How will the Warsaw reprivatisation scandal affect Polish politics?

by Aleks Szczerbiak

Polish politics this summer was dominated by a scandal involving irregularities in the return of Warsaw properties confiscated under communist rule. The so-called reprivatisation scandal is the most serious in the capital’s recent history and, given that the Warsaw mayor is a leading figure in the country’s main opposition party, has the capacity to shake up the national political scene.

Warsaw mayor under fire

Warsaw mayor Hanna Gronkiewicz-Waltz – who is a member of the centrist Civic Platform (PO), Poland’s ruling party between 2007-15 and currently the main opposition grouping – came under intense scrutiny during the summer months for alleged irregularities over the settlement of compensation claims for properties and businesses expropriated during the period of communist rule. After the Second World War the so-called Bierut Decree legalised the confiscation of almost all private land in the centre of Warsaw; justified by the need to speed up reconstruction but often without compensation for the owners. This legacy of expropriations has troubled Polish governments since the end of communist rule in 1989 and while many of the claims for restitution have been legitimate the so-called ‘reprivatisation’ process also created a lucrative business with the potential for abuse.

The Warsaw scandal broke when the liberal-left ‘Gazeta Wyborcza’ newspaper published revelations of property restitutions carried out by lawyer Robert Nowaczyk. Allegations of impropriety initially surrounded one of the most expensive plots of land in the centre of Warsaw, with an approximate value of 160 million złoties, located at the pre-war 70 Chmielna Street address which was turned over incorrectly to Mr Nowaczyk when he bought the claims to it in 2012. A few weeks after issuing a decision to return the plot to Mr Nowaczyk, deputy director of the Warsaw Bureau of Land Management Jakub Rudnicki, who co-owned a property with the lawyer in the Southern Polish town of Zakopane, resigned from his job as the city hall official in charge of returning confiscated land. Meanwhile, finance ministry documents showed that the original Danish owner of the property had already been compensated for it years earlier.

Mrs Gronkiewicz-Waltz admitted that the transfer of the Chmielna Street plot was premature and promised to set up an independent audit and commission of inquiry to clear up the scandal and look into all restitutions dating back to 1990. However, she refused to resign claiming that she was unaware of the irregularities and attempting to shift the blame onto the finance ministry for failing to provide sufficient information. Her initial response was limited to dismissing three city hall officials involved in the process saying that they had not performed proper due diligence. Arguing that the whole Polish political class was responsible for not sorting out the reprivatisation issue and that malpractice had been occurring under her predecessors, Mrs Gronkiewicz-Waltz called for the passage of a wide-ranging law regulating the compensation process introduced in parliament by Civic Platform in September.

However, although they did not accuse her of outright corruption, Mrs Gronkiewicz-Waltz’s critics argued that she was politically responsible for the scandal, ignoring warnings from local civic organisations and the right-wing media and failing to take sufficient control over a process where millions of złoties were at stake. They said that it will be difficult to find an independent audit firm that has no conflicts of interest in the reprivatisation process and that the proposed commission of inquiry was simply a way of buying time. The mayor’s critics also pointed out that Civic Platform failed to introduce a comprehensive law regulating reprivatisation during its eight years in office. More broadly, the ruling right-wing Law and Justice (PiS) party tried to link the scandal to the well-entrenched, and often deeply corrupt, mafia-like elite networks which they argue have poisoned the relationship between business and politics in post-communist Poland. Mrs Gronkiewicz-Waltz’s situation was further complicated by the fact that her husband’s family were also beneficiaries of a controversial reprivatisation transaction.

Struggling to recover

The Warsaw reprivatisation scandal intensified the crisis faced by Civic Platform which has been struggling to recover from its defeat by Law and Justice in last October’s parliamentary election. Civic Platform saw its vote share fall by 15.1 percentage points to 24.1% and number of seats held in the 460-member Sejm, the more powerful lower chamber of the Polish parliament, decline from 207 to only 138. Earlier, in the May 2015 presidential election Civic Platform-backed incumbent and odds-on favourite Bronisław Komorowski lost to Law and Justice challenger Andrzej Duda. Much of the widespread disillusionment with the political establishment and strong prevailing mood that it was time for change was directed against Civic Platform, which many voters saw as representing an out-of-touch and complacent elite disconnected from the concerns of ordinary people and tainted by scandals.

In January, the party elected a new leader, Grzegorz Schetyna, who was foreign minister in the outgoing government. At the same time, a significant challenger for the leadership of the opposition emerged in the form of the ‘Modern’ (Nowoczesna) grouping formed in May 2015 by liberal economist Ryszard Petru. Mr Petru’s party won 7.6% of the vote in last October‘s election to emerge as the fourth largest grouping in the Sejm, picking up support from voters who felt that Civic Platform had drifted away from its free market roots. Modern’s greatest asset, however, was the fact that, in sharp contrast to the more compromised figures associated with Civic Platform, it did not have the political ballast of having to defend eight years in office. Although he was not in the party’s inner circle for a number of years Mr Schetyna was still associated in the public mind with the previous, discredited administration and  Mr Petru’s party started pulling ahead of Civic Platform in opinion polls.

