From June 2020 to May 2021, NIK conducted an audit: “Performance of tasks by the Fund for Victims Support and Post-Penitentiary Support – the Justice Fund”. The audit covered 21 entities: the Minister of Justice (Justice Fund Administrator) and 20 beneficiaries of the Justice Fund (14 non-governmental organisations, 4 universities, one state-owned organisational unit conducting research activity and one provincial hospital). That was the first comprehensive audit of the Justice Fund conducted since 2017 when the new law came into force which fundamentally changed the principles underpinning the Fund’s financial economy.
NIK negatively evaluated efforts of the Justice Fund Administrator to provide suitable legal and organisational conditions for the Justice Fund’s functioning and the manner of using public funds at the Administrator’s disposal.
An amendment to the Executive Criminal Code adopted in August 2017 and the Ordinance on the Justice Fund issued by the Minister of Justice in September 2017 resulted in creating an open, underspecified catalogue of the Justice Fund’s tasks. Following that amendment an unlimited category of activities could be financed from the Fund’s resources, if only they related, at least minimally, to the Fund’s underspecified objectives, such as: crime prevention; backing and development of the system of crime victim support, post-penitentiary support and crime cause prevention; performance of statutory tasks of public finance entities related to protection of crime victims’ interests as well as detection and prevention of crime. Additionally, the Fund Administrator consistently used broad interpretation of the Fund’s tasks, pointing to their “holistic” nature. He claimed that any social or economic changes considered positive by himself (in areas such as: education, social and family policy, labour market or religious values) could be financed from the Fund’s resources as part of crime prevention. The lack of a precise, normative definition of the Fund’s tasks and its Administrator’s acceptance of arbitrary use of the Fund’s resources were glaringly inconsistent with the overriding principle arising from the Public Finance Act. In line with that principle, earmarked funds are designed to perform strictly specified state tasks. However, the Justice Fund broadly supported tasks financed from various budget parts, even other earmarked funds. In practice it meant that the Justice Fund no longer operated as an earmarked fund in the audited period.
The absence of legal restrictions was also related to mechanisms of selecting the Fund beneficiaries. Detailed analysis of 16 open competitions for projects to allocate tasks to NGOs showed that the Administrator did not prepare them properly. As a result, competition committees evaluated the quality of projects in an arbitrary and discretionary manner. At the same time, the Administrator took unfounded, arbitrary decisions to annul competitions or refuse subsidies to some entities which were highly-graded by competition committees. It is worth noting that the Administrator authorised himself in the Ordinance on the Justice Fund to take such decisions. The discretionary nature of decisions taken by the Minister of Justice in terms of using public funds was even more visible in case of public finance entities. Most subsidies (60%) were granted without a call for projects. At the same time, it was not justified why this peculiar procedure was applied, where beneficiaries were selected by way of arbitrary decision of the Fund Administrator.
NIK negatively evaluated measures of the Minister of Justice related to performing subsidy contracts to allocate the Fund’s tasks. The main reason was that the Justice Fund regularly subsidised initiatives which were by no means related to its objectives (or were related to a marginal extent). That situation had adverse impact on the pursuit of the Fund’s primary objectives in terms of compensating crime consequences and post-penitentiary support. As a result, only 34% of subsidies (about PLN 228.5 million of over PLN 681 million) granted from the Fund’s resources was paid directly to crime victims (and their close ones) in the audited period and only 4% (a bit more than PLN 24 million) was earmarked for post-penitentiary support. Other subsidies were mainly related to: crime cause prevention (144 contracts for about PLN 171 million), support of Volunteer Fire Departments (2455 contracts for nearly PLN 141 million) and healthcare facilities (121 contracts for over PLN 35 million), construction and furnishing of a facility for adults in coma (one contract for over PLN 37 million).
NIK’s negative evaluation was mainly related to tasks ordered by the Fund Administrator as part of the Fund’s new objective (introduced in 2017), which is the crime cause prevention. As much as 25% of the total value of earmarked subsidies was granted for that purpose (over PLN 171 million). Since that term was not defined in the law and the call for projects was organised without due diligence, the Fund Administrator financed tasks that were not related to the Fund’s objectives and not directly related to crime prevention. They included organisation of a conference on cooperation prospects within the Visegrad Group, education of local managers, educational and pedagogical activity addressing adolescence-related issues. Other contracts questioned by NIK were related to initiatives referred to by the Fund Administrator as research projects. They did not comply with standards for research projects and were primarily designed to support statutory activity of the entities realising them. Of the total number of 16 examined contracts, which were assumed to prevent crime, NIK evaluated 13 of them as unreasonable and uneconomic. As part of those contracts, over PLN 63.3 million subsidies were granted.
