White-Collar Crime 2020

Last Updated October 20, 2020

Poland

Law and Practice

Authors



Raczkowski is the biggest HR law firm in Central and Eastern Europe, providing corporations with solutions to all legal problems arising in HR, compliance and white-collar crime. The firm manages complex criminal proceedings and internal investigations. Raczkowski successfully operates in the field of corporate compliance, regulatory enforcement and crisis management. The firm assists companies in key areas of regulatory focus, such as money laundering and anti-corruption, including under the US Foreign Corrupt Practices Act, the UK Bribery Act and Sapin II statutes and regulations. As a member of Ius Laboris (an alliance combining almost 2,000 lawyers from over 59 jurisdictions) and with partnerships with top European law firms, Raczkowski represents clients in single- and multi-jurisdictional matters. In Poland, the firm has a team of over 70 lawyers and staff members, and has offices in Warsaw, Krakow and Poznan. Raczkowski’s clients include Amazon, Coca-Cola HBC Polska, Johnson & Johnson Poland, L'Oréal, MTV, Oracle, Oriflame Poland, Roche, Costa Limited (Costa Coffee) and Astellas.

Categories of Offences

Under Polish law, two kinds of prohibited acts are recognised: offences (criminal and fiscal) and misdemeanours (minor offences). There are three separate Codes regulating the three kinds of prohibited acts: the Criminal Code for criminal offences, the Fiscal Criminal Code for fiscal offences, and the Misdemeanours Code (for misdemeanours). Criminal offences are described as prohibited acts of major harmfulness, while misdemeanours are usually of less importance and constitute a violation of administrative rules and laws. It is up to the legislator to decide whether a specific act is described as a criminal offence or misdemeanour – it is not the harmfulness of a specific act that decides the legal qualification. Fiscal offences, described in the Fiscal Criminal Code, consist of threatening or causing damage to state treasury. 

All kinds of prohibited acts must be described in the legal act in force at the time of its commission. The prohibited act must fulfil the description provided in the legal act. Also, the perpetrator must be attributed fault.

Elements of an Offence

Fault

Fault is recognised as a personal charge of committing an offence in a situation where there is a requirement to act in accordance with the law. The other characteristic of a prohibited act is the perpetrator’s intent. An offence is committed intentionally if the perpetrator intends its commission; ie, he or she wants to commit it or, foreseeing the possibility of its commission, accepts this. An offence is committed unintentionally if the perpetrator, without having intent of its commission, commits it due to non-compliance with the carefulness required in the given circumstances, even though he or she has foreseen or might have foreseen the possibility of its commission. A criminal offence must usually be committed intentionally, as unintentional commission is punishable only if the statute contains such a provision.

On the other hand, misdemeanours can be committed intentionally or unintentionally, unless the statute stipulates otherwise.

Social harmfulness

Finally, the prohibited act must be socially harmful, although there is a major difference between criminal offences and misdemeanours. While misdemeanours need only to be harmful to any degree, criminal offences need to be harmful to a more than negligible degree.

Attempt to Commit an Offence

The person can also be held liable for attempting to commit a criminal offence in any case – attempting any criminal offence is punishable. Moreover, the Criminal Code provides that an attempt is punishable with the same penalty as accomplishment (although, generally, courts issue a more lenient penalty for an attempt than committing an offence). Attempting a misdemeanour is only penalised when the statute specifically provides for that.

Limitation Periods

The limitation period applied to criminal offences depends on the qualification of the given offence and penalty provided for its commission. It does not matter what penalty is imposed on a convicted person in a specific case. Committing a murder ceases to be penalised 30 years after its commission. Other crimes (felonies) – ie, offences penalised with imprisonment for not less than three years expire 20 years after their commission. If the offence is penalised with imprisonment exceeding five years (but the lower limit of the penalty is lower than three years), such an offence expires 15 years after its commission. Offences penalised with imprisonment exceeding three years (but the lower limit of the penalty is lower than three years) expire ten years after their commission.

Other offences, except for offences prosecuted privately (eg, defamation, insult), expire five years after their commission. Finally, offences prosecuted privately expire after the lapse of one year from the moment the harmed party learned the identity of the perpetrator of the offence, but no later than three years after the moment of its commission.

Extension of Limitation Periods

All the periods provided above are to be extended if a criminal proceeding is initiated before they expire. It is not necessary to bring charges against a specific person to extend the expiry period. In the case of all offences prosecuted ex officio, the expiry period is extended for an additional ten years (ie, in the case of a murder, the expiry period is 40 years).

The limitation periods provided above are calculated from the moment of commission of an offence; ie, the moment when the perpetrator acted or omitted an action he was obliged to perform (in the case of omission). If there is a specific result that needs to appear in connection with the perpetrator’s action (eg, material damage), the limitation period is calculated from the moment when this result occurred. Also, if a continuing offence is committed or an offence consists of more than one act, the expiry period is calculated from the moment of the last action.

Jurisdiction of Enforcement Authorities

Generally, the Polish criminal statutes apply to persons who commit an offence in Poland, or to Polish citizens who committed an offence abroad. In such cases, Polish authorities have jurisdiction to conduct criminal proceedings. With regard to foreigners, they can be accused of an offence committed abroad only if such an offence was committed to the detriment of a Polish citizen or Polish organisational unit (eg, a company registered in Poland), or if such an offence is penalised with at least two years' imprisonment. In all cases of offences committed abroad, the offence needs to be penalised both in Poland and in the country where it was committed.

Jurisdiction is determined based on the place where the offence was committed. Under the applicable law, it is possible that there is more than one place of committing an offence. An offence is committed where the perpetrator acted, or failed to act in compliance with the law, or in the place where the result of the act occurred or was supposed to occur. Therefore, if a person acts in Germany, but the result is supposed to occur in Poland, both Poland and Germany may be considered as places where an offence was committed.

