Criminal liability for business decisions in Poland. Tightening penalties for white collar crimes in Poland.

Publication date: January 03, 2024

On October 1, 2023, a controversial amendment to the Polish Penal Code entered into force. The changes introduced by it include, among others, tightening penalties for crimes listed in Chapter XXXVI of the Polish Penal Code (hereinafter referred to as the Penal Code), i.e. crimes against business transactions and property interests in civil law transactions. People holding important positions in companies should feel particularly at risk, because in their case the penalties will be much higher.

Penalties for white collar crimes.

Introduced together with the amendment to the Penal Code, Art. 306b of the Penal Code, creates new qualifying types for acts under Art. 296 § 1 or 2 of the Penal Code (abuse of trust in business transactions), Art. 296a § 1 or 4 of the Penal Code (economic bribery of the basic and qualified types), Art. 299 § 1, 2, 5 or 6 of the Penal Code (money laundering) or in Art. 303 § 1 of the Penal Code (unreliable and false economic documentation). These types are based on the amount of property involved in the crime or the amount of damage. And accordingly, in accordance with Art. 306b § 1 of the Penal Code, the qualifying mark is committing an act in relation to property with a value (or causing damage of a certain amount) greater than five times the amount determining the property of great value (PLN 5,000,000), while the qualifying mark under § 2 is the value greater than ten times the amount determining property of great value (PLN 10,000,000).

Therefore, acts previously classified as misdemeanors may, under Art. 306b of the Penal Code be classified as a crime. Article 306b of the Penal Code specifies the penalty for the case mentioned in § 1 to be imprisonment from 3 to 20 years. However, § 2 for causing damage to property exceeding PLN 10,000,000 establishes the penalty of imprisonment from 5 to 25 years. The application of such a high upper penalty limit is also possible thanks to the amendment in question. The previous limit of 15 years was increased twice and is now 30 years. Moreover, 25 years of imprisonment as a separate type of penalty has also been abolished. Therefore, by applying such high ranges of imprisonment, the legislator equates the acts listed in Art. 306b of the Penal Code to the most serious crimes included in the Penal Code.

No possibility of obtaining conditional suspension of the sentence.

Increasing the lower limits of imprisonment for types qualified under Art. 306b of the Penal Code results in the inability for a legally convicted person to obtain conditional suspension of the execution of the sentence. Pursuant to Art. 69 of the Penal Code, the court may conditionally suspend a prison sentence if the following conditions are met:

1. The perpetrator had not previously been sentenced to prison at the time of committing the crime;
2. This is supported by the perpetrator’s attitude and his previous life;
3. The sentence to be suspended was imposed for a period not exceeding one year.

Extended limitation period for criminal liability.

Qualification of new types under Art. 306b of the Penal Code as crimes also drastically changes the issues regarding the statute of limitations for crimes. In the cases discussed, it may be as long as 20 years from the date of committing the crime, while in a situation where criminal proceedings were initiated during this period, the statute of limitations expires after 30 years.

The existing criminal sanctions for the crimes in question, classified as misdemeanors, provided for a statute of limitations for criminal liability for the committed act of 5 to 15 years, and if proceedings were initiated during this period, up to 25 years.

What are the crimes in question?

The new regulations place particular emphasis on combating crimes involving the use of specialized knowledge – regarding, for example, financial markets, law, banking or the tax system. This concerns the so-called white collar crimes. It was in the proceedings regarding these crimes that prosecutors received instructions to demand the most severe penalties, up to 25 years of imprisonment and to demand fines of up to PLN 50 million.

Abuse of trust in business transactions.

Criminal liability for the offense provided for in Art. 296 § 1 of the Penal Code shall be borne by anyone who, being obliged pursuant to a provision of an Act, a decision of a competent authority or an agreement to deal with property matters or business activities of a natural or legal person or an organizational unit without legal personality, by misusing the powers granted to him or failing to fulfill his obligation, causes significant property damage. This provision regulates the basic type of crime of abuse of trust and is punishable by imprisonment from 3 months to 5 years.