NIK positively evaluated the fact that the Fund Administrator created a crime victim support network covering all districts. The calls for projects were not properly organised, though, and did not ensure optimal selection of entities to support beneficiaries. That had severe consequences on crime victims. Their situation got much worse in Opolskie Province and ended in a direct threat to life and health to some minor beneficiaries from Śląskie Province.
Besides, the audit revealed that in some cases the Fund financed assistance to persons who were not crime victims (e.g. legal counselling in typical civil law cases or help in exchanging correspondence with the Social Insurance Institution (ZUS) as part of one’s business activity).
In other cases the Fund Administrator financed current activity of local government units selected by himself on an arbitrary basis, under the pretence of supporting crime victims. The Minister of Justice took decisions to finance those tasks without due diligence because he lacked objective data confirming the legitimacy, scale and desired results. At the same time, the Fund Administrator withdrew from originally planned undertakings that could have real impact on the situation of crime victims or crime cause prevention. First of all, without any justification, the Minister of Justice gave up the construction or adaptation of child-friendly hearing rooms. He also resigned from designing and building infrastructure to improve road safety, pedestrian crossings in particular. It needs to be underlined that financing of tasks related to the said child-friendly hearing rooms in law enforcement agencies and courts was the key argument raised by the legislator and the Minister of Justice as a rationale for the amendment to the Executive Criminal Code and the new Ordinance on the Justice Fund which enabled financing of public finance entities’ statutory tasks from the Justice Fund’s resources.
NIK negatively evaluated the way the Fund Administrator promoted the Justice Fund. In the audited period, some activities were started based on NIK’s recommendations from its previous audits to ensure better recognisability of the Fund and help beneficiaries expand their knowledge about available forms of support. The audit showed, however, that the Fund Administrator’s efforts were far from the actual recommendations of NIK. They ranged far behind the education of potential beneficiaries and aimed to promote activities of the Minister of Justice and his Ministry, in areas such as the relations of Poland with the EU institutions or a reform of the administration of justice.
The abovementioned irregularities resulted among others from the lack of proper planning of the Fund’s activity areas and the failure to define problems that were to be solved by public spending. The audit revealed that programmes approved by the Fund Administrator were not based on objective data and were not consulted with specialised entities. Besides, the Minister lacked staff and expertise to properly plan, control and settle expenditures which exceeded PLN 350 million in individual years. That was mainly an outcome of the Administrator’s decision who consistently, without proper analyses expanded the Fund’s activity areas (in 2018, since he decided to further equip the Volunteer Fire Service, the number of subsidy contracts went up by nearly 900%!).
In the light of the said unprecedented audit findings, NIK found it essential to take urgent steps to make sure the resources of the Justice Fund are spent in line with the requirements set out in the Public Finance Act, i.e. in line with the principles of economy and purpose, value for money and use of optimal methods and measures to achieve assumed objectives. It is also pivotal to restore the financial economy principles applicable to earmarked funds under the Public Finance Act, with regard to that Fund. In view of the above, NIK addressed 21 detailed recommendations in its audit report to ensure effective and transparent use of the Fund’s resources. Also, according to NIK, legislative works need to be started to amend the Executive Criminal Code and the Ordinance on the Justice Fund to limit the Fund’s objectives to its two originally defined areas, i.e. support of crime victims (and compensation of crime consequences) and post-penitentiary support. In the opinion of NIK, this is a prerequisite to make sure public funds are used and settled effectively and in compliance with the Public Finance Act.
In view of the necessity to take the said urgent remedy actions, out of concern for the condition of public finance with the aim of improving the situation of crime victims, NIK President, acting under the Act on NIK, notified the President of the Council of Ministers, the Vice-President of the Council of Ministers and the Head of the Central Anti-Corruption Bureau about NIK’s observations, evaluations and recommendations included in the audit report addressed to the Minister of Justice. NIK President requested the President and the Vice-President of the Council of Ministers to take immediate efforts to ensure economic and legitimate use of the Fund’s resources. At the same time, NIK requested the Head of the Anti-Corruption Bureau to take relevant measures to clarify circumstances of the irregularities identified by NIK, including the mechanisms fostering corruption, in particular. Until the audit publication date, although statutory deadlines passed, NIK did not receive any response from the Prime Minister or the Deputy Prime Minister. The Head of the Anti-Corruption Bureau stated at the same time that he is not a competent authority in this case.
NIK President also filed a motion to the Constitutional Tribunal to establish that the Ordinance on the Justice Fund is inconsistent with the Executive Penal Code and with the Constitution of the Republic of Poland.
