Is it possible to create an economic criminal?

The question posed in the title could be considered provocative, but if we look at some criminal proceedings, especially those publicised in the media, it is not so absurd. We constantly hear about the arrests of representatives of the business community, who are very often remanded in custody. This raises voices of opposition and appeals to the justice system in general to refrain from such actions, especially since there are no violent crimes or traditionally understood criminal groups involved. It is also often said that these arrests are politically motivated. In fact, such cases are widely discussed from time to time, regardless of who is in power. At first glance, this could mean that, according to the law of probability, serious economic scandals arise from time to time and must be addressed. In other words, ‘that’s just the way it is.’ But is that really the case?

One of the most common allegations made in economic crime cases boils down to the claim that funds transferred under a contract, e.g. by an entrepreneur who has undertaken to carry out a specific business venture, EU project or public-private partnership, have been spent in a defective or improper manner, although this is not the only case, of course. It is worth emphasising that such improper spending of funds may concern both contracts between entrepreneurs and, above all, contracts involving public funds concluded between a private and a public entity.

There is no doubt that any irregularities in the disposal of these funds should be thoroughly investigated, including by the public prosecutor’s office. Public funds may be spent in a manner that is clearly contrary to their intended purpose, the objective of the contract and the planned results, and even the interests of the beneficiary itself. Undoubtedly, such actions require the intervention of law enforcement authorities and clarification of the matter, and the form and type of contract concluded will determine the legal classification and direction of the investigation, e.g. towards general fraud, subsidy fraud, actions to the detriment of the company, creditors, etc.

The case may be relatively straightforward, but there are also situations where the money was spent in accordance with the agreement (its purpose) but the planned results were not achieved. In the eyes of investigators, it may also be spent for purposes other than those originally specified in the agreement.

In many cases, including those known from media reports, such performance of the contract is verified by investigators. There are many examples of beneficiaries being questioned about how they spent the funds entrusted to them. For example, it is alleged that an entity simply misinterpreted the purposes for which the money was transferred, hired the wrong people, did not have sufficient own contribution, had deficiencies in its documentation, etc.

The issue of interpretation

It is not difficult to guess that it is very easy for the prosecutor to put forward such a hypothesis – all they need to do is interpret the agreement differently. This already allows for a number of oppressive measures to be taken, which are difficult to defend against.

In such cases, apart from searches, gathering documentation and questioning witnesses, the prosecutor usually appoints an expert to determine whether the contract and the public funds entrusted on its basis were spent as intended. Such an expert, acting on behalf of the prosecutor, is usually tasked with assessing whether there has been, for example, wasteful or improper spending of money, which is often decisive in deciding whether to bring charges. At this stage, only the prosecutor talks to the expert, who is de facto assessing the legitimacy of business activities.

The defendant and his defence counsel will only be able to do so at the court stage, where it would have to be proven that the expert is wrong – and preferably that he admits it himself. It is not difficult to guess that this is unlikely. The vast majority of high-profile investigations are conducted in this way.

One example that comes to mind is the recent high-profile arrests and detentions in cases related to the spending of funds from the Justice Fund, in which the role of prosecutors and, I presume, the experts they appoint, will be to verify whether the money granted was spent in accordance with the agreement. The same will probably be the case in the investigation into persons associated with the Lewiatan confederation, involving alleged fraud against PFRON and ZUS. The proceedings in this case will require verification of whether public funds were allocated legitimately. A prime example is the high-profile case of the National Centre for Research and Development, in which an investigation was launched to verify the reliability of the spending of European Union funds. Recently, there has been a lot of talk about further investigations, e.g. into the merger of Orlen and Lotos. As one might expect, the economic viability of this merger will be reviewed. There are many examples of such proceedings, as they are springing up like mushrooms after rain during a change of government.

Only before the court

As I indicated above, the initiation of proceedings, the presentation of charges, and even arrests and searches are carried out on the basis of a decision by the prosecutor, who acts autonomously in this regard. Some of his actions can only be appealed to the court post factum, but no one can turn back time, and the case has already been publicised (and its fairness publicly questioned). It should also be remembered that, as a rule, the materials gathered during the preparatory proceedings are not disclosed to the suspect or his defence counsel unless a request for pre-trial detention is made. This obviously makes it difficult to challenge the investigators’ hypotheses and attempt to clear oneself of the charges.

The fact that the charge may not be upheld in court is secondary at this stage, as there is still a long way to go before the case is referred to court. As the practice of conducting preparatory proceedings shows, as a result of changes in the leadership of the prosecutor’s office, many of them suddenly evolve – they are suspended, taken over by another unit, and finally discontinued. This is despite the fact that very oppressive measures interfering with personal freedom, such as detention and even pre-trial detention, were previously used in their course. With each change of government, other proceedings gain momentum, while older ones are phased out. All this usually takes place without any change in the legal framework. We have been operating in this model for years, and there are few signs that this is likely to change radically.

The initiation of large-scale investigations into economic crimes, especially those involving large state-owned companies (such as Orlen and Lotos), will invariably attract considerable public interest. Unfortunately, the outcome of these proceedings rarely reaches the wider public.

Author:

adw. Bartłomiej Pietrszka