Civil Protection and Civil Defence Fund (a repeat of history?)

The proposed normalization raises my serious doubts, both of a legal-constitutional, legal-commercial and practical nature.

So far, the information disclosed regarding the disposition of funds that fed into the Justice Fund, for example, should have given rise to in-depth reflection on the part of those in power and legislators. Nevertheless, the necessary foresight, reflected in specific statutory guarantees, was lacking.

The motives cited in the published explanatory memorandum to the law are laudable and refer to the constitutional principle of protecting life (Article 38 of the Constitution), as well as the imperative to ensure the safety of citizens (Article 5 of the Constitution).

Nevertheless, the above canons should have been confronted (already in the justification) with the principles of protection of private property and openness of entities performing tasks of public authority.

In its current form, the proposed regulation is too labile and indefinite, thus failing to meet the requirement of proportionality and unambiguity expected of the legislator, as well as providing a moral hazard for policy makers.

First, the catalogue of companies of significant importance to the state’s economy is determined, in accordance with the law's delegation in Article 31(2) on the principles of state property management, by the Prime Minister by decree. As a consequence of the above, it is up to the will (including political will) of the current Prime Minister which company will be obliged to allocate annually at least 3% of investment expenditures for the previous year for investments related to ensuring the implementation of civil protection tasks.

It is worth noting that the above list of relevant companies can include virtually any entity, even with a negligible ownership stake of the State Treasury. The above rule also applies to public companies (currently, for example, Orlen, KGHM, WSE, PHN), which will indirectly affect the economic depletion of the rights of listed shareholders. Significant companies and their partners or shareholders are not provided with any means that balanced economically and purposefully the above tribute to civil protection tasks.

Second, according to the proposed regulations, the subsidy of material companies for public purposes is to be at least 3% of investment expenses. The provision under review lacks an indication of the upper ceiling of this amount due, which also creates further risks. First of all, it is unclear who will specify the amount payable for civil protection tasks, whether it will be a circular from the government or perhaps an autonomous decision by the board of directors or general meeting of the material company. Leaving such wide discretion on the side of the company's management and, for example, the Council of Ministers, raises the danger of political corruption, i.e. buying favour with those in power by managers of companies, including public companies.

The draft lacks a requirement for the approval of the company's ownership body (either the shareholders' meeting or the general assembly) to allocate a specific amount for a public purpose, which raises questions from the point of view of protecting the ownership of the company’s shares and leaves too wide a margin of discretion for the boards of directors of these corporations.

Thirdly, the mechanism for calculating capital expenditures for the previous year is unclear, i.e. whether the amount of these expenditures is to be estimated by the company’s management board or derived from the most recent annual financial report, and if so, whether it is a report that has just been prepared or one that has already been approved.

Fourth, the criterion for allocating the tribute to investments related to ensuring the performance of civil protection tasks can be understood in an arbitrary and opportunistic way. Therefore, there is a risk that huge transfers for legitimate public purposes will be used according to the ad hoc wishes of those in power, often motivated by personal or political interests. Especially since the concept of civil protection encompasses a broad spectrum of activities for the protection of citizens in emergency situations occurring: in everyday situations, standard functioning of the state, and in state emergencies.

Fifth, the way in which the tribute is used for investments related to ensuring the performance of civil protection tasks can be shrouded in a veil of secrecy for many years (e.g., until there is a change in the political authority responsible for spending the funds). In this case, the lack of transparency is fostered by the peculiarities of civil protection tasks, which, due, for example, to the interests of state security, are, as a rule, subject to many exemptions from openness.

The instruments provided by the provisions of the Law on Access to Public Information, or the company's shareholder's right to information (Articles 428-429 of the Companies Act), may not be sufficient remedies calculated to ensure openness. Trading practice indicates that the hubs of entities obliged to provide information often abuse the right to refuse to answer, citing vague concepts, which will be significantly facilitated in the case of the implementation of public protection tasks.

Nor is it clear that the remedy for possible abuse will be, for example, an audit by the Supreme Audit Institution, which, in the case of Orlen, for example, has already encountered difficulties in another case.