Corporate Criminal Liability

In Poland, the Act on Liability of Collective Entities for Acts Prohibited Under the Applicable Law was enacted in 2002 (the "Act on Corporate Liability"). According to the aforementioned provisions, the legal entity may be liable for certain white-collar offences and fiscal offences committed by its representatives, managers and even employees. In order to prosecute a legal entity, firstly an individual must be validly convicted. It is a condition for initiating proceedings against a company. A legal entity is held liable if, in the given circumstances, it can be proved that the organisation of this unit enabled or facilitated the commission of an offence due to a lack of supervision or fault in selecting the manager. The last criteria concerns fault in choosing a given person as a manager, when it could be foreseen that he or she may have commit an offence.

Ineffective Regime

As the successor of the legal entity cannot be held liable for an offence committed by an individual before changing the legal form (merger, acquisition, etc), the Act on Corporate Liability is almost never applied (see the Poland Trends & Developments chapter for more information).

The victim of a white-collar offence may file a claim for compensation of all damages caused by the offence. This motion is, therefore, a part of criminal proceedings. No initial fee is to be paid for filing such a motion. In the event of a conviction, the court is obliged to impose on the convicted person an obligation to compensate the damage. If the compensation determined by the court in criminal proceedings does not cover the whole loss caused by the offence, the victim can claim the outstanding part in a civil procedure.

The victim may also file a civil claim against the perpetrator of a white-collar offence. If that should be the case, an initial fee must be paid (generally, 5% of the claim).

The draft of an amendment to the Code of Commercial Companies has recently been published. The reform concerns holding companies law; specifically, issues related to the recognition of interest of the capital group. The change may influence the approach of enforcement agencies to the offence of abuse of trust (acting to the detriment of a company) and limit the risk of criminal liability of managers operating on the Polish market.

The Ministry of Justice is also working on a new Act on Corporate Criminal Liability, which may significantly change the current regime and create a significant risk of liability for companies (especially given the unclear premises of the aforementioned liability, as well as the severe penalties to be imposed on legal entities). See the Poland Trends & Developments chapter for more information.

The main authority entitled to conduct criminal investigations and file acts of accusations is a public prosecutor. The prosecutor's offices at all levels (there are four levels: Rejonowa, Okregowa, Regionalna, Krajowa) are divided into departments. There are departments and prosecutors specialising in white-collar offences or fiscal offences.

In criminal proceedings, many activities are performed by the police under the prosecutor’s supervision. Similarly to the prosecutor's office, the police also provide specialised units designated to conduct proceedings in white-collar offence cases.

With regard to fiscal offences, criminal proceedings are usually conducted by the Tax Inspection Office/National Tax Administration, under the prosecutor’s supervision.

On the other hand, there are no court departments or judges that specialise in white-collar cases. All indictments are brought to the criminal departments of courts – judges are assigned randomly.

Initiation of an Investigation

Rules on conducting investigations and trials are described in separate codes, similarly to the rules on criminal liability (see 1.1 Classification of Criminal Offences). The Criminal Procedure Code provides for rules on conducting proceedings regarding criminal offences, while the Criminal Fiscal Code regulates the procedure in fiscal offence cases. There is also a separate Code on Procedure in Misdemeanour Cases.

Under Polish law, a criminal offence might be prosecuted ex officio or upon a private accusation. All white-collar offences are prosecuted ex officio. However, within these offences another group can be distinguished: offences prosecuted upon the victim’s request. There are many white-collar offences that are prosecuted by a prosecutor only upon the request of a victim, which means that the prosecutor cannot initiate and conduct the investigation without such a request (eg, acting to the detriment of a company and causing material damage to its property).

An investigation is initiated by a prosecutor (or, in minor cases, by the police) when there is justified suspicion that an offence has been committed. This suspicion should be based on evidence. Most of the investigations in white-collar cases are initiated based on the notification of an offence filed by the victim. It is not required to indicate a suspect at the very beginning of the case (when the investigation is initiated).

Rights of Enforcement Agencies

The prosecutor (or the police, acting under the prosecutor’s supervision) has a broad possibility of acting during the investigation. At any time the prosecutor can call any person to a questioning (excluding persons who are obliged to preserve professional secrecy; eg, advocates, legal/tax advisers and journalists). Managers, directors, members of the board and all employees may be called for questioning and they are obliged to testify.

The prosecutor can issue a written decision demanding any natural person or legal entity to provide him or her with information, documents and other objects relevant for the case. Such a demand may consist of ordering such information to be produced about employees, addresses, purchases, etc. The enforcement agencies are entitled to perform a search; eg, in the company’s headquarters. Though the company can appeal against such a decision, it does not suspend execution of the order.

Currently there are no strict rules on conducting internal investigations. Only certain entities are obliged to conduct internal investigations in some cases (eg, entities operating on the financial market, obliged entities within the meaning of AML regulations). In these cases, the entity conducting an internal investigation should ensure the whistle-blower’s protection (protection against retaliation and protection of personal data).

The prosecutor or the police may demand or seize all documents and evidence gathered during the investigation, unless they are covered by the professional secrecy of lawyers/advisers.

The evidence taken during an internal investigation may be used as evidence during the criminal investigation.

Mutual Legal Assistance between States

There are two kinds of regulations regarding legal assistance and cross-border co-operation in Polish criminal procedure: EU regulation and numerous bilateral and multilateral agreements. Recently, the European Investigation Order has played an increasingly important role in cross-border investigations. Also, the European Arrest Warrant is often applied, with Poland as both the issuing and requesting state.

Regulations regarding mutual legal assistance, in relation to both EU member and non-member states, are included in the Criminal Procedure Code. These provisions set forth the possibility of taking evidence in cross-border investigations and also taking over or transferring prosecution and jurisdiction.

