- Risk key
- MODERATELY LOW
- MODERATELY HIGH
Businesses face a moderate to high corruption risk when dealing with the judiciary. Bribes and irregular payments in return for favorable judicial decisions are fairly uncommon (GCR 2015-2016). Almost one-quarter of citizens believe bribery and abuse of office are widespread in the courts (European Commission, Feb. 2014). However, in contrast to the lower courts, the public generally expresses very high confidence in the Constitutional Tribunal (BTI 2016). Two out of five businesses perceive the independence of the judiciary to be fairly or very bad (JS 2017). A third of judges believe some appointments and promotions in the judiciary are made on basis other than merit or experience (ENCJ 2017). Companies express strong dissatisfaction with the efficiency of the legal framework pertaining to settling disputes and challenging regulations (GCR 2017-2018). Some of the main problems in the judiciary are delays in adjudicating cases, lengthy pretrial detention periods and corruption investigations that move slowly (BTI 2016). Companies complain of over-regulation, over-burdened courts and prosecutors, and burdensome bureaucratic processes (ICS 2017). Foreign companies generally rely on a third-country court or offshore arbitration to settle legal matters (ICS 2017). Foreign arbitration is generally recognized in Poland, but there are many exceptions; delays in recognition are mainly due to the lack of specialized judges in specific commercial matters (ICS 2017). Enforcing a contract in Poland takes longer than elsewhere in the OECD (DB 2018).
In 2017, the Polish parliament passed a set of bills that would have effectively brought the Supreme Court under the control of the ruling party by removing all judges of the court except for those chosen by the justice minister and by allowing parliament to appoint members of the National Council of the Judiciary (The Guardian, Jul. 2017). After mass protests, Poland’s President vetoed the measures (The Guardian, Jul. 2017).
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 moderate corruption risk when interacting with the Polish police. Companies express insufficient confidence in the security apparatus to protect business from crime and in enforcing the rule of law (GCR 2017-2018). More than two-thirds of companies pay for security in Poland (ES 2013). Poland’s government has effective mechanisms to investigate corruption and abuse within the police force (HRR 2016). There is a fairly high level of public trust in Poland’s police: two-thirds of respondents express their trust (BTI 2016).
Poland’s public services sector carries a moderate to high corruption risks for business. Investors regularly cite regulatory unpredictability and high levels of administrative red tape as problems (ICS 2017). A vast 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).
Starting a business in Poland takes almost four times longer and is costlier than the OECD average (DB 2018). The time and procedures required to deal with construction permits are in line with the OECD average (DB 2018).
The land administration carries a moderately high corruption risk for businesses investing in Poland. Companies report insufficient confidence in the government’s ability to uphold property rights, complaining particularly about the time required in Polish courts to adjudicate property rights cases (GCR 2017-2018; ICS 2017; BTI 2016). An 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). Private property may be expropriated in Poland for public purposes and the government must pay full compensation at market value (ICS 2017). There have been a number of cases in which the inability to reach an agreement on compensation has resulted in disputes (ICS 2017). Investors should be aware that widespread nationalization of property during and following World War II may complicate attempts to gain a clear title to land in Poland, particularly in major municipalities (ICS 2017). A new restitution law for land nationalized under the communist regime entered into force in 2016, leading to compensation payouts for previously nationalized land to rise steeply (NiT 2017). The restitution process has been tainted by corruption in the previous twenty years (NiT 2017). In August 2016, a Polish newspaper published corruption allegations against a number of municipal officers in Warsaw overseeing the process (NiT 2017).
Registering property in Poland takes significantly more time than elsewhere in OECD countries (DB 2018).
The tax administration does not carry a high risk for businesses operating in Poland. Companies do generally not expect to give gifts or make irregular payments and give bribes in meetings with tax officials (GCR 2015-2016; ES 2013). 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 2017-2018). Companies complain about frequent changes, lack of clarity, and strict penalties for minor errors in relation to the tax laws (ICS 2017). The time required to deal with tax payments is higher than OECD averages (DB 2018). Poland has eased the process of filing and paying VAT and transport taxes by introducing an electronic filing system (DB 2016).
Poland has dramatically increased its ability to collect taxes through new IT systems and legal changes (FT, Jun. 2017). Poland was losing an estimated USD 10.5 billion a year through tax fraud and an additional USD 4.7 to USD 7.1 billion in corporate tax avoidance (FT, Jun. 2017).
