Polish Lawmaker Expects Lengthy Probe of Central Bank Governor

(Bloomberg) -- Poland’s ruling coalition is preparing for a drawn-out probe of central banker Adam Glapinski as his supporters, currently in the opposition, seek to stymie efforts that could lead to the governor’s ouster.

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The motion to start the investigation will be submitted in parliament on Tuesday — beginning a process which could last more than a year and encounter obstruction from Glapinski and his allies, said ruling party lawmaker Janusz Cichon, who has led the work on the dossier.

Among eight accusations against Glapinski, the motion lists alleged irregularities in the central bank’s bond-buying and an abrupt interest-rate cut ahead of the last general election.

The governor has repeatedly denied any wrongdoing and his backers in the Law & Justice party are seeking to turn the investigation into an attack on the quantitative easing program that financed much needed pandemic-era relief.

“We are aware that this will be a difficult process,” Cichon told Bloomberg News. “We expect obstruction from the governor.”

The motion will trigger an investigation by a committee of lawmakers, which may take between six and 12 months, according to Cichon. The probe will involve taking testimony from witnesses including the governor. The former ruling party is trying to bar the committee from summoning Glapinski.

The development is the latest and the most controversial yet by Prime Minister Donald Tusk’s administration in its bid to free state institutions from the influence of the previously ruling populists and restore democratic standards.

Law & Justice officials rushed to defend Glapinski, saying criticism of the National Bank of Poland’s bond-buying undermined a program, which helped Poland survive lock-downs without significant job losses. The governor has repeatedly denied any wrongdoing.

“The arguments of those attacking the NBP show high levels of ignorance, even economic illiteracy,” Mateusz Morawiecki, a former prime minister, said in emailed comment to Bloomberg News. “The central bank did what it was supposed to do during the pandemic crisis.”

Very Serious

According to Cichon, the quantitative easing program required approvals by the Monetary Policy Council and the central bank’s management board. “We have doubts that such resolutions were taken,” he said.

The accusation is not about the bond-buying as such, but rather about whether it allowed the central bank to finance the budget deficit — which is banned by the Constitution as well as European Union laws, according to Cichon. The probe will check if QE was a coordinated action between Glapinski, the government and state financial institutions, he said.

During its open-ended QE program in 2020 and 2021, the central bank bought 144 billion zloty ($36 billion) of notes issued by the government as well as two state agencies responsible for with Covid-recovery efforts.

Przemyslaw Litwiniuk, a member of Glapinski’s MPC, said the details of the QE program should be scrutinized, telling broadcaster TVN24 on Friday that the issue “required investigation, also for the future as the country must know how to function in a crisis situation.”

The full lower house will vote on whether to put the governor in front of the tribunal, which is likely to lead to his suspension from office, only after the parliamentary committee finishes its investigation.

Cichon said in a separate interview on Friday that the best solution — from the point of view of Poland’s finances — may be for Glapinski to resign before the probe ends.

“The matter is very serious,” Cichon told Bloomberg. “We cannot afford — in a country that after so many years is trying to restore the rule of law — for the governor of such an important institution as the central bank to participate in a political dispute.”

--With assistance from Natalia Ojewska.

(Updates with new quotes from MPC member and opposition, details on the bond-buying program from the first paragraph.)

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