Legal Eye: Economic vetting

The Act, which recently passed an initial reading in the lower house, would, if enacted into law, impose new disclosure obligations on a broader range of persons holding a position of "public trust" to disclose not only personal assets, but also those of his or her spouse and other immediate family members.

The Act builds upon a current law, now 10 years old, which requires high- ranking public officials to disclose their assets. Under the Act, the definition of a public official has been expanded to include not only persons elected to national (and to some extent local) public office, but also members of the civil service, senior attorneys, key military officers, judges, management personnel in state-owned companies, public health officials, and "all other persons defined in other regulations as holding an office of public trust." This last catch-all clause arguably could be construed to include persons serving on the management board of a publicly listed company. Fortunately, however, in a recent ruling on a different vetting regulation, the Constitutional Tribunal struck down portions of a law that would have extended the definition of a "public" official to include all persons serving on the management boards of publicly listed companies.

How big is your house?

Under the proposed Act, a person covered by the new disclosure requirements would not only have to explain the means by which he or she acquired his or her home, apartment and all investment property (i.e., where did the money come from?), but also the size of the property and form of ownership. This requirement would apply similarly to all other financial assets, including stocks, bonds, certificates of deposit, etc. Personal property valued at more than zł.10,000 would also need to be declared, including property transferred to children, parents or grandparents up to five years prior to filing such declaration. Similarly, a person covered by the Act would need to declare all liabilities exceeding zł.10,000 in value, including the terms and conditions of repayment. Additionally, each declaration must be accompanied by a copy of the person's tax return for the previous year.

Conflict of interest?

Under the draft Act, a public official - including not only elected officials, but also persons serving on the supervisory board of a state-controlled company, or any other person for that matter falling within one of the 29 categories of a public official - would be prevented from serving on the supervisory board of more than two companies. Moreover, a moratorium of three years would be imposed on such public officials from taking an active role in the management of any company. For the time being no such restriction applies to the private sector, which at first glance, would appear to place the management of state-controlled companies at a competitive disadvantage to their peers in the private sector.

Next steps?

In order to become law the Act first needs to survive two further votes in the Sejm, followed by approval by the Senate. If and when adopted by both houses of parliament, the Act will then be submitted to the President for signature. Once legislation has been approved by both houses of the parliament, the President may not refuse to sign a bill into law. The President may, however, before signing a bill into law, seek the opinion of the Constitutional Tribunal on the bill's constitutionality.

Paul Fogo is a senior attorney with Miller Canfield W. Babicki & Partners. fogo@pl.millercanfield.com