There is a moderately low risk of corruption in Poland’s customs administration. Irregular payments and bribes are fairly uncommon during import and export procedures (GETR 2016), and no companies report being expected to give a gift to obtain an import license (ES 2013). Companies express general satisfaction with the efficiency and time predictability of import and export procedures (GETR 2016). Allegations of corruption among customs officials are reportedly declining (ICS 2017). Burdensome import procedures are cited as the biggest impediment to importing (GETR 2016). However, corruption at the border is infrequently cited as a problematic factor for importing (GETR 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 2018).
Poland’s public procurement sector suffers from high levels of corruption. Companies indicate that diversion of public funds and favoritism in decisions of government officials are both very common (GCR 2017-2018). 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 artificial division of orders is among the most common violations in the sector. The division of orders allows 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 favor certain companies when preparing tenders in return for bribes (EUACRP, Feb. 2014). Poland’s Central Anti-Corruption Bureau admits a number of sectors are at risk, including EU funds and public procurement at local and regional levels (NiT 2017).
Companies are recommended to use a specialized public procurement due diligence tool to mitigate the corruption risks associated with public procurement in Poland.
The Criminal Code in Poland criminalizes bribery, extortion, cronyism, patronage, abuse of public functions, influence peddling, gifts and money laundering. Bribing a foreign public official is criminalized (CMS 2016). 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 2016). There are no official exceptions for facilitation payments or gifts (CMS 2016). 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 2017). Financial disclosure laws oblige public officials to submit statements about their financial assets, real property, and stocks owned by them or their relatives (HRR 2016). Poland lacks a comprehensive law on the protection of whistleblowers (WLG 2016). 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.
The Council of Europe has expressed its concern with the relatively lax ethical rules for members of parliament and conflict of interest conflicts in government (GRECO 2017). The government has stepped up the prosecution of corrupt acts (BTI 2016).
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 2016). Direct censorship is not practiced in Poland, yet the government, especially local bodies, may exert pressure on journalists, which combined with the risk of defamation suits can lead to self-censorship (FotP 2017). Public media still suffers from political interference and influence (BTI 2016). The government has sought to overhaul the country’s public broadcasters, leading to more one-sided coverage and self-censorship (FotP 2017). Journalists’ access to lawmakers has seen attempts at curtailment by the government (FotP 2017). The government does not restrict internet access, and the right to information is protected by law (HRR 2016). Poland’s media environment is considered ‘ partly free’ (FotP 2017).
Freedom of association is protected under Polish law and is respected in practice (HRR 2016). Civil society traditions in Poland are strong (BTI 2016). Civil society actors are involved in policy making, but in practice consultation of civil society actors is often formalistic (BTI 2016); in 2016, ninety percent of bills were introduced without consulting civil society (NiT 2017). Pro-government and public media have launched a smear campaign aimed at NGOs (NiT 2017).
- World Bank: Doing Business 2018.
- World Economic Forum: Global Competitiveness Index 2017-2018.
- US Department of State: Investment Climate Statement 2017.
- Freedom House: Nations in Transit – Poland 2017.
- Freedom House: Freedom of the Press 2017.
- European Network of Councils for the Judiciary: Independence, Accountability and Quality of the Judiciary, Performance Indicators 2017.
- European Commission: EU Justice Scoreboard 2017.
- The Guardian: “Poland’s President to Veto Controversial Laws amid Protests”, 24 July 2017.
- FT: “Poland Scales Back Tax Plan after Tax Crackdown”, 22 June 2017.
- World Economic Forum: Global Enabling Trade Report 2016.
- US Department of State: Human Rights Report 2016.
- Bertelsmann Foundation: Transformation Index – Poland 2016.
- CMS: Guide to Anti-Bribery and Corruption Laws 2016.
- World Law Group: Global Guide to Whistleblowing Programs 2016.
- Reuters: “Poland’s Anti-Corruption Agency Raids Offices in Ciech Takeover Probe”, 6 April 2016.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- Radio Poland: ‘Warsaw-Bourse CEO under investigation in Ciech privatisation probe’, 14 October 2015.
- European Union: Anti-Corruption Policies Revisited – Background Paper on Poland 2014.
- Eurobarometer: Special Eurobarometer 397 – Corruption Report, 2014.
- European Commission: EU Anti-Corruption Report: Annex 14, Poland 2014.
- World Bank Group: Enterprise Surveys 2013.