The Polish anti-corruption agency the CBA has sent its operatives to secure paper and electronic documentation concerning the allegations made against Marek Chrzanowski, until yesterday the head of the Financial Supervisory Authority (KNF).
Yesterday Poland’s daily “Gazeta Wyborcza” revealed allegations made by Leszek Czarnecki, the owner of the Getin and Idea banks against Mr Chrzanowski. Mr Czarnecki has filed with the public prosecutor’s office recordings made of his conversation in March of this year with Marek Chrzanowski. It is alleged that at the meeting between the two men Mr Chrzanowski proposed that the bank owner pay a substantial bribe to insure favourable regulatory treatment by the KNF.
CBA is in the process of securing all documentation relating to KNF activity on Mr Czarnecki’s banks and the “Getback” debt management company that came close to collapse earlier in the year.
Meanwhile Mr Chrzanowski, who resigned from his post with the KNF yesterday, returned home from his trip to Singapore. He visited KN to file his resignation papers. He is still officially employed in the authority until the end of the year, however he does not have any access to his computer or former office. His cell phone is still active, but without access to e-mail or other data.
Chrzanowski’s position was untenable
The resignation of Mr Chrzanowski is a relief for the government as KNF heads are not easy to dismiss. However, his position was untenable. The very fact that he held such talks with a bank owner and that he suggested that Mr Czarnecki hire a recommended lawyer is serious enough, even if the allegations of a bribe being sought turn out to be unsubstantiated. That in itself compromised the KNF and was a deeply unprofessional act.
Was there an attempt to take over Mr Czarnecki’s banks?
The allegation being put forward is that the President’s representative on the KNF was attempting to create a scenario in which the troubled banks would be taken over by other entities. This action by Zdzisław Sokól, the President’s nominee gave Mr Chrzanowski the opportunity to try and put pressure on the bank owner in order to get him to pay a hefty bribe, allege the Czarnecki camp.
It is important to note that Mr Czarnecki’s banks were indeed in trouble. They had been pushing out shares to investors in the troubled debt management company “Getback”. They were in need of recapitalisation and the KNF is a body responsible for ensuring the safety of deposits.
The affair around the Polish Financial Supervision Authority (KNF) continues as accusations against more members have been filed.see more
Questions for the investigators
It is inevitable that investigators will now ask why it took Mr Czarnecki over six months to report the attempt to extort money from him. Is he attempting to defend against the KNF taking action against the misdeeds of his banks and regulatory decisions on possible take-over of his operations? Is the fact that the filing of the allegations to the public prosecutors came virtually at the same time as the Polish Senate was debating changes in financial regulations affecting the banks pure coincidence?
But there will also be questions which will need to be asked of the government and the KNF. Was there an orchestrated attempt to take advantage of the banker’s problems in order to either take over his companies or at least extract money from them, or was Mr Chrzanowski acting totally on his own?
Government takes firm action
The government has taken firm action to contain the crisis. Not only has it persuaded Mr Chrzanowski to resign, it has also acted quickly to investigate, as the CBA’s presence in the offices of the KNF indicates.
These actions will not prevent the Opposition demanding an enquiry by a special investigative committee of Parliament. But they are a part of trying to ensure calm on the markets.
How will the markets react?
Influential market analysts such as the former member of the Monetary Policy Council Bogusław Grabowski and senior economist Marek Zuber have been quick to reassure that the scandal over Mr Chrzanowski’s actions and resignation should not affect the markets.
This is not the first time that the heads of national banks or financial supervisory authorities have been accused of corruption. The heads of the Cypriot, Latvian and Italian national banks, and the heads of the financial supervisory bodies in Japan and China have faced such scandals without lasting damage to the markets and economies of those states.