Changes in the Polish criminal law – potential impact on prosecution of companies and white collar crime matters
- Changes to the national criminal law regulations (effective as of the 1st of July 2015) could result in an increased risk of direct prosecution of corporations in Poland, with harsher penalties.
- Under the amended criminal law regulations, which greatly limit active role of the criminal court during the trial, indicted individuals and entities shall have a better chance of effective defense against “ frivolous” charges in white collar crime matters.
- At the same time, press articles concerning activities of the Polish Central Anti-Corruption Bu-reau (CBA) and Warsaw Office of the US Federal Bureau of Investigation (FBI) suggest more enforcement actions against corporations and managers with regard to past and current corruption-related misconduct.
Amendments to the criminal law regulations – increased risk of prosecution of corporations
The Polish Parliament has enacted the Code of Criminal Procedure Amendment Act (Journal of Law, 1247.2013, the “CCP Amendments”) significantly reshaping the national criminal justice system. Concurrently, criminal law regulations governing the liability of corporations have been amended through the Criminal Code Amendment Act (Journal of Laws 396.2015; the “CC Amendments”). Both these legisla-tions shall come into force with effect from the 1st of July 2015, however amendments to the criminal procedure regulations shall apply to court cases wherein the investigation commenced prior to the aforementioned date.
Under the amended Criminal Code the courts would no longer have jurisdiction to order the forfeiture of proceeds from a crime obtained by a company via criminal proceeding initiated against a natural person who acted in the company’s name or interest (e.g. manager or another employee who gave bribe so that the company could win a public tender). Although this amendment might at first glance suggest decreased risk of corporate criminal liability, it is likely to have an opposite effect. An official document from the Ministry of Justice accompanying a draft of the CC Amendments states that prosecutors would now be expected to initiate a separate criminal case against a corporation that benefitted from the crime of a natural person – on the basis of the Criminal Liability of Collective Undertakings Act (“CLCU”). So far, the CLCU has rarely been applied (only 31 new cases in 2014, mostly minor tax matters) as the authorities usually have deemed the case closed upon the conclusion of criminal proceedings against natural person and neither the Prosecutor General’s Office nor the Ministry of Justice has previously issued any directives or instructions to “line” prosecutors to indict corporations following final convictions of natural persons acting in their name or interest. The Ministry’s statements cited above and certain publicly accessible information (please see the next section hereof) suggest that such an approach by the prosecuting authorities is bound to change the legal landscape in the near future.
It should be noted that the CLCU sets out potentially significant penalties that may be imposed on corporations, including a fee of up to approx. EUR 1.2 Million, forfeiture of proceeds from the crime (e.g. net profit from the contract obtained through a rigged public tender), prohibition from participating in public tenders, receiving any public subsidies or other public support (also from EU institutions) – for up to 5 years. This would of course be coupled with the negative publicity that results from the corporation being named a defendant by the public prosecutor’s office under CLCU. In accordance with the CLCU, a criminal case against the company may be initiated only following a conviction of a natural person from whose criminal misconduct such company has obtained or could have obtained a benefit.
Amendments to the criminal law regulations – better protection from “frivolous” indictments
The CCP Amendments introduce a new model for the criminal due process in Poland, and would apply to all indictments brought on or after 1st of July 2015 (also to the indictments against corporations brought on the basis of CLCU). This new model places a strong emphasis on an ‘active’ role of the parties, i.e. the public prosecutor and the defense counsel, requiring them to produce all evidence and limiting the role of the judge to that of a supervisor of the trial who neither asks questions to witnesses, nor shows any other initiative in determining the facts of the case prior to issuing the judgment.
So far, the criminal cases in Poland, especially in complex white collar crime matters, dragged on for years since
the judge had to thoroughly examine the case and look for additional evidence (also that which would incriminate the defendant) even if the prosecution had failed to provide sufficient proof of a crime. Under the “old” model, the prosecutors on many occasions indicted business decision makers e.g. for acting to the detriment of the company based on scant evidence as they knew that the burden of examining (proving) the charges would be borne by the criminal court. This is bound to change under the CCP Amendments as prosecutors may now expect “frivolous” indictments to be quickly dealt with by competent defense counsel during the trial.
Moreover, the CCP Amendments address one of the “bottlenecks” of the criminal procedure affecting especially white collar crime matters – namely, the problem with expert opinions. According to the “old” model, the judge had to make all assessments requiring specialized knowledge (e.g. analysis of the defendant’s business decisions and/or loss caused to the company) on the opinion of an expert from the list maintained by the court and such an expert had to be unrelated to parties and was later paid from the court’s budget. This resulted in a very limited pool of available experts and, generally, low quality of their work products, thereby allowing for criminal convictions based on opinions prepared without any understanding of the modern business environment and particularly, the inevitability of risk in business decision making. The opinions also typically took a very long time to prepare as the “official” experts were overburdened with work. As per the CCP Amendments, the defendant shall be allowed to present “private” expert opinions and could apply for their authors to testify before the court in support of their conclusions. These changes in the criminal procedure would mitigate the risk of unjust criminal indictments and/or convictions particularly for business decisions that have caused losses to the company.
Developments in the Polish anti-corruption agency and FBI Warsaw office
Further to the Hewlett Packard corruption scandal in Poland (which resulted in a USD 108 Million set-tlements under the U.S. Foreign Corrupt Practices Act), Mr. Pawe? Wojtunik, Head of the Polish Central Anti-Corruption Bureau (“CBA”), said in a press interview that the CBA was planning to be more active in going after corporations engaged in corruption and criminal misconduct committed by their managers. Mr. Wojtunik also said that the CBA would review the past conviction of managers of corporations for corruption and return to those cases, initiating prosecution against such companies (on the basis of CLCU). Corporations that are aware of past convictions of their managers or other employees for corruption-related crimes are advised to review such cases for possible corporate criminal liability risks in Poland. It would be imperative to note that any settlements that a corporation has entered into with foreign law enforcement authorities are not binding on the Polish authorities and would not impact the corporations’ criminal liability in Poland.
More recently, one of the Polish business newspapers published an article (“FBI Invites Whistleblowers for a Coffee”, “Puls Biznesu” of 8th of April 2015) discussing activities of the FBI Warsaw office and citing the Head of the office Ms. Monika A. Wasiewicz. The article while relying majorly on the uncovered large-scale corruption scandals in Poland involving US corporations (Hewlett Packard, Stryker and Glax-oSmithKline), also stated that due to the FBI’s actions in cooperation with the Polish investigative au-thorities several comparable corruption matters could surface later this year in Poland.
Jan Jobs, Attorney-at-law
Co-Head of the Compliance & Internal
Investigations Practice Group
Jobs Skowrovnska Samsel LLP
17/15 Wiejska str.
00-480 Warsaw, Poland
Phone: +48 22 122 15 13
Mobile: +48 604 444 790