Extradition Matters

Extradition of a Polish citizen is generally forbidden, as provided in the Constitution. It is permissible only if such a possibility is provided within a ratified international agreement or similar law; eg, EU regulations. Furthermore, extradition is only permissible if an offence was committed abroad and it is punishable in Poland or it would be punishable if committed on Polish territory. The extradition of a Polish citizen is nonetheless unacceptable if the suspect is charged with a non-violent offence committed for political reasons or the extradition would lead to a violation of human rights.

Initiation of a "White-Collar Investigation"

Investigations in white-collar cases may be initiated both ex officio and upon the motion of an aggrieved party, depending on the offence.

Legal entities are rarely accused of committing offences under the Act on Corporate Criminal Liability as it, inter alia, requires valid conviction of an individual acting on behalf of a company. Moreover, any transformation of the legal form of a company prevents accusation of the successor. The corporate criminal regime has proved to be inefficient. Currently, the Ministry of Justice is working on a draft of a new law in this respect.

Plea Agreement

Under Polish criminal law and procedure, there are no mechanisms to resolve the investigation without a trial, except for plea agreements.

Nonetheless, some white-collar offences are prosecuted upon the victim’s request (eg, acting to the detriment of a company and causing material damage to its property). In such cases, if the perpetrator remedies the damage, the victim might refrain from submitting the request or withdraw it. However, if the request is submitted, it can only be withdrawn upon the prosecutor’s (during the investigation) or the court’s (during the trial) consent. If the prosecutor or the court assents to the withdrawal, the proceeding is discontinued. If the prosecutor or the court does not agree, the proceeding is still pending.

There are three types of plea bargain in the Polish Criminal Procedure Code, depending on the time of concluding an agreement between the prosecutor and the suspect. The prosecutor and the suspect may agree on the terms of conviction before an act of accusation is brought to the court. In such a case, the prosecutor does not bring an act of accusation and files a request to convict the suspect and impose penalties that were agreed between them. If the victim objects to the prosecutor’s request, the case is brought to a trial. This kind of agreement can be made in most criminal cases, except for felonies (zbrodnia), the most serious offences.

If the prosecutor and the suspect do not agree on the terms of conviction, the suspect can independently file such a request, proposing a penalty and other measures to be imposed on him or her. Such a request must be made before the notification of the first trial is delivered to the suspect. The suspect can make such a request only if the offence is penalised with imprisonment for a maximum of 15 years. In this case, it is irrelevant whether the victim agrees or objects to the motion; however, the prosecutor must agree on the terms proposed by the suspect.

Finally, the suspect can file a motion to sentence him or her to a proposed penalty before the first interrogation of all the accused is finished in the trial. This request can also only be made  if the offence is penalised with imprisonment for a maximum of 15 years. The prosecutor and the victim must agree on the terms proposed by the accused.

In all kinds of plea bargaining there are no independent possibilities of reducing charges or applying specific rules on suspending the sentence.

The Act on Corporate Criminal Liability provides for a catalogue of white-collar offences that, if committed within an organisation, may lead to liability of the corporate entity. This catalogue contains circa 130 offences and fiscal offences. The law is not applied in practice, due to the reasons described in the Poland Trends & Developments chapter.

Bribery/Influence Peddling

Polish criminal law distinguishes between bribery and influence peddling. Bribery consists of proposing or accepting a material benefit by a public official or a person performing a public function. The amount of the benefit is irrelevant. Influence peddling consists of exerting influence in a public institution or on an official and taking on intercession in settling a matter in exchange for a material or personal benefit or its promise.

Both offences may be applied to foreign public officials or representatives of a foreign institution.

Private Corruption

A private corruption offence (between private entities) may be committed by a manager or an employee who demands or accepts a material or personal benefit or its promise in exchange for abusing his or her power or for failing to fulfil the incumbent duties in such manner that it may inflict material damage upon such entity or constitute an act of unfair competition or inadmissible preferential activity for the benefit of the buyer or recipient of a merchandise, service or performance.

The sanction for a corruption offence is imprisonment for up to 12 years in the most serious cases.

Bribery/Influence-Peddling Prevention

There is no general obligation to implement a compliance management system, including anti-bribery regulations. Such regulations apply only to entities in specific branches, such as the financial sector. Banks and financial services institutions are obliged to implement an anti-fraud/bribery system containing the procedure for notifying regarding irregularities and suspicions (whistle-blowing system). However, no detailed guidelines are provided for such regulations.

According to the Warsaw Stock Exchange's guidelines, all companies listed on the Stock Exchange should implement anti-corruption regulations. The guidelines require companies to introduce an anti-corruption code and conduct risk assessments.

Draft laws on corporate criminal liability discussed in the Poland Trends & Developments chapter are supposed to introduce sanctions for lack of prevention/compliance management.

Insider Dealing/Market Manipulation

Insider dealing and market manipulation offences are described in the Act on Trading in Financial Instruments. Both regulations refer to the European Market Abuse Regulation (MAR).

  • Market manipulation – anyone who is engaged in manipulation within the meaning of Article 12 of the MAR is subject to a fine of up to PLN5 million or imprisonment from three months to five years, or to both penalties.
  • Insider dealing – users of inside information contrary to the prohibition referred to in Article 14 (a) of Regulation No 596/2014 shall be subject to a fine of up to PLN5 million or to imprisonment from three months to five years, or to both penalties.

Offences "against the banking system" are listed in the Banking Law, under which, whoever carries out, without authorisation, a business consisting of pooling funds of other natural or legal persons, or organisations without legal personality, in order to extend credit or loans, or expose such funds to risk in another way, shall be liable to a fine of up to PLN10 million and to imprisonment for up to five years.

