Work is underway on the Act on Transparency of Public Life, which would introduce numerous solutions not previously encountered in the Polish legal system. The aim of the proposed act is to increase the transparency of management and control over publicly financed institutions, and to reinforce anticorruption mechanisms in Poland.
Among other things, the proposed act would regulate activity at the intersection of the public and private sectors. It is aimed at various addressees (individuals, businesses, employers, and public institutions) and combines various legal regimes (administrative, criminal and civil). The planned date for entry into force of the act is March 2018.
Below we present some of the solutions proposed in the bill which may have the biggest impact on business.
Protection for whistleblowers
For years there have been calls to introduce the concept of whistleblowers in the Polish legal system from experts in issues such as combating corruption. (The first such provisions were introduced in the UK in 1998.)
The status of whistleblower is to be given to an individual or business entity whose cooperation with the law enforcement authorities—notice of possible commission of a criminal offence by an entity the whistleblower has a legal relationship with (including as the whistleblower’s employer)—may adversely the whistleblower’s life situation or professional or financial position.
Under the bill, whistleblowers would receive legal protection against termination or modification of the terms of their employment contract or other legal relationship (e.g. service or supply contract), as well as compensation from the party terminating or modifying the contract.
It can be predicted that whistleblowers will be treated as witnesses of a special type (somewhat similar to a crown witness), legally protected in connection with the seriousness of the information which can be used in a criminal proceeding.
Large and medium-sized enterprises required to combat corrupt practices
The bill would impose on a business entity which is a medium-sized enterprise (employing at least 50 people) or larger an obligation to adopt and apply internal anticorruption procedures.
Such internal anticorruption procedures include in particular:
- Monitoring of the risks of criminal liability in fundamental areas of the business
- Countering mechanisms enabling the financing of bribes, including through use of the assets of the enterprise
- Regular training of employees on risks of criminal liability in the enterprise’s business
- Inclusion of anticorruption clauses in contracts (providing that none of the fee for performance of the contract will be used to cover the costs of bribes)
- Adoption and implementation of an ethics code for the enterprise
- Development of internal procedures concerning receipt of inducements by employees, notification to management of corrupt propositions, and procedures for reporting irregularities.
The procedures referred to above do not constitute a fixed list. The exact measures that should be introduced will depend on the enterprise, and it will be the only entity responsible for failing to implement them.
Financial liability of the enterprise (administrative offence)
If the prosecutor’s office charges a person acting for or on behalf of an enterprise with commission of a corruption offence, the head of the Central Anticorruption Bureau (CBA) will be required to commence and conduct an inspection of the enterprise for its compliance with anticorruption procedures.
If the inspection finds that the enterprise failed to apply internal anticorruption procedures (or applied them in a sham or ineffective manner), the head of CBA will issue to the enterprise an application to impose a fine on the enterprise of PLN 10,000 to 10,000,000, with a demand to pay the fine within 30 days. Otherwise, the application to hold the enterprise liable will be forwarded to the president of the Office of Competition and Consumer Protection (UOKiK). An additional sanction in the form of a prohibition against seeking the award of public contracts for a period of 5 years may also be applied. The proposal also provides for the possibility of waiver of the fine.
Amendment of the Act on Liability of Collective Entities for Punishable Offences
Alongside the work on the act discussed above, work is also underway at the Ministry of Justice on an amendment to the Act on Liability of Collective Entities for Punishable Offences. This amendment will create an additional regime of criminal or quasi-criminal liability that can be applied independently of the sanctions imposed under the Act on Transparency of Public Life. Most large and medium-sized enterprises will be covered by this regime.
Restrictions on hiring persons who perform public functions
Regulations that so far have mainly involved public law will now have a specific impact on private law. Bans and restriction on the conduct of business by persons performing public functions are an obvious solution. But a new feature of the law will be restrictions on hiring and cooperation with such persons for a period of three years after they cease to perform public functions. During that time it will be impermissible for them to be employed by or perform other paid activities for a business entity if, among other things, they took part in proceedings for award of a public contract or issuance of an administrative decision concerning the business, or oversaw the performance of a contract concluded with the business. Violation of this prohibition could result in a fine of PLN 10,000 to 500,000.
Apart from the changes described above, which in our view will have the greatest impact on business conducted by large and medium-sized enterprises, we also signal other changes provided for in the proposed Act on Transparency of Public Life.
Limitations on holding certain positions by persons performing public functions
The proposal clarifies existing limitations in this respect. The new regulations would include a prohibition against such persons serving as a liquidator, receiver or involuntary administrator in a bankruptcy proceeding, a supervisor or administrator in a restructuring proceeding, or proxy for a shareholder of a commercial company, or employment or performance of other paid activities in such company (not applicable to scientific or teaching activity).
Requirement for obligated companies to provide access to public information
As part of the reinforcement of transparency and oversight of the management of state-owned companies, the proposed Act on Transparency of Public Life expands the definition of a company obligated to provide access to public information.
An obligated company will include a commercial company meeting at least one of the following conditions:
- The involvement of the State Treasury, a territorial governmental unit, state or local government legal person, or other obligated person, constitutes at least 20% of the share capital or 20% of the shares in the company
- At least one of the aforementioned entities holds the rights of a dominant undertaking within the meaning of the Competition and Consumer Protection Act.
The act would impose additional requirements on such obligated companies, such as:
- The requirement to maintain a register of civil contracts made in writing and resulting in expenditure of at least PLN 2,000
- Restrictions connected with performance of functions by certain persons
- Filing of asset statements by members of the authorities of such company and its employees.
Apart from the regulations concerning obligated companies, it should also be mentioned that the bill significantly expands the list of persons required to submit asset statements, creating new rules and imposing more severe liability for providing inaccurate information in an asset statement.
Professional lobbying as a regulated activity
The bill also clarifies legal solutions involving lobbying. It contains a definition of professional lobbying, i.e. lobbying of a gainful nature conducted on behalf of persons or entities with the aim of upholding the interests of such persons or entities, and also imposes new obligations on persons engaged in professional lobbying, including a requirement to obtain an entry in the register of professional lobbyists.
We will keep our readers informed of the progress in the work on these solutions.
Magdalena Kotowicz, Business Crime practice, Wardyński & Partners
Janusz Tomczak, adwokat, Business Crime practice, Wardyński & Partners