However, Mr Petru’s party lost its initial momentum as the effect of this ‘newness’ began to wear off. Moreover, Civic Platform retained a number of important political assets, including: a large number of experienced parliamentarians, substantial access to state party funding, a relatively well-developed grassroots organisational network, and a local government base that includes control of most of Poland’s large cities and 14 out of 16 regional authorities, which play a key role in distributing EU funds and are a major source of local patronage. Although Mr Schetyna lacks charisma and dynamism, he is a good organiser and an experienced (and ruthless) political operator who has tried to restore a sense of discipline and purpose to the party. As a consequence, the two opposition groupings are now fairly evenly matched: the ‘Pooling the Poles’ micro-blog that aggregates voting intention surveys shows support for Civic Platform at 20% and Modern at 19%, although both lag well behind Law and Justice on 38%.

Implications beyond the capital

Nonetheless, the Warsaw reprivatisation scandal is a serious problem for Civic Platform with political implications that go well beyond the capital. Along with the other large Polish cities that have provided the bedrock of the party’s electoral support, Warsaw is one of the Civic Platform’s strongholds. As one of the party’s deputy leaders, Mrs Gronkiewicz-Waltz is also among Civic Platform’s most prominent and high profile figures and her 2006 election victory was a key landmark in the party’s march to power. Although Mrs Gronkiewicz-Waltz had previously announced that she will not stand for re-election when her current term of office ends in autumn 2018, the Warsaw mayor clearly had her eye on other high profile positions, with some commentators even speculating that she might stand as Civic Platform candidate in the 2020 presidential election.

Mrs Gronkiewicz-Waltz was Mr Schetyna’s opponent in internal party power struggles, but the Civic Platform leader felt obliged to defend her (albeit without any great enthusiasm) partly because she holds such a powerful position within the party, but also to prevent Law and Justice from taking power in the capital. While her resignation might pave the way for a less compromised Civic Platform politician to take over as Warsaw mayor, finding a replacement would be difficult and there is no guarantee that the party would win the subsequent by-election. In the meantime, her resignation would allow the government to appoint a commissioner to run the city, possibly even until the next local elections in autumn 2018.

Instead, Mr Schetyna, who has spent much of the last nine months securing control of the party apparatus and marginalising his opponents, used the scandal to undermine Mrs Gronkiewicz-Watltz and strengthen his own position in the capital. He forced Mrs Gronkiewicz-Watltz to dismiss two of her deputy mayors – including right-hand man Jarosław Jóźwiak, who was responsible for overseeing the reprivatisation process – and replaced them with one of his own placemen: legal scholar and former parliamentary deputy Witold Pahl. The Civic Platform leader also persuaded Mrs Gronkiewicz-Waltz to stand down as head of the Warsaw party organisation and placed it under the direct control of one of his closest allies: regional party boss Andrzej Halicki.

At the same time, while it is clearly very tempting for Law and Justice to try and deprive Civic Platform of one of its most important power bases, replacing Mrs Gronkiewicz-Waltz with a government-appointed commissioner to run the city is, at this stage, very risky. Without a binding national administrative court verdict of malpractice against Mrs Gronkiewicz-Waltz there could, arguably, be no legal basis for such a move so it could be overturned judicially. Law and Justice will also be concerned that the liberal and centrist opposition could, as part of their ongoing critique of the ruling party that it is undermining democracy and the rule of law (a charge that the party denies vigorously), portray the appointment of a commissioner to run Warsaw until the next local elections as a centralising and authoritarian move.

There is a civic initiative underway for a recall referendum to oust Mrs Gronkiewicz-Waltz, although it could take time for this to gather the requisite number of signatures and even then it may not secure the turnout required to be valid (two-thirds of the number of who voted in the previous 2014 mayoral election). On the other hand, it could actually be in Law and Justice’s interests to keep a weakened Mrs Gronkiewicz-Waltz in office, for the moment at least. Although the ruling party secured a plurality of votes in Warsaw during last year’s parliamentary election, it currently lacks a local candidate able to appeal beyond its core electorate and secure the 50% support required to win a mayoral election, particularly in a city with a large number of better-off voters who are more likely to vote for liberal and centrist political groupings.

The stakes are high

No one can foresee the eventual legal and political consequences of the Warsaw reprivatisation scandal. The government is awaiting the outcome of investigations by the public prosecutor’s office and central anti-corruption bureau (CBA) before deciding on its next move, while Civic Platform is hoping that the issue will fade away or another scandal (preferably involving the ruling party) overshadows it. For sure, unless prominent Civic Platform politicians either have criminal charges brought against them or are linked more directly to the scandal it is unlikely to completely bury Mr Schetyna’s party. However, given that Warsaw is one of the party’s most high profile bastions of support, even if ongoing investigations simply confirm that Mrs Gronkiewicz-Waltz did not fulfill her oversight obligations it will be difficult for Civic Platform to convince voters that it does not bear any responsibility for the scandal. Similarly, a recall referendum would move the issue back to the top of the national political agenda, whatever its outcome. All of this could seriously damage Civic Platform’s attempts to re-build its support ahead of the 2018 local government and 2019 parliamentary elections. So the stakes are high and how Mr Schetyna deals with the issue could be one of the biggest tests of his leadership.

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