Tax Offences

Tax offences are described in the Fiscal Criminal Code. There are several fiscal offences described as tax fraud. The main tax fraud offence consists of providing the tax authorities with false information in tax declarations in order to extort the tax or reduce its amount.

Evasion of taxes is also a fiscal offence, which consists of failing to reveal the tax base or submit a declaration that exposes the tax to a depletion.

The Criminal Code provides for another kind of tax fraud, consisting of issuing a forged or false invoice, notwithstanding the results of such an act. The offence is penalised severely, depending on the amount indicated in the invoice, potentially by imprisonment for up to 25 years. The offence is aimed at fighting VAT carousels.

All persons and legal entities performing business activity are obliged to keep accounting/financial books. Failing to do so may lead to criminal liability of a person managing the entity (eg, a member of the board or a financial director). Such an offence consists of failing to keep the books, failing to keep them compliant with relevant laws, providing false data within the books, or failing to perform a financial examination. Offences are penalised with a fine or imprisonment for up to two years.

Failing to keep financial books, including accountancy books and tax books, also constitutes a fiscal offence that is penalised with a fine.

Competition Law

Competition law is mainly defined in two acts: the Act on Protection of Competition and Consumers, and the Act on Counteracting Unfair Competition.

Most of the offences provided within these acts are administrative offences. The Criminal Code includes one offence that refers to public tenders and penalises agreements between bidders that are to the detriment of the organising institution/entity. The potential sanction is imprisonment for up to three years.

The Consumer Law mainly sets forth administrative measures and penalties imposed by the Office of Competition and Consumer Protection. Fines may be imposed on a company or manager as a result of performing practices harmful to the collective interests of consumers, even unintentionally. These practices may consist of anti-competition agreements, merging without the chairman of the Office’s consent, and applying prohibited and unfair contractual provisions. The fine amounts to no more than 10% of the turnover generated in the financial year preceding the year in which the penalty is imposed.        

Cybercrimes

There are several cybercrimes provided in the Criminal Code. Whoever, without authorisation, substantially disrupts the operation of a computer system or network by transmitting, destroying, deleting, damaging or obstructing access to computer data is subject to the penalty of imprisonment for between three months and five years. Producing, obtaining, selling or sharing devices or computer programmes adapted to commit cybercrimes or provide unauthorised persons with another person’s passwords, access codes or other data enabling unauthorised access to information stored in a computer system or network constitutes another offence penalised with imprisonment for between three months and five years. Also, a person who, with the purpose of gaining a material benefit or inflicting damage upon another person, without authorisation, affects automatic processing, collecting or transmitting of computer data, alters or deletes a computer data record, or enters a new computer data record is subject to the penalty of imprisonment for between three months and five years.

Company and Trade Secrets

Company and trade secrets are protected separately from unfair competition acts and violations unrelated to any business activity.

Whoever, without authorisation, gains access to information not intended for him or her by opening a sealed letter, plugging into a telecommunications network, or breaching or bypassing an electronic, magnetic, computer or other special protection of such information is subject to a fine, the penalty of limitation of liberty, or imprisonment for up to two years.

Fiscal Offences

Fiscal (also financial/trade/customs) offences are provided in the Fiscal Criminal Code, which contains numerous offences in relation to tax obligations, subsidies, customs, etc. Fiscal offences consist of failing to provide declarations, failing to pay taxes or other tributes, tax frauds or extortion.

Obstructing/Frustrating Criminal Proceedings

Obstructing or frustrating criminal proceedings is punishable if it leads to the avoidance of, or aims to avoid, criminal liability of the perpetrator. This can consist of harbouring the perpetrator, obliterating evidence of the crime, or serving a penalty instead of to a sentenced person. A person cannot be held liable for both a predicate offence and concealment.

The Criminal Code provides for several forms of criminal conspiracy. A person might be held liable for an offence if he or she commits it (personally and alone commits an offence); commits it together and in agreement with another person or persons; directs the commission of an offence by another person; or, by taking advantage of another person's dependence on him or herself, instructs him or her to commit an offence.

Incitement and Aiding

The Criminal Code also provides for two other forms of offence: incitement and aiding. Incitement consists of persuading another person to commit an offence. Aiding consists of intentionally facilitating the commission of an offence, especially by providing an instrument, conveyance, counsel or information.

Each perpetrator, instigator and aider is held liable for his or her own offence, independently of the liability of other persons. All are subject to the same penalty.

AML

Regulations in regards to money laundering in Poland are based on AML Directive IV, implemented in the Act on Counteracting Money Laundering and Terrorism Financing of 2018 (the “AML Act”). However, the general offence of money laundering is set forth in the Criminal Code. Under the Code, whoever receives, possesses, uses, conveys or transports abroad, conceals, transfers or converts legal tenders, financial instruments, securities, foreign exchange, property rights or other movable or immovable property, that has been obtained from the benefits derived from any offence, or assists in transferring their ownership or possession, or undertakes other actions that may frustrate or substantially obstruct the determination of their criminal origin or location, or their detection, seizure or forfeiture, is subject to the penalty of imprisonment for between six months and eight years.

Only "obliged" entities, within the meaning of the AML Act, have a duty to provide specific measures to counteract money laundering and terrorism financing, including providing a risk assessment (amended at least once every two years); implementing an internal procedure for counteracting money laundering and a procedure for receiving notifications of irregularities and conducting internal investigations; and performing due diligence and financial safety measures in relation to clients. Also, the AML Act obliges the obliged entities to notify the General Inspector of Financial Information (an administrative institution dedicated to the prevention of money laundering) of any suspicions in respect of money laundering or suspicious transactions. Such criminal offences are penalised with imprisonment for between three months and five years, if intentional, or a fine (of up to PLN1,080,000), if unintentional. Failing to do so is both a criminal and administrative offence. Providing the Inspector with false information is also a criminal offence. Moreover, failing to implement any obligation provided in the AML Act is subject to an administrative fine of up to EUR5 million.

