The Law and Justice (PiS) Party and Ziobro arm themselves to strike fear into entrepreneurs; to strike them not with a stick, but with a truncheon.
Michał Romanowski – Professor of commercial law, Warsaw University. Attorney-at-Law at the Romanowski i Wspólnicy Law Office.
In a recent interview with Forbes, Arkadiusz Muś, one of Poland’s most prominent entrepreneurs explained that many businessmen refrained from criticising the authorities in harsh words because “there have been several cases of politically motivated detentions of entrepreneurs, and some of them are afraid that the state apparatus will harm them in some way. During the time the Law and Justice (PiS) was in power, the state has been furnished with a whole lot of new tools that can be used against entrepreneurs.”
The state ruled by the Law and Justice (PiS) Party and Ziobro indeed arm themselves, even at the very last moment, so that they can strike fear into entrepreneurs; to strike them not with a stick, but with a truncheon.
On 1 October 2023, an amendment to the Criminal Code came into force. The key element of this amendment is Article 306b, based on which a member of the management board, supervisory board, partner or their accessories may be detained for a period of 3 to 20 years for a business decision that results in a loss of more than PLN 5 million for the company, while if the said loss were to exceed PLN 10 million, for a period of 5 to 25 years! Let us keep in mind that the recent amendment to the Code of Commercial Companies and Partnerships by Sasin and Kowalski, backed by servile lawyers, has afforded the public prosecutor the power to determine what is in the best interest of the company. Hence, this amendment will give an even greater striking power to the famous Article 296 of the Penal Code, which many entrepreneurs have suffered from in the country ruled by the Law and Justice (PiS) Party and Ziobro (see the report by the Open Dialogue Foundation and “Themis” Association of Judges (Stowarzyszenie Sędziów „Themis”) as it provides for prison sentences for managers for having caused damage to property as a result of abuse of power or dereliction of duty. From 1 October 2023, Ziobro’s public prosecution office, which has shuttered itself off since after the potential loss in the elections, will want to have sentences of even up to 25 years in prison to be imposed based on the vague premise of acting to the detriment of a company.
One might think that I am exaggerating, but am I really? Let me outline two cases known to me not only from the cited report of the Open Dialogue Foundation and the “Themis” Association of Judges, but also from practice. These are just the tip of an iceberg.
Acting in the best interests of the company? Well, let’s incarcerate him!
Jakub Karnowski, the former CEO of Polish Railways (PKP) and Chairman of the Supervisory Board of PKP Cargo during a period from 2012 to 2015, was charged by the Public Prosecutor’s Office in March 2019 for having voted in approval of PKP Cargo’s purchase of a Czech company at a price undervalued by roughly €18 million and for failing to take into account risks of at least PLN 30 million that were known not to have occurred at the time these charges were made against him. In other words, Jakub Karnowski has been harassed and intimidated by the Public Prosecutor’s Office for many years for the fact that PKP Cargo, wait for it … acquired the Czech company FOR A LOW PRICE, and for failing to take into account non-existent risks. Is it science fiction? No, it is not. Such is the reality of Ziobro’s Public Prosecution Office. I would like to add that the decision on PKP Cargo’s acquisition was based on a valuation by PKO BP and EY prepared at the request of PKP Cargo’s Management Board. Members of PKP Cargo’s Management Board were taken into custody, which the court found to be an obviously unfounded decision.
Piotr Osiecki, the former CEO of the Altus TFI investment fund, was remanded in custody in August 2018 for acting to the detriment of GetBack. The offence he allegedly committed as the CEO of Altus TFI investment fund was to sell Altus’ shares in EGB Investments to GetBack at an inflated price. However, Piotr Osiecki was not a member of GetBack’s Management Board nor its Supervisory Board, but the CEO of the public company Altus TFI. When selling his shares in EGB, according to the Code of Commercial Companies and Partnership, the Public Offering Act and the Investment Funds Act, he had the duty to act in the best interests of Altus TFI’s shareholders and participants of the investment funds managed by Altus TFI. This means his duty was to maximise the share sale price, not to minimise it!
Piotr Osiecki has been remanded several times. He was required to pay a record-high bail of PLN 108 million. The court dismissed the charges against him in the GetBack case. All in all, Osiecki spent 16 months in custody!
Let me highlight that Karnowski was charged under Article 296 of the Criminal Code (the offence of abuse of managerial trust) for the acquisition by PKP Cargo of the Czech company for too low a price in the interests of its shareholders, while Piotr Osiecki was charged under the same Article 296 of the Criminal Code for selling shares in EGB at a too high price in the interests of its shareholders and investment fund participants. What both these managers have in common is that they were charged with a managerial offence in connection with actions aimed at increasing the value of the assets entrusted to them for management by shareholders and fund participants. Following the amendment to the Criminal Code, which came into force on 1 October 2023, they would have faced a prison sentence of even up to 25 years.
The modus operandi of Ziobro’s Public Prosecutor’s Office that emerges from the quoted report includes a “visit” to the house at 6 a.m. by agents of the Central Anticorruption Bureau (CBA), handcuffs, extraction arrests, fear of whether the remand would be ruled upon by a neo-judge, pre-trial prosecution proceedings lasting many years, and sometimes an offer to have his company taken over in exchange for “peace of mind”.
