NIK on the usage of public funds by beneficiaries of the Justice Fund (press conference transmission)

The scale of irregularities identified by NIK concerning the usage of public funds by beneficiaries of the Justice Fund from 2021 to 2025 is enormous. The auditors have identified, among another things, many cases of gross inefficiencies in the disposal of these funds (or even their embezzlement), the conclusion of fictional contracts, the execution of expenditure in violation of law, the acquisition of materials and services at excessive prices. In the opinion of the House, the revealed irregularities in the operation of the Justice Fund point to the operation of a systemic mechanics for the waste of public funds for many years.

The Justice Fund is simply a state-owned peculiar intent fund. The first objectives of the Fund included assistance to victims of crime and support to those leaving criminal establishments. In 2017, these targets were extended to counter crime. According to the Public Finance Act, the gross of the special-purpose fund comes from public funds and costs are incurred in carrying out separate public tasks. The Fund shall be held by the Minister of Justice.

The functioning of the Justice Fund has been of large interest to citizens, the media and public finance professionals for years, especially as we are talking about crucial public resources. For example, in 2023 the revenues of the Fund amounted to over PLN 424 million, which should be utilized to aid victims of crime and to aid return to society to those who end imprisonment. Unfortunately, the usage of this Fund for many years has been in flagrant contradiction with the nature of the special-purpose funds, and the scale and nature of the irregularities found have raised a legitimate outrage over the waste of public funds which should scope the most deprived. In the audit completed in 2021, NIK negatively assessed the actions of the Fund's Member, the Minister of Justice. In addition, it questioned more than 280 million expenditures that were not made in accordance with the rules, not deliberately or economically (more on the implementation of the statutory tasks of the Justice Fund). As a consequence of the audit, 5 reports of suspected crime were sent to law enforcement authorities, as well as a request to the Constitutional Court on the non-compliance of the rules governing the functioning of the Justice Fund with the Constitution of the Republic of Poland and another laws. The findings of the audit were notified to the Prime Minister, the CBA Chief, and above all to the Minister of Justice. In spite of this, the State authorities did not take effective action to destruct the irregularities identified at the time and to implement the findings of the control findings of the NIK, which resulted in the disclosure of further, very serious irregularities during the current audit.

Control (started in 2024) included the Fund’s Commissioner – the Minister of Justice and 22 beneficiaries of the Fund’s funds, with which 30 grant agreements with a full value of over PLN 260 million were concluded. The period under scrutiny is 2021-2025, with the exception that the contracts examined were concluded between 2019 and 2023. This is due to the fact that NIK has mostly examined the contracts for which public funds have already been transferred and at least partially settled by the Fund's Holder.

The results of the checks set out below concern only beneficiaries of grants from the Justice Fund. Control activities with the Minister of Justice have already been completed, but multi-threading, containing many systemic irregularities, the follow-up to the Minister is inactive being prepared.

Given the scale of the irregularities found and the fact that the passage of time could importantly impede or even prevent the Minister of Justice from taking corrective action and enforcing the amounts of over-payments collected, The president of NIK, acting on the basis of Article 62a of the Law on NIK, decided to immediately transfer them to the Minister of Justice in order to take action to recover public funds as shortly as possiblewhich have been utilized by individual foundations and associations with a gross violation of the rules and rules governing their spending.

Since a number of cases have been detected in the audit that point straight to the anticipation of committing a crime, The president of NIK besides decided to supply a set of control documentation to the National Prosecutor to usage the findings of NIK in ongoing investigations. This decision is dictated by the fact that the National Prosecutor's Office is presently conducting a multi-threaded investigation and the fast transfer of material by the NIK is crucial for the essential procedural activities.

At the same time, the president of NIK, acting on the basis of Articles 10 and 73(4) of the Law on NIK, based on the public interest, including the desire to prevent any speculations and conjectures concerning the scope of the information provided to the aforementioned authorities, decided to make public information on the erstwhile findings of the NIK on the functioning of the Justice Fund.

Profeto.pl Foundation

The construction of the "Archipelag – islands free of violence" Centre by the Profeto.pl Foundation is simply a clear example of the misuse of public funds. It is worth noting that even if all the gross irregularities shown by the NIK inspectors during the construction process were disregarded, already from the very presumption of this investment it was clear that in the building, whose cost of the construction was yet estimated at close to PLN 100 million, the aid was to be provided only for 1 year and was to be allocated only PLN 3.5 million for the full amount. (3.6%). In the rest, the building could in practice be utilized freely by the Profeto.pl Foundation for any purpose.