With regard to criminal charges brought against a natural person, the authors identify two main defence strategies: lack of intention of committing an offence and exercising due diligence. Usually, defence lawyers present the suspect’s decision as justified in the given circumstances and compliant with the rules on modern business. Some decisions may be defended as an element of business risk that could not have been avoided. Diligent performance of control functions in a company may be a defence appropriate for supervisory board members who may be charged for negligent execution of their control duties (effective compliance management systems may help in the circumstances).

De Minimis Exceptions

There are no strict de minimis exceptions for white-collar offences in Polish criminal law. However, it is a general rule that all criminal offences must be socially harmful to more than a negligible degree. There are no exempt industries or sectors.

Some de minimis exceptions are provided in specific types of white-collar offences; eg, material damage of at least PLN200,000 (or direct danger of causing such damage) is required to accuse the manager of an abuse of trust offence (to the detriment of a company).

Mitigation of Penalty

In some cases, a perpetrator who caused damage to property/assets may remedy the damage before the investigation and apply for specific lenient measures to be applied.

The court may also apply extraordinary mitigation of the penalty in exceptional situations; eg, if the victim and the perpetrator have reconciled, the damage has been redressed or if the victim and the perpetrator have agreed on the manner of redressing the damage.

Also, mitigation of the penalty is obligatorily applied or the penalty is obligatorily suspended if the perpetrator who has committed an offence in complicity with other persons has disclosed information concerning the individuals participating in this offence and the relevant circumstances of its commission to a law enforcement authority (a prosecutor or the police). Similarly, upon the prosecutor’s request, the court may apply extraordinary mitigation of the penalty or suspend it with regard to a perpetrator who has, apart from providing explanations in his or her case, disclosed information on another offence, if this other offence is penalised with imprisonment for at least five years and presented its substantive circumstances to a law enforcement authority that had no prior knowledge of these facts.

There is a specific regulation on a "crown witness" in the Polish criminal law regime.

With regard to fiscal offences, the perpetrator may notify the tax office of an event of committing such an offence, disclosing all relevant information and paying the public debt. In such a case, the tax officer and the perpetrator may agree on the amount of the fine and the court may close the case by approving such an agreement.

There are no general rules in Poland in respect of whistle-blowers’ protection. Also, the EU Directive on protection of persons notifying irregularities has not yet been implemented.

There are only sectoral regulations regarding whistle-blowing. The Act on Anti-money Laundering provides for the obligation to introduce whistle-blowing procedures and ensures that whistle-blowers are protected. However, these regulations are not detailed and do not provide specific measures that should be applied. The AML Act obliges the obliged entities to protect the personality and personal data of a whistle-blower. Whistle-blowers are to be protected against discrimination, repression and other kinds of unfair treatment.

The burden of proof in all criminal cases is on the public prosecutor. Accordingly, the prosecutor should present all evidence, both in favour and against the suspect. Indictment is to be brought to the court only if all the circumstances revealed during the investigation justify the suspicion that an offence has been committed by a given person (suspect). There are no strict rules or standards providing any guidelines as to how to determine the sufficient threshold of evidence.

During the criminal proceeding, all unexplained circumstances must be eventually determined in the suspect’s/accused’s favour (in dubio pro reo). Therefore, if the prosecutor or the court has reasonable doubt about any relevant circumstances, the suspect/the accused cannot be sentenced.

Guidelines Concerning Penalties

The general rule is that the court imposes the penalty according to the level of the accused’s fault and social harmfulness of the offence. The court should also consider other factors, such as the preventative and educational aims it is to achieve with regard to the sentenced person, as well as the need to develop the legal awareness of society. The court should also take into account the perpetrator's motivation, the type and degree of the violation of the perpetrator's duties, and the type and extent of the negative consequences of the offence. Some of the characteristics and personal conditions of the perpetrator are also relevant, such as his or her way of life prior to the commission of the offence and his or her behaviour afterwards.

There are no specific rules or guidelines on imposing a penalty on perpetrators of white-collar offences; however, the Criminal Code sets forth some possibilities to limit the penalty in specific cases. If the perpetrator causes material benefit to a company’s or natural person’s property, and voluntarily remedies the damage inflicted before the investigation, the court may apply extraordinary mitigation of the penalty or even waive its imposition.

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Trends and Developments


Authors



Raczkowski is the biggest HR law firm in Central and Eastern Europe, providing corporations with solutions to all legal problems arising in HR, compliance and white-collar crime. The firm manages complex criminal proceedings and internal investigations. Raczkowski successfully operates in the field of corporate compliance, regulatory enforcement and crisis management. The firm assists companies in key areas of regulatory focus, such as money laundering and anti-corruption, including under the US Foreign Corrupt Practices Act, the UK Bribery Act and Sapin II statutes and regulations. As a member of Ius Laboris (an alliance combining almost 2,000 lawyers from over 59 jurisdictions) and with partnerships with top European law firms, Raczkowski represents clients in single- and multi-jurisdictional matters. In Poland, the firm has a team of over 70 lawyers and staff members, and has offices in Warsaw, Krakow and Poznan. Raczkowski’s clients include Amazon, Coca-Cola HBC Polska, Johnson & Johnson Poland, L'Oréal, MTV, Oracle, Oriflame Poland, Roche, Costa Limited (Costa Coffee) and Astellas.

