Poland's law to weed out communist-era spies risks chaos in business

By bne IntelliNews March 26, 2007

Jan Cienski in Warsaw -

Poland's government is sending increasingly mixed signals to business as the conservative ruling Law and Justice party tries to build support in the political centre by suggesting pro-business reforms, while at the same time causing corporate consternation by demanding that people account for their actions under communism, a key issue for the party's right-wing voters.

While seeking the loosen the chains that tie down business, the government is also behind a new so-called lustration law that came into force earier this month, under which every Polish citizen who is a member of the board or a manger of a company listed on the Warsaw Stock Exchange will have to state whether or not they informed for the Communist-era secret police.

The law covers everyone born before 1971. Those who do not submit statements by May 15, or who lie about their pasts, face a decade-long ban from public posts.

The law also theoretically covers the 13 foreign companies listed on the stockmarket, but the government has admitted there are no sanctions if their boards and managements to not comply with the new regulations.

The provision is causing growing alarm in business circles, who worry it will cause chaos. "We can expect a lot of confusion on the market," says Beata Stelmach, president of the Association of Stock Exchange Issuers, a grouping of companies listed on the exchange. "I hope there won't be a huge mess but I am convinced that a lot of people on boards will not lustrate themselves, not because they have something to hide but because that is human nature."

The new law will be administered by the Institute of National Remembrance (IPN), which has custody of all of the secret police files left over after the collapse of communism. However the IPN is only beginning to gear up for the laborious process of vetting as many as 700,000 declarations that will flood in over the coming weeks.

As well as exchange-listed companies, banks, pensions funds, journalists, local and national politicians, lawyers, directors of public and private schools and university professors are also covered by the bill. The government has said that it could take as long as 15 or 20 years to fully verify all the declarations. That leaves businesses in a state of uncertainty, unable to be confident that their managers or board members are ever legally in the clear.

Business-friendly face

On the pro-business front, the government is promising to introduce a raft of legislation aimed at slashing away the bureaucracy that impedes a lot of business activity.

In a widely trumpeted announcement, Jaroslaw Kaczynski, the prime minister, promised to reduce the amount of time needed to register a company from 31 to only three, part of a package he said would "break that chains which limit entrepreneurs."

Michal Krupinski, the deputy treasury minister who is responsible for the legislative initiative, says: "We do see the problem and we are trying to deregulate."

Business groups have long denounced the thickets of bureaucracy that have grown up in Poland since the early 1990s, when there were very few restrictions, but they are sceptical that the ideas being pushed by Law and Justice will amount to much, noting that most of the legislation has been before parliament for the past three or four years.

The duelling approaches to business are a result of the government's political problems. Opinion polls show Civic Platform, the largest opposition party, taking a significant lead over Law and Justice. The ruling party has decided to try and fight for the centrist, pro-business electorate, which has migrated to Civic Platform.

However, the government is loath to neglect the needs of its right-wing core supporters, for whom ridding Poland of all traces of communism is an issue of paramount importance. These voters tend to be more suspicious of business interests. The end result is mixed signals being sent both to voters and to business.

"The promise of easing difficulties while at the same time adding new ones does not remove barriers to entrepreneurship," said the Polish Business Council.

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