The essence of the act is to cause significant property damage as a result of abuse of powers or failure to fulfill obligations. The behavior of the perpetrator of a prohibited act is determined by three elements which, according to the judgment of the Polish Court of Appeals in Wrocław of September 5, 2012, case files number: II AKa 155/12, must occur together, and there should be a cause and effect relationship between them:

1. A formal, specific obligation to act in a specific manner for the benefit of the injured party;
2. Abuse of one’s powers or failure to fulfill one’s obligations;
3. The occurrence of property damage to the injured party’s property as a result of the perpetrator’s performance of functional criteria.

Art. 296 § 2 of the Penal Code is an aggravated type of offense specified in Art. 296 § 1 of the Penal Code. The qualifying mark is the purpose of the perpetrator’s action – obtaining a financial benefit. This sign should be understood as any gain of property to oneself or another person or avoidance of loss therein, except only in cases where such a benefit is due to the perpetrator or another person in accordance with the legal relationship existing at the time of the act.

Basic and qualified economic bribery.

Pursuant to Art. 296a § 1 of the Penal Code anyone who, while holding a managerial position in an organizational unit conducting business activity or being in an employment relationship with it, a contract of mandate or a contract for specific work, demands or accepts a material or personal benefit or a promise thereof, in exchange for the abuse of the powers granted to him or her, fail to fulfill an obligation that may cause material damage to that entity or constitute an act of unfair competition or an unacceptable preferential act for the benefit of the buyer or recipient of goods, services or benefits, is subject to the penalty of imprisonment from 3 months to 5 years. This provision regulates the basic type of economic passive bribery. The same penalty applies to the person granting the benefit.

However, art. 296a § 4 of the Penal Code introduces a qualified type of passive economic fraud. Pursuant to this paragraph, if the perpetrator of the act specified in § 1 causes significant property damage, he or she shall be subject to the penalty of imprisonment from 6 months to 8 years (damage whose value exceeds PLN 200,000).

Money laundering.

Pursuant to Art. 299 § 1 of the Penal Code, the crime of money laundering may be committed by accepting, possessing, using, transferring abroad, exporting abroad, concealing, transferring or converting money, assisting in the transfer of ownership or possession, and undertaking other activities that may prevent or significantly impede the determination of the criminal offense, the determination of the origin, place of residence, detection, seizure or forfeiture of property values referred to in this provision. The perpetrator of the crime of money laundering under Art. 299 § 1 of the Penal Code may be any person and is subject to the penalty of imprisonment from 6 months to 8 years.

However, in the case of an offense under Art. 299 § 2 of the Penal Code, this offense is of an individual nature and specifies that its perpetrator may only be an employee of a financial or credit institution, bank or other entity which, under the provisions of law, is obliged to register transactions and persons making transactions, or a person acting in the name or on behalf of that entity. This offense, in accordance with § 2 of the analysed provision, may be committed by accepting or transferring or converting means of payment, securities, financial instruments or foreign exchange values, or by providing services intended to conceal the criminal origin of these means of payment, financial instruments, securities or foreign exchange values or protect them against seizure. There has been no amendment to the penalty applicable to the perpetrator, which also ranges from 6 months to 8 years of imprisonment.

Additionally, in the provisions of Art. 299 § 5 and 6 of the Penal Code there are included two types of aggravated crimes under Art. 299 § 1 and 2 of the Penal Code.

Unreliable and false economic documentation.

The crime in question, in accordance with Art. 303 of the Penal Code, is related to a failure to keep economic documentation, its content being unreliable or untrue. It should be noted, however, that this is the issue of the documentation that a given entity is obliged to keep under the law. This was also noted by the Polish Supreme Court in its decision of February 2, 2009, case files number: V KK 330/08, in which the Supreme Court stated that documentation within the meaning of Art. 303 of the Penal Code does not cover notes, lists, or registers prepared in connection with the business conducted, which the economic entity has not been legally obliged to prepare.

Entity committing an act under Art. 303 § 1 of the Penal Code is punishable by imprisonment for up to 3 years.

Were these changes necessary?