Corporate Criminal Liability in Poland – New Challenges Ahead

At present, the regime of corporate criminal liability in Poland is highly ineffective. In practice, the risk of bearing criminal liability for legal persons (entrepreneurs) does not exist under the applicable provisions. The situation is caused by several reasons. First, a case against a company is possible only after obtaining a valid judgement (conviction or conditional discontinuation of the proceeding) against a person acting on behalf of that company (persons formally authorised to represent it; eg, agents). Therefore, initiating a criminal proceeding against a company is possible after conducting, most often, long-term criminal proceedings against an individual. The catalogue of offences for which the company may be held liable mostly includes offences against economic turnover (such as abuse of trust, corruption, financial fraud or money laundering – "white-collar crimes").

Criminal liability of companies requires proving fault in the selection or fault in the supervision of offenders (managers, employees). Practice has shown that after a trial of an individual, law enforcement agencies are no longer interested in prosecuting a company. This is also an effect of the deficiency of the current law provisions, which, inter alia, do not provide solutions in the event of a change of the legal form of a company. As the possible fine imposed on a company is calculated based on the revenues generated in the financial year in which the offence was committed (a monetary penalty of up to PLN5 million, but not more than 3% of the mentioned revenue), companies have often changed their legal corporate form to avoid responsibility – the original entity did not generate any income, so imposing a penalty was impossible. This is also visible in the statistics. The most severe penalty imposed on a company is PLN12,000, and there are only several dozen proceedings per year pending against companies.

In connection with the above, the Council of Ministers adopted on 8 January 2019 the draft of a new law on corporate criminal liability that significantly reforms the regime. The draft is in the parliamentary freezer; however, in August 2020 this issue returned to public discussion as several statements about the possible continuation of work on the draft were made in the press, including by the deputy of the Minister of Justice. The draft act completely changes the corporate criminal liability principles and introduces a requirement to implement a compliance management system for companies operating in the Polish market.

Amendment to the corporate criminal liability regime

According to the draft law provisions, corporate criminal liability may be incurred by all legal persons (including all commercial companies). A company may be held criminally liable for all criminal offences (currently, only for some) committed in connection with the activities of the company. To pursue a case against the company, it will not be necessary to initiate proceedings against an individual. Proceedings against a company might be conducted simultaneously to proceedings against the individual, separately, or only against a legal entity. Under the new regulations, a company can be held liable even if the perpetrator of a crime has not been detected.

The conditions for corporate criminal liability are a lack of due diligence in the selection (fault in selection or supervision of managers/employees) and a so-called compliance fault, understood as admitting irregularities in an internal organisation that enabled or facilitated the commission of an offence. The irregularity consists, in particular, of (i) the lack of rules of conduct/code of ethics/offence prevention, (ii) the lack of a proper organisational structure with division of responsibilities, and (iii) the lack of a person or organisational unit supervising the compliance area.

Liability regimes

The draft provides for two regimes of criminal liability of companies: for "own" offences and for "other people's" offences. 

A responsibility for an own crime means that a company may be criminally liable for all offences committed directly in connection with the activities of that company by members of its bodies/other persons authorised to represent it (eg, proxies) and all employees/B2B co-operators.

A responsibility for "someone else's" crime means that the company may incur criminal liability for all offences committed in connection with any contract concluded with a third party – if an offence is committed by a subcontractor or other entrepreneur who is a natural person, or by an employee or a person authorised to act for a subcontractor or entrepreneur. The condition of liability is that the company benefits from the offence, even indirectly (eg, obtaining a lower price, lowering costs, or a VAT refund).

It is worth noting that the draft in no way indicates what specific control mechanisms could be implemented to have even a hypothetical possibility of supervising the company's subcontractors and avoiding the risk of criminal liability.

The penalties

The draft significantly increases the penalties.

The catalogue of penalties includes a fine from PLN30,000 to PLN30 million, with the possibility of increasing it to PLN60 million, and even the penalty of liquidation of the entity (in specific cases). The draft law also provides for punitive measures; among others: forfeiture; prohibition of promotion/advertising; prohibition of conducting specific activities, using public funds, or participation in tenders, whether permanent or temporary (up to five years); and closure of the branch.

The draft also allows a court to order the forfeiture of company assets if, in whole or in large part, they served to commit an offence or to conceal the benefit obtained from a crime.

Compliance management system

As the main condition of liability is a compliance fault, the draft in facts obliges legal entities to (i) implement a whistle-blowing communication channel, an anti-abuse procedure, and a code of ethics; (ii) appoint a compliance officer/compliance unit responsible for supervising the company's conformity with the law (it should be an independent position within the company, with an appropriate budget and proper organisational support); and (iii) prepare the scope of responsibilities and division of duties of all persons working for the company, including managers.

An obligation to implement compliance management systems for companies operating in Poland is reasonable and necessary. So far, compliance obligations have been imposed only on entities operating in specific sectors (eg, financial institutions, obligated institutions under the Anti-money Laundering Act, the pharmaceutical sector). However, it is reasonable to adjust the scope of compliance management systems to the size of the organisation and the scale of the conducted business activity. The draft act, to the extent that it requires the implementation of anti-abuse procedures, corresponds to the whistle-blower protection directive – the implementation of a whistle-blower policy and ensuring a whistle-blower’s protection is inevitable.

Assessment of the draft act

The draft act has been criticised by entrepreneurs and lawyers, mainly due to the wide scope of criminal liability of entrepreneurs for actions not only within their organisations, but also taken by third parties, as well as for an unclear definition of the prerequisites of this liability. The penalties in the proposed scope are considered excessive. According to many, the legislator has gone from one extreme to the other. Press releases from August 2020 suggest the Ministry of Justice wants to return to work on the project. It is said that the project will only cover entities hiring 250 or more employees, in order to limit the obligations of those who operate on a smaller scale. Penalties are reportedly also to be mitigated, to a maximum amount of PLN50 million. The draft law has not yet been published.