The first grant agreement of April 2020 for the creation of a specialised centre for victims of the crime amounted to PLN 43 million,but in subsequent years it was annexed respective times – by PLN 16 million in January 2022, by PLN 12.7 million in November of the same year and by almost PLN 27 million in May 2023. It is worth noting that the number of days from receipt of requests to increase backing to sign the contract was 4, 1 and 2 days, respectively, and the proposals themselves did not contain a detailed calculation and a sound justification for the increase in costs.

Graphic description

Implementation of the construction investment by Profeto.pl Foundation

• Grant agreement 15 April 2020: PLN 43.3 million
• Annex no. 4, 11 January 2022: PLN 59,3 million (+PLN 16 million)
• Annex no. 5, 30 November 2022: PLN 72 million (+12,7 million PLN)
• Annex no. 6, 17 May 2023: PLN 98.9 million (+PLN 26.9 million)

The full investment costs consisted of: most of the works and equipment, little of the administrative costs and the least of the aid to the victims.

Source: improvement of own NIK based on audit results.

The offer submitted by Profeto.pl was flawed, incompatible and did not meet the requirements of the competition announcement, and the Foundation itself was not prepared to carry out the task. It should be stressed that the Foundation did not have the right to freely dispose of the game on which the investment was to take place (Foundation Profeto.pl owns 7/13 properties and 6/13 belongs to the Assembly of the Priest of the Sacred Heart of Jesus).

The first general contractor for the investment was chosen in a dishonest and uncompetitive manner, and construction work on the site began before obtaining a construction permit. For a period of approx. 1.5 years, the investment was a self-employment, and the amount spent during this period is ineligible and should be reimbursed. As part of the construction project, many materials and services were purchased at overpriced prices, resulting in an unprofitable spending of over PLN 2 million.

Type of expenditure

Foundation expenditure

Actual value of works/purchases

Overpaid

Total

Source: improvement of own NIK based on audit results.

The audit findings besides show that during the implementation of the construction investment by the Profeto.pl Foundation, there was a fraud of PLN 476.9 1000 in public funds, which was to be utilized for the acquisition of sheet metallic and roof windows. In addition, receptions and payments were made for the full amount of over PLN 7.2 million for works which were not actually carried out. Due to the problems of the general contractor, it was essential to re-pay the same works to subcontractors in the amount of PLN 4.17 million. In June 2022, a fresh general contractor was elected, to which remuneration was unduly increased by more than PLN 14.3 million, which the NIK considers to be an economical activity.

In the end, a building of more than 6 1000 square metres with 2 underground and 3 ground floors was built from the funds of the Justice Fund, including:

• 10 method spaces;
• seven directors;
• four recording studios;
• three tutors and interpreters' rooms;
• the performance area for 282 seats, including the associated rooms;
• five ‘Island free of violence’;
• 29 intervention premises;
• underground garage with an area of over 1300 m² with 77 parking spaces, equipped with 29 garage platforms.

The Spirit Strong Foundation

Detailed findings of the ultimate Audit Chamber concerning the implementation of the investment of the Strong in Spirit Foundation from Łódź showed that the amount of the grant amounted to PLN 16 million, of which PLN 11.5 million was intended to cover the cost of the construction investment and equipment of the Multifunctional Training Centre building in the centre of Łódź. However, the offer was not accompanied by a construction task or a cost estimate, and Instead of the planned 15 fresh rooms for the implementation of prevention tasks for children and young people, a four-storey building was built in which 56 rooms were created, including part of them being dedicated to the Foundation's headquarters.

Inflated service prices

The NIK auditors have besides identified cases another than those previously indicated in excess of the prices of services financed by the Justice Fund. For example Alegoria Foundation she purchased services from Profeto.pl Foundation at prices above, at least by PLN 1.8 million marketplace prices (e.g. for conceptual, graphic and IT website improvement Horizons.info 300 1000 zlotys were spent, while the price of this service, according to the expert, amounted to a maximum of 135,000 zlotys. In turn Foundation for the Centre for Harmful Assistance and Crime Prevention paid PLN 590 1000 for the construction of the website == sync, corrected by elderman ==, its maintenance and promotion, i.e. nearly PLN 431 1000 more than the marketplace value of these services, and Warsaw Foundation Seminar of Administration Axiology spent PLN 15 1000 on translation, at a marketplace price of little than PLN 800.