Legislative path of the Act.

The bill amending the Penal Code was submitted on September 16, 2021 by the Minister of Justice. In the justification for the introduction of Article 306b of the Penal Code, the Minister of Justice noted the need to stratify and further distinguish the types of prohibited acts directed against economic transactions and property interests in civil law transactions, depending on the amount of damage. Moreover, the Minister of Justice justified the classification of these acts as crimes due to their high degree of social harmfulness.

In the initial phase of the legislative process, and more precisely during public consultations, only two comments were received regarding the content of Art. 306b of the Penal Code. They were presented by the Court of Appeals in Szczecin and the National Chamber of Legal Advisors.

Both the Court of Appeals in Szczecin and the National Chamber of Legal Advisors drew attention to the attempt to impose on the courts the obligation of applying a specific penalty, which would lead to a limitation of the judge’s discretion in the scope of the penalty and would be a clear manifestation of lack of trust in the courts’ assessment. These comments were not taken into account because, quoting the position of the Minister of Justice: “The introduction of subsequent qualified types of crimes does not limit judicial discretion, because with each “next or subsequent” type of crime, the scope of judicial discretion increases (the difference between the lower and upper limit of the threat is greater).”

On February 8, 2022, the Council of Ministers decided to submit the draft act to the Sejm, authorizing the Minister of Justice to present the Government’s position on this matter during parliamentary work. This draft does not include any comments regarding Art. 306b of the Penal Code.

The bill was submitted to the Sejm on February 22, 2022. During the work of the committees, there were no comments regarding the discussed article 306b of the Penal Code. Despite the motions to reject the act in its entirety, on July 7, 2022, it was adopted by the Sejm of the Republic of Poland by a simple majority of votes (result: 229 for, 173 against, 39 abstentions).

The act was submitted to the President and the Speaker of the Senate on July 8, 2022.

The Senate, in a resolution of August 4, 2022, moved to reject the bill. It stated that the act adopted by the Sejm of the Republic of Poland is mostly a repetition of the regulations contained in the Act of June 13, 2019 amending the Penal Code and certain other acts, which was found to be inconsistent with the Constitution of the Republic of Poland by the judgment of the Constitutional Tribunal of July 14, 2020. Moreover, the Senate considered the proposed amendment to the Penal Code as repressive, casuistic, extremely restrictive of judicial freedom and retroactive to the state of development of criminal law in democratic societies and the state of research in the field of penal science. The Senate’s position lacked clear criticism of Art. 306b of the Penal Code.

The Sejm of the Republic of Poland rejected the resolution of the Senate of the Republic of Poland on November 16, 2022 and then forwarded it on November 17, 2022 for signing by the President of the Republic of Poland.

On December 2, 2022, the act was signed by the President of the Republic of Poland.

White collar crimes statistics.

According to the statistics of the Polish Police, the number of white collar crimes committed in 2021 amounted to 224,775. As can be seen from the chart below, this is more than in previous years. However, as white collar crimes increased, their detection rate decreased and in 2021 it was only 74.5%. Comparing this with the detection rate from previous years, which amounted to 81.1% in 2020 and as much as 92.4% in 2012, the decrease in the detection of white collar crimes is clear. The legislator rightly notes the need for change, but will tightening criminal sanctions help significantly improve statistics?

Blue line – crimes ascertained

Orange line – crimes detected

Along with the introduction of stricter penalties, it would be necessary to adopt solutions that would increase the detection of crimes. Perhaps the fact that the potential risk of detection is much greater would effectively dissuade potential perpetrators from committing a prohibited act.

Lack of consistency from the legislator – controversies.

Due to the wide range of people who can be accused of the crimes in question, false accusations may become an unfair practice used by competitors or former colleagues. However, there are no solutions indicated by the legislator aimed at protecting the interests of falsely accused entities. As a result, excessive caution and nervous attitude among managers, directors or board members of companies may result in extended decision-making at individual levels of the company, while weakening its current position on the market. Additionally, the fear of often drawn-out criminal proceedings may also have a paralyzing effect on the company’s functioning.