Compliance obligations in the new Public Procurement Law

The draft act on corporate criminal liability is not the only one that may introduce new obligations in the compliance area. When introducing the amendment to the act – the Public Procurement Law – new provisions regarding the exclusion of an economic operator (bidder) from a tender and related compliance obligations were adopted. The amendment will enter into force on 1 January 2021.

One of the general rights of a contracting entity is to exclude the economic operator from the tender due to certain circumstances, including committing criminal offences (specified in the act). In some cases the exclusion is obligatory; there are, however, situations where the contracting entity may decide whether to exclude the economic operator. Under Polish law, they concern, eg, offences committed at the workplace, environmental crimes, tax violations and breaches of rules of professional conduct.

According to the provisions soon to be effective, an economic operator may not be subject to exclusion, despite committing an offence/misconduct, if it is proven to the contracting entity that the damage caused by the crime/misconduct has been repaired, including through monetary compensation, and the facts and circumstances related to the crime have been explained. Additionally, the economic operator must prove active co-operation with the competent authorities, including law enforcement authorities, or the contracting entity.

Moreover, an economic operator is obliged to apply technical, organisational and personnel measures appropriate to the prevention of offences/misconduct, including cutting all ties with persons or entities responsible for the contractor's misconduct; staff reorganisation; implementing a reporting and control system; and establishing internal audit structures to monitor compliance with laws, internal regulations and business standards. The contracting authority assesses whether the actions undertaken by the contractor are sufficient to demonstrate its reliability, taking into account the specific circumstances of the offence.

The requirement to implement a remediation plan after detecting irregularities should be assessed positively. However, it is worth noting that the described provision is designed to encourage economic operators to inform about offences detected in the organisation by conditioning their right to apply for public tenders. An obligation to self-report in the event of a detected offence, co-operation with law enforcement authorities and implementing compliance procedures will be soon be introduced for some of those who intend to be awarded a public contract.

The Draft of a New Holding Law in Poland and its Significance for the Criminal Liability of Managers

In August 2020, a draft amendment to the Code of Commercial Companies was published. The new law is an important change to the law regarding holding companies in Poland. One of the reforms to be implemented is a recognition of an interest of a group of companies (capital group). This change directly translates to the scope of criminal liability of managers for the abuse of trust offence (acting to the detriment of the company). At present, Polish law acknowledges only the interest of an individual company operating within a capital group, in isolation from the strategic interest of the entire group, which causes serious consequences for managers acting on behalf of Polish companies.

Acting to the detriment of the company under Polish law

The abuse of trust offence (called, in the jargon, "acting to the detriment of the company") in the Polish law regime may be committed by a person entrusted with a fiduciary duty to deal with the business activity and/or to manage the assets of a given entity. Determination as to whether a person in a specific case manages the company's assets and deals with the business operations of the company is made in the context of the organisational structure and actual decision-making policies that are in place at the company. "Dealing" with business operations in this context means managing business operations relevant to the company. Given the above, the described offence may be committed by members of the management board and other people exercising managerial functions who have an independent position in the company's organisational structure that allows them to make standalone decisions and freely manage its assets.

The core of the offence is inflicting damage to the company's property by abusing powers or a failure to fulfil obligations by a manager.

Abuse of powers or failure to fulfil obligations is considered improper, unprofessional management; eg, taking excessive economic risk. Abuse of powers includes both activities beyond the scope of the powers granted and activities formally falling within this scope but clearly contrary to the interests of the company. It is a behaviour that breaches general principles of good management and contravenes the behaviour of a "prudent manager". Failure to fulfil obligations is the failure to perform basic managerial duties granted by authorisation and required by the principles of rational management.

The damage inflicted should have a causal link to the manager's improper behaviour and may refer to actual damage to the company’s assets as well as lost profits of a given entity.

The way the abuse of trust offence is defined in the Polish Criminal Code allows the enforcement authorities to apply it to many business transactions, including those that are dubious or that did not reach expected goals.

Business transactions are assessed in the context of their profitability in relation to the company directly engaged, solely, even though such company may be related by shares with other entities and be a part of a capital group. Currently, the economic purpose of a given business operation is considered in the narrow perspective of interest and profitability for a specific entity within a capital group. This causes enormous risks for managers operating in Poland who work within the structures of capital groups.

Interest of a subsidiary versus interest of a capital group

At present, Polish law lacks solutions that would provide a legal basis for assessing the activities undertaken by managers of a subsidiary in the context of the interest of the entire capital group. This means that if a given business operation is unfavourable (leads to losses) for a company directly involved (subsidiary), but beneficial for the controlling company or the parent company, the managers who conducted such transaction on behalf of the subsidiary may incur criminal liability for acting to the detriment of the company.

In practice, if a subsidiary implements the parent company's business strategy and acts in accordance with the instructions imposed by the "main owners", its managers expose themselves to the risk of criminal liability. It is even less comprehensible as, in fact, the role of the management board is often to implement shareholders’ decisions resulting from corporate dependencies. If a company is a part of a capital group, in which the subsidiaries are obviously controlled by the parent company, in practice the manager of such controlled entity cannot contest the ownership decisions and refuse to execute transactions that are beneficial for the group in a broader perspective. Presently, the manager of a subsidiary is faced with the dilemma of whether to act against the shareholders' will (for which he generally neither has a right nor legal measures) or to expose himself to the risk of personal liability related to a business transaction knowing that Polish law recognises only the interests of individual companies and not the interests of the holding company.