The power of the powerless: time to go back to Havel’s philosophy
Arkadiusz Muś urges businesspeople not to be blind to the prevalent evil and incompetence, to moral falsehood, and not to keep quiet. In 1978, Václav Havel wrote the essay under the title “The Power of the Powerless” in which he uncovered the secret of the persistence of a repressive regime. In the essay, Havel described the owner of a grocery store who, for the sake of peace and quiet, placed a placard in his window with the slogan: “Proletarians of all countries, unite”. Havel explained that “the greengrocer declares his loyalty […] by accepting the prescribed ritual, by accepting appearances as reality, by accepting the given rules of the game. In doing so, however, he has himself become a player in the game, thus making it possible for the game to go on”. Well, what if no one wanted to play the game of the authoritarian power?
The criminal law system under the Law and Justice (PiS) party and Ziobro considers an entrepreneur to be an enemy, a suspect and an inherently dishonest person. Criminal sanctions are absurdly harsh and the powers of the Public Prosecutor’s Office are growing. This is an attribute of authoritarian and totalitarian states.
Economic freedom means the right to earn an income, i.e. to make a livelihood thanks to entrepreneurial ingenuity and the willingness to take risks in order to live on one’s own account. The consequence is offering employment to others and taking responsibility for their earnings. The only thing entrepreneurs and their employees expect from the government is not to be deterred, to be allowed to live and make an living. That is why economic freedom is regarded to be one of the constitutional freedoms, alongside human rights. Economic freedom is not a licence granted by the ruling party, but a natural right that the ruling party must respect. Politicians do not generate income. They spend the money earned by others by collecting taxes and charging various tributes. Politicians can do good by creating space for economic freedom, or evil by regarding entrepreneurs and managers as evil and greedy people who need to have their backs broken.
Entrepreneurs and managers are by and large valiant people who are ready to take reasonable economic risks. Professor Tadeusz Kotarbiński used to say that “reality never guarantees success, it merely creates a multitude of opportunities that in the eyes of entrepreneurial people deserve to be tried out before one has to give a capitulant answer to Hamlet’s dilemma ‘to be or not to be’”.
We live in the 21st century, we have a decent constitution, we are signatories to the European Convention on Human Rights and the Charter of Fundamental Rights of the European Union, we are a member of the European Union and the Council of Europe! Entrepreneurs cannot live in constant fear of authoritarian power, of being prosecuted by Ziobro, of an absurdly harsh criminal law. The greengrocer of Havel’s essay did not understand that slave-like servitude means living in constant fear.
If today an entrepreneur were to be asked: “How are you?”, we would have a dialogue much like the one between Winnie-the-Pooh and Eeyore: “‘And how are you?’ said Winnie-the-Pooh. Eeyore shook his head from side to side. ‘Not very how,’ he said. ‘I don’t seem to have felt at all how for a long time.’”
The state run by the Law and Justice (PiS) party and Ziobro despises independence. The Law and Justice (PiS) and Ziobro-run state wants the ruled to be afraid of the rulers. The Law and Justice (PiS) and Ziobro-run state needs tools to beget fear in order to have subservient prosecutors, subservient judges, and subservient media. It needs to have a corporation run by the party, very much like Obajtek’s Orlen (the Polish equivalent of the East India Company). It needs Article 306b of the Criminal Code.
What should be done to go back to normal?
The rule of law is a fundamental goal in a democratic society. Where there is no law, there is no freedom. In his Politics, Aristotle emphasises that “he therefore that recommends that law shall govern seems to recommend that God and reason alone shall govern”.
In his The Constitution of Liberty, Friedrich August von Hayek aptly observed that “today the conception of the rule of law is sometimes confused with the requirement of mere legality in all government action. The rule of law, of course, presupposes complete legality, but this is not enough: if a law gave the government unlimited power to act as it pleased, all its actions would be legal, but it would certainly not be under the rule of law.”
The Law and Justice (PiS) party and the Morawiecki government want to do as they please, guided by the words of Kornel Morawiecki uttered in the Polish Sejm on 26 November 2015: “Law is an important thing, but the law is not sacred. (…) the good of the Nation is above the law! If the law interferes with this good, we must not regard it as something we cannot change. This is what I am saying – the law is there to serve us! A law that does not serve the Nation is lawless!”
These words are describing the philosophy of Law and Justice (PiS) and Ziobro’s actions with regard to entrepreneurs. Well, perhaps they should follow the example of Orlen’s partner in business in the Gdansk Refinery from Saudi Arabia and introduce a punishment of flogging for entrepreneurs and managers?
How about abolishing the right to enter forests by regulation once again? How about convicting someone? “Give me a man and I’ll find a paragraph,” the Stalinist prosecutor Andrey Vyshinsky once said. How about …
Well, how about making a change so that things be normal? Entrepreneurs, on 15 October 2023, YOU HAVE A VOICE, YOU HAVE A VOTE. You don’t have to be the greengrocer of Havel’s essay!
- ODF and Themis Report on the Activities of the Polish Public Prosecutor’s Office under the Rule of Zbigniew Ziobro (October 7, 2023)
In other media:
- Rzeczpospolita: How Zbigniew Ziobro’s Public Prosecutor’s Office ‘Broke Businessmen’s Backs’ (October 11, 2023)
- Money.pl: How Zbigniew Ziobro’s Public Prosecution Office “Broke Businessmen”. Report on Harassment (October 11, 2023)
- Rzeczpospolita: Cezary Szymanek: Public Prosecutor and Judge in Service of Party: How PiS Breaks Businessmen (October 11, 2023)