The advanced hazard of price inflating was besides found for information and advertising services purchased by Association of Media Friends for PLN 1.78 million. However, the Association's activities before the inspection of the NIK, consisting of the removal of traffic monitoring plugs on all websites, prevented the expert from presenting a comprehensive valuation.

Financing of tasks incompatible with grant agreements

During the review, it was established that projects not in practice connected with the objectives of the Fund have been awarded from the Justice Fund.

Association of Media Friends from Szczecin (previous name of wellness Friends Association) received a grant of over 7.7 million PLN to carry out the task of combating crime and helping victims by construction of local online information servicesand carrying out actions and information activities in support of the activities of the Fund's manager in the areas of the Szczecin, Lublin and Radom regions. This appropriation was used, inter alia, to produce material promoting circumstantial political parties and politicians. In addition, a number of articles uncover statements that can be classified as hatred speech.

In turn Foundation for the Centre for Harmful Assistance and Crime Preventionreceived a grant of PLN 6.5 million to make the net portal == sync, corrected by elderman == and the establishment of the Media Objectivism Audit Institute. With the consent of the Disponent, the Foundation purchased and equipped for the amount of PLN 307,000 a motorhome, which was to constitute a mobile studio and let to supply legal advice "in the field and scope the needy support". The Foundation could not reasonably justify this expenditure, did not paper the actual intent of the vehicle, and the cases of its usage for the purposes covered by the contract were of a non-emergence.

Conflicts of interest and corruption mechanisms

Moreover, the NIK auditors have identified a number of actions undertaken by the beneficiaries of the Justice Fund, which are characterised by corruptive mechanisms and which indicate a hazard of conflict of interest.

In the area of assistance to victims of crime:

• connecting the functions of coordinator and first contact at the local Wejherów aid point, conducted by Association Integration on Plus;
• first contact with Integration Association on Plus benefits in kind to the nearest individual who has not been entitled to aid;
• the allocation of benefits to persons in the authorities of non-governmental organisations providing assistance.

In the area of crime prevention:

• The Altum Foundation and the Warsaw Aksiology Administration Seminar Foundation employed as lecturers staff of the MinistryJustice,Whereas the conditions of competitions have prohibited specified persons from participating in projects financed by the Disponent;
• in the competition committees, erstwhile staff of the Ministry, indicated in the competition offers as possible contractors or persons who, immediately before being employed in the Ministry, have provided work for applicants for funding;
• Members of the Boards of Foundations and Associations, the closest persons or members of the bodies of specified entities, received crucial revenuesas service and order contractor implemented in the framework of projects entrusted to those entities by the Fund's Officer;
• for 1 of the projects of the Academy of Justice, the current Rector Commandant acted as a consultant to the project's content prior to its formal notification to the Disponent, the individual carrying out part of the project's tasks for a fee and then overseeing the project.

Postpenitional aid

The aid provided by the foundations and associations did not meet the basic needs of those leaving the penal establishments. 2 of the 3 entities audited – The LUMUS Foundation from Gdańsk and the Dies Mei Foundation from Pabianic – did not supply accommodation for erstwhile residents in stationary readaptation centres and carried out this task by refunding rents of rented apartments, which resulted, among others, into enter into fictional lease agreements with relatives and loved ones. On the another hand, the Dies Mei Foundation performed seemingly tasks related to the professional activation of people leaving penal establishments, i.e. no individual meetings and consultations were conducted at the stationary point, and only collective occupation offers were sought for beneficiaries. The auditors besides found cases of transfer to erstwhile embedded commodity vouchers allowing the acquisition of tobacco and alcoholic products.

Conclusion

As a consequence of irregularities detected during the audit, NIK formulated above90 follow-up applications. In 21 cases, the Chamber requested reimbursement of public funds spent unlawfully or in a contract, with a full amount of over PLN 65 million (at this phase of control).

These findings do not exhaust the full scale of the irregularities. The NIK will study on further actions as shortly as they are completed.