To better illustrate the above-described: transactions permitted under the provisions of the Code of Commercial Companies in which companies from the capital group participate – for example, buy-backs or squeeze-outs –  may be challenged by the law enforcement authorities. It is important in this context that an abuse of trust offence is prosecuted ex officio. Currently, all transactions within the group leading to capital transformations and a change in the ownership structure carry a risk. For example, a voluntary redemption of shares at the nominal price is feasible and legitimate; such redemption at the nominal price of the shares carried out by the management board’s members may, according to Polish law, constitute a mismanagement and expose managers to a risk of liability for an offence. In the law enforcement agencies’ view, these shares, after all, could be redeemed at the market price; the difference between these values may, therefore, be a detriment to the subsidiary. Possible benefits for the entire capital group are not taken into account.

The argument that legal provisions allow the conduct of the described transaction is considered as a "hard legalism"; according to the authorities, the transaction may be formally lawful, but devoid of economic sense. The economic purpose is understood only as an interest/benefit for the subsidiary. This, in turn, causes significant difficulties in transforming the group structure/ownership structure, even though such necessity is justified by specified business circumstances (eg, changes in legislation in a given jurisdiction, which may have a significant impact on the cost-effectiveness).

Such legal conditions, in effect, significantly increase the risk of economic activity conducted in Poland by international capital groups. The possibility of challenging ownership and strictly business decisions by law enforcement agencies leads to a conclusion that the principle of freedom of economic activity may be, in some cases, endangered or be subject to limitations. The Polish regulations at present do not seem to record the fact that the parent company or the directly controlling company is, in fact, a founder and a sponsor of the subsidiary. Subsidiaries are often financially dependent on support from the capital group – therefore – it should naturally authorise controlling entities to have some impact on the functioning and strategy of the subsidiaries. Such control is obviously exercised, but it is burdened with a significant risk for the company’s representatives. However, this situation may change soon in connection with the above-mentioned changes to the Code of Commercial Companies.

How can the draft law impact the white-collar area?

The draft of the new corporate law introduces a definition of a group of companies and finally addresses the concept of the interest of a capital group, which is crucial for managers' criminal liability.

The group of companies – according to the draft – is understood as the parent company and its subsidiaries, guided by a common economic strategy (interest of the group of companies), enabling the parent company to exercise uniform management over the dependent entities. The parent company and the subsidiary participating in the group of companies, besides the interests of the company, are guided by the interests of the group of companies, as long as they do not infringe the legitimate interests of creditors and minority shareholders. According to the draft law, the parent company may issue a binding instruction to a subsidiary belonging to a group of companies to run the company's affairs if it is justified by a specific interest of the group of companies.

For the execution of a binding instruction of the parent company, the member of the management board, manager, or supervisory board member shall not be criminally liable for the offence of mismanagement (acting to the detriment of the company).

Meaning of the changes

The proposed changes are long-awaited by practitioners in the field of white-collar crime. The existing regulation has led to criminal charges being brought against managers who implemented ownership decisions and strategy of the group. If the amendment comes into force, the actual control of the parent company will be eventually formalised and recognised as a binding instruction. Importantly, the proposed regulation does not completely release responsibility for a given decision; it also requires that the interests of creditors and minority shareholders be respected, but it reduces the risk of conducting criminal proceedings against managers acting in the best interest of the capital group.

The proposed regulation is compatible with the recommendations formulated by an EU working group in 2011 (EU Reflection Group on the Future of EU Company Law) that recommended recognising the interest of capital groups in order to create a "safe harbour" for managers acting on behalf of subsidiaries.

Recognition of the unitary nature of the capital group and acknowledging that it is one organism that has one common interest and goal is desirable in the Polish legal order. The drafted changes will limit the risks for managers acting in the Polish market and respond to the problems and challenges of modern economic transactions.

Raczkowski

Bonifraterska 17
00-203 Warsaw
Poland

+48 22 380 42 50

office@raczkowski.eu www.raczkowski.eu
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Law and Practice

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Raczkowski is the biggest HR law firm in Central and Eastern Europe, providing corporations with solutions to all legal problems arising in HR, compliance and white-collar crime. The firm manages complex criminal proceedings and internal investigations. Raczkowski successfully operates in the field of corporate compliance, regulatory enforcement and crisis management. The firm assists companies in key areas of regulatory focus, such as money laundering and anti-corruption, including under the US Foreign Corrupt Practices Act, the UK Bribery Act and Sapin II statutes and regulations. As a member of Ius Laboris (an alliance combining almost 2,000 lawyers from over 59 jurisdictions) and with partnerships with top European law firms, Raczkowski represents clients in single- and multi-jurisdictional matters. In Poland, the firm has a team of over 70 lawyers and staff members, and has offices in Warsaw, Krakow and Poznan. Raczkowski’s clients include Amazon, Coca-Cola HBC Polska, Johnson & Johnson Poland, L'Oréal, MTV, Oracle, Oriflame Poland, Roche, Costa Limited (Costa Coffee) and Astellas.

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Authors



Raczkowski is the biggest HR law firm in Central and Eastern Europe, providing corporations with solutions to all legal problems arising in HR, compliance and white-collar crime. The firm manages complex criminal proceedings and internal investigations. Raczkowski successfully operates in the field of corporate compliance, regulatory enforcement and crisis management. The firm assists companies in key areas of regulatory focus, such as money laundering and anti-corruption, including under the US Foreign Corrupt Practices Act, the UK Bribery Act and Sapin II statutes and regulations. As a member of Ius Laboris (an alliance combining almost 2,000 lawyers from over 59 jurisdictions) and with partnerships with top European law firms, Raczkowski represents clients in single- and multi-jurisdictional matters. In Poland, the firm has a team of over 70 lawyers and staff members, and has offices in Warsaw, Krakow and Poznan. Raczkowski’s clients include Amazon, Coca-Cola HBC Polska, Johnson & Johnson Poland, L'Oréal, MTV, Oracle, Oriflame Poland, Roche, Costa Limited (Costa Coffee) and Astellas.

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