Tax authorities in Poland branded "unaccountable"

by Martin Banks

After the Polish Foreign Minister assisted his French and German colleagues to topple the Ukrainian dictator it is may be time to solve an internal problem: the KGBish Polish tax police. It is said the country´s tax officials can detain without charge any business executive they do not like. Nor are they obliged to present to courts within a reasonable delay clear evidence or proof to justify their arrests.

One Polish centre-right MEP said, "What is worse are the reports that tax police are allowed to keep some proceeds from any interventions they make, which gives them an incentive to suspend businesses from operating until moneys are paid over." His comments come after it emerged that in 2011, Poland secured $18.9 billion of foreign direct investment according to the OECD. 

This was a remarkable achievement during the period when most EU economies were still reeling as a result of the 2008 world banking crisis and the slow down in credit and investment. The 2011 figure was an increase of $5 billion on the previous year and showed that the Polish Government with its Anglo-Polish Finance Minister Jacek Rostowski, represented one of the countries foreign businessmen were confident to invest and do business in.

But the latest FDI figures published by the OECD and the UN Trade Organisation show a dramatic slump to just $3.4 billion.

The respected Heritage Foundation 2014 report, which scores countries' performance across a range of economic measurements, also shows that Poland has a poor score for business corruption.

Mr Marek Kmetko, a Polish-born businessman who now lives in Switzerland, said, "Compared to a similar sized country, Spain, which also left a background of political authoritarianism, Poland just cannot shake off a bad reputation for a poorly functioning relationship between foreign companies, local Polish business executives and the Polish state authorities."

The main complaint of business concerns the approach of the tax police in Poland who said to operate in a way unknown in other Member States. 

If for personal or political reasons, the director of the local tax police wants to shut down a company which they allege is guilty of some breach of Poland's complex business and social security tax laws, they can do so without any obligation to explain their actions.

Business journalists and business lawyers in Warsaw are aware of the behaviour of the Polish tax police which dates back to communist era operations. But the high state authorities admit privately that they are powerless to reform the way some prosecuting officials work.

When key managers or executives are removed from day-to-day operations a business stops functioning and all employees down the employment chain have to find other work if they can. 

Polish unemployment rose to 14% in January 2014 - well above the EU average - as a result of this loss of business confidence in the country.

Moreover, it is argued that Poland exports its unemployment westwards to other EU Member States who have to offer work to Poles who cannot find jobs in their own country because of the lack of confidence from investors and business executives who fear that they will face arbitrary harassment or even arrest by local prosecutors working with the tax police in a manner unknown anywhere else in the EU.

The Polish MEP who spoke to EBR declined to be named for personal reasons but said he had raised his concerns "at the highest levels" of the EU. He said, "It is always difficult to criticize police raids. Polish politicians can easily face accusations, justified or false, of dubious relationships with the business world; for this reason they are reluctant to criticize or investigate the tax police.

"Any politicians who dare to raise the issue can find themselves smeared in the different media outlets in Poland as the Polish police operation still retains many of the arts of the pre-1989 era of black propaganda, disinformation, blackmailing and the threat of media exposure."

Mr Kmetko agrees, saying, "In the end the behaviour of the tax police does serious damage to Poland by discouraging foreign investors and Polish citizens living elsewhere in Europe or North America who would like to help their country of origin but are not confident that they will receive fair and proper treatment.

"Once the European Parliament elections have been held, a new generation of Polish MEPs should address this problem and send out a clear signal that the era of arbitrary and politically or "cash" motivated arrests, detentions and the destruction of businesses by the tax police and their friends in Prosecutors' offices will come to an end once and for all."