WARSAW (Reuters) – Polish ruling party lawmakers are seeking to bring central bank governor Adam Glapinski before a state tribunal in a process that could remove him from his post.
Below are the main accusations and procedural steps that need to be taken to hold him responsible for allegedly breaching the constitution. He denies any wrongdoing.
BUDGET DEFICIT FINANCING
Lawmakers accuse Glapinski of indirectly providing budget deficit financing in the amount of 144 billion zloty ($36 billion) under a quantitative easing program during the COVID-19 pandemic.
This included buying government bonds or bonds issued by the state-owned Polish Development Fund (PFR) and state-owned development bank BGK, which benefited indirectly from National Bank of Poland (NBP) actions, while the actual beneficiary was Poland’s Treasury, the motion says.
The operations, carried out to finance government funding for businesses suffering from the pandemic slump, were carried off-budget, breaching the constitution, which bars the central bank from financing government borrowing.
The financing of the borrowing continued until November 2021 while inflation surpassed the central bank’s target range and fuelled more price pressure, the motion says. The actions may have been based on an informal agreement between the central bank and the government.
The probe will also aim to determine if financing of government borrowing was deliberate or unintentional, stemming from the mistaken assumption that it was legal. CENTRAL BANK STANCE
The central bank said the quantitative easing programme was in line with the law and that the accusations against Glapinski were an attack on the independence of the bank.
Glapinski says he has always done his job independent of political influence.
The governor has defended his record, pointing to a sharp fall in inflation over recent months and saying that quantitative easing was essential to rescue the largest economy in the east of the European Union during the pandemic.
WEAKENING OF THE ZLOTYAccording to the motion, Glapinski stood behind currency interventions that lacked the proper authorization of the NBP board, while some aimed at weakening the zloty. The governor also mislead the finance ministry, the motion says, projecting the bank would earn a profit of 6 billion zloty in the summer of 2023, while knowing that the NBP forecast projected a loss of at least 17 billion zloty.
The central bank governor acted against monetary policy guidelines by buying government-backed bonds in 2021 and in 2023 cut interest rates, which was aimed to support the ruling party and led to zloty depreciation and thus breached the constitution, according to the motion.
Glapinski is also accused of impeding the jobs of some members of the rate-setting Monetary Policy Council (MPC) and the NBP board by barring their access to the NBP documents, including MPC minutes, and of orchestrating the misrepresentation of the voice of some members in meeting minutes.
BONUSES, POLITICAL CAMPAIGNING
The governor accepted a system of quarterly bonuses that were paid to him irrespectively of his performance, breaching central bank law, the motion says. Lawmakers say Glapinski, a long-time ally of the former ruling Law and Justice (PiS) party, publicly engaged in campaigning in favour of PiS, which breaches the constitution.
WHAT LIES AHEAD?The proceedings to be held in the Constitutional Accountability Committee in parliament are likely to take months as lawmakers will examine official documents and take testimonies from an extensive list of witnesses.
Aside from Glapinski, dozens of other officials and executives are expected to be called including Jaroslaw Kaczynski, the leader of PiS.
The list also includes members of the NBP board, MPC members, former finance ministers, as well as former CEOs of PFR, BGK and Poland’s top state-controlled banks PKO BP (NYSE:) and Bank Pekao.
After the proceedings, the Committee submits a request to the lower house of Parliament, or Sejm, to hold the central bank governor constitutionally accountable before the State Tribunal or to discontinue the proceedings. The decision on the matter is being made by the Sejm in a vote.
If a request is adopted, the speaker of parliament sends an indictment to the head of the State Tribunal, otherwise the case is discontinued. The tribunal is both a court of first instance and a court of appeal. If it finds Glapinski responsible it rules the governor could lose his job.
($1 = 3.9745 zlotys)
