Legal limbo
Without this verdict, an "economic vetting" law currently being drafted would have required private-sector executives to submit wealth declarations. Businesspeople, both foreign and domestic, shouldn't get too comfortable yet though, as the draft law could be changed at any moment, dragging them back into the vetting process
Just as the Constitutional Tribunal was reaching a verdict on the Vetting Act in the headline-making struggle between Law and Justice (PiS) and the judiciary, another law on vetting was quietly being worked on. The draft bill stipulates that people holding public positions will be required to undergo economic vetting - that is, submit a wealth declaration concerning the last five years.
"Only bold and firm steps can improve the public's opinion of us," Deputy Prime Minister Przemysław Gosiewski said. He explained that the existing regulations (such as wealth declarations) need to be more firmly implemented in order to reduce corruption.
The draft proposal lists 29 professions that will be eligible for economic vetting. Among them are public clerks and politicians, as well as members of supervisory and management boards of companies in which the State Treasury holds the majority of the shares. However, Article 2 of the bill states that it "also applies to all other people considered to be holding public positions based on other regulations."
Unconstitutional regulation
One of those "other regulations" is the infamous Vetting Act, which was declared unconstitutional in its current form by the Constitutional Tribunal a fortnight ago. That law stated that members of the supervisory and management boards of all companies overseen by the Polish Financial Supervision Authority (KNF) are considered to hold public positions.
"This meant that until the Constitutional Tribunal's decision [that the Vetting Act was unconstitutional], representatives of private companies listed on the Warsaw Stock Exchange were required to disclose their incomes," said Roman Rewald, Chairman of the Polish-American Chamber of Commerce (Amcham).
By putting an end to the Vetting Act in its previous shape, the Constitutional Tribunal in theory eliminated the danger of private-sector managers having to present their wealth to public scrutiny. However, it is possible that a revised version of the law will maintain the assertion that members of the boards of companies overseen by the KNF will be considered to hold public functions after all. As a result, representatives of the private sector are still unsettled. They also wonder whether Article 2 of the economic vetting bill was just a legislative error, or whether it was intentionally added to ensure the private sector would be subject to vetting.
"For us as representatives of foreign investors, either option is a bad signal," Rewald said. "Even if it was just a legislative blunder it makes Poland look like a third-world country," he explained. Although Rewald acknowledges that the Constitutional Tribunal clearly expressed its stand on vetting representatives of the private sector, he said that this does not mean that the threat has disappeared. "Article 2 is still there and with it there is still a possibility that we will find ourselves in the same situation," Rewald said.
The president of the Confederation of Polish Employers (KPP), Andrzej Malinowski, also said he is worried that the government might try to return to the stipulation concerning the private sector while the draft laws are being worked on in the Sejm committees.
Withdrawal symptoms
What could vetting in the private sector mean? Apart from the fact that management and supervisory board members would have to disclose their wealth as well as that of their spouses, it could affect the way investors look at Poland.
"People (especially foreigners) could resign from boards, investors could pull out of the capital market ... Many might even stop looking at Poland as an investment center," says Rewald. He isn't the only one thinking that this would hurt Poland's reputation as an investment destination. "Foreign investors prefer to go to places where it's more convenient for them to invest," said Malinowski.
But the legislators see the problem differently. "The goal of the economic vetting bill is to eliminate corruption," said Andrzej Dera, a PiS deputy overseeing the work on the draft bill. Experts are unsure whether economic vetting can in fact eradicate corruption, however, "We will not get rid of corruption through restrictions. The problem is in poor legislation, which leaves doors open for interpretation," KPP's Malinowski said.
Bureaucratic oversight
PiS' Dera explained that the reason Article 2 was added to the draft economic vetting law was because its authors wanted to ensure that everyone holding a public position would be included in the bill without having to change it in the future. "Now we have to sit down and discuss how to eliminate all the mistakes and misunderstandings," Dera said. He stressed that "there was no intention to include the private sector among those eligible for vetting."
Although Rewald understands the motivation behind the economic vetting of the management and supervisors of state-owned firms - as a result of their close political associations - others aren't convinced that it will do the public sector much good. "This is a further blow to state-owned enterprises," Malinowski said.
"The salary cap has already resulted in inexperienced, lower-class managers working in them," he explained. Offering salaries four times higher than public companies, the private sector easily attracts the best managers. As a result, the KPP president explained, many managers in state-owned enterprises are "political nominees." "Now with economic vetting, the best managers will be even less likely to work for firms owned by the Treasury," Malinowski concluded.
Further limitations
Even Dera notes that state-owned companies "are already subject to some limitations ... We will have to discuss the possible consequences of further limitations," he said, adding that those sitting on supervisory and management boards of publicly owned firms are in charge of public money and must be held accountable.
The restrictions imposed by the draft bill are not only limited to making income declarations. According to Polish commercial law, anyone eligible for economic vetting under the draft law would not be able to hold positions on more than two companies' supervisory boards. The restrictions would also mean that any person holding a public function would face a three-year ban on taking an active role in the management of a company. That would mean politicians, for example, would be restricted from working for companies they were involved with in their political capacity. This might work well for politicians, but would be a serious obstacle for businesspeople in companies with a majority of shares in the Treasury's hands, who might find it difficult to find employment elsewhere.
Absurd idea
Malinowski sees these restrictions as absurd. He explained that very often in large capital groups members of the board of the mother company also hold positions on the boards of daughter firms. Now, according to the proposed regulation, this will no longer be allowed. "Whoever wrote this draft has no idea about the realities of the economy," Malinowski said.
Entrepreneurs and business circles promise to keep a close watch on the legislative process of the controversial bill. "We will be watching the legislative process of this bill very carefully," Rewald promises. "We have the same postulate to the government - to get rid of the stipulation which allows an open list of those required to undergo vetting," he concludes. The KPP president is determined to stand up against any regulation meddling in the private sector.
"I'll not back down from any interference in the private sector. I'll immediately take this law to the Constitutional Tribunal," Malinowski declared. "We as entrepreneurs should be dealing with the future of our enterprises, not worrying about clerks," he concluded.
