the three largest mining companies and the former directors of the mines, who were accused of accepting bribes to provide contracts to a private company that sells goods and services for the mine; the trial is the largest ever in Poland's mining industry (Polcoaldex, July 2013).
The Criminal Code in Poland criminalises bribery, extortion, cronyism, patronage, abuse of public functions, gifts and money laundering. The code also provides for the seizure of assets if they are not derived from a legal source (ICS 2013). Penalties for committing a corruption crime include imprisonment for up to 12 years for individuals and/or a fine. Legal entities are liable for corruption, and bribery can be subject to fines or potential debarment from public tenders (CMS Legal, Sept. 2014). While in office and for one year thereafter, public officials cannot legally engage in business activities that could give rise to a conflict of interest (ICS 2013). Financial disclosure laws oblige public officials to submit statements about their financial assets, real property and stocks owned by them or their relatives (HRR 2014). Despite a robust legal framework, anti-corruption laws are not effectively implemented by the government (HRR 2014), and political figures engage in corrupt practices (NiT 2015). Poland lacks a comprehensive law on the protection of whistleblowers, coupled with an unpredictable judiciary, which may result in whistleblowers being left without reliable protection (WiEU 2013). Poland has signed and ratified the OECD Convention on Combating Bribery, the United Nations Convention against Corruption, the Council of Europe Civil Law Convention on Corruption and the Criminal Law Convention on Corruption.
Some corruption cases involving the financial declarations of high-ranking officials unfolded in recent years. In the so-called ‘Waitergate’ recordings case, a former minister of infrastructure, Sławomir Nowak, was recorded asking former deputy minister of finance Andrzej Parafianowicz to end an ongoing investigation into Nowak’s wife’s financial statements. Parafianowicz was recorded giving his consent (NiT 2015). Other financial statements also revealed that MPs had claimed reimbursements for travels they didn’t make. Other conflicts of interest cases have revealed practices of cronyism within the higher echelons of the government (NiT 2015).
The constitution of Poland envisages freedoms of speech and of the press, but there are laws that restrict these freedoms, as there are penalties for defamation by individuals and the media (HRR 2014). Libel is a criminal offence, and the number of lawsuits brought against journalists has risen in recent years (FotP 2015). The newspaper Wprost published transcripts of secretly recorded and compromising conversations between leading politicians. The police subsequently raided the newspaper offices without a police order. The authorities eventually failed to discover the newspaper’s source or to seize the recordings (FotP 2015). Direct censorship is not practiced in Poland, yet the government, especially local bodies, may exert pressure on journalists, leading to self-censorship (FotP 2015). Public media still suffers from political interference and influence (BTI 2014). The government does not restrict internet access, and the right to information is protected by law (FotP 2015). Poland’s media environment is considered 'free' (FotP 2015).
Freedom of association is protected under Polish law and is respected in practice (HRR 2014). Despite the number of NGO’s being low, politicians provide an important role to civil society organisations (BTI 2014). NGOs have reportedly engaged in a variety of activities, and an encouraging increase in donations to non-governmental organisations were recorded (NiT 2015). NGOs have developed independent online media outlets (NiT 2014). Poland's Anti-Corruption Bureau (CBA) has actively collaborated with the civil society (HRR 2014).
- World Economic Forum: Global Competitiveness Report 2015-2016.
- World Bank and IFC: Doing Business 2016.
- US Department of State: Investment Climate Statement - Poland 2015.
- Freedom House: Nations in Transit - Poland 2015.
- Radio Poland: 'Warsaw-Bourse CEO under investigation in Ciech privatisation probe', 14 October 2015.
- Radio Poland: 'Update 1-Poland's anti-corruption agency investigates Ciech sale', 14 October 2015.
- US Department of State: Country Report on Human Rights Practices - Poland 2014.
- European Union: Anti-Corruption Policies Revisited - Background Paper on Poland 2014.
- CMS: CMS Guide to Anti-Bribery and Corruption Laws, September 2014.
- Bertelsmann Foundation: Transformation Index - Poland 2014.
- Eurobarometer: Special Eurobarometer 397 – Corruption Report, 2014.
- World Economic Forum: The Global Enabling Trade Report 2014.
- European Commission: EU Anti-Corruption Report: Annex 14, Poland 2014.
- Freedom House: Freedom of the Press – Poland 2014.
- Freedom House: Nations in Transit - Poland 2014.
- EUBusiness: '80 countries join fight to end banking secrecy', 30 October 2014.
- Reuters: 'Novartis employee pleaded guilty in Polish bribery case', 9 October 2014.
- European Commission: Business Attitudes Toward Corruption 2013.
- Transparency International: Whistleblowing in Europe - Legal Protections for Whistleblowers in the EU 2013.
- World Bank Group: Enterprise Surveys 2013.
- US Department of State: Investment Climate Statement - Poland 2013.
- Bloomberg Business: 'Philips Pays $ 4,5 million to Settle Poland Bribery Case with SEC', 9 April 2013.
- Polcoaldex: 'Largest corruption trial in Polish mining industry', 16 July 2013.
- France24: 'EU’s biggest states vow to fight tax evasion', 13 April 2013.
- Transparency International: Government Defence Anti-Corruption Index - Poland 2012.