Polish cenbank chief closer to tribunal after govt lays out charges By Reuters

By Karol Badohal and Marek Strzelecki

WARSAW (Reuters) -Poland’s central bank governor faces accusations that include breaking constitutional rules with a bond-buying programme and misleading the finance ministry, according to a motion to bring him before a state tribunal.

The new government coalition led by former European Council President Donald Tusk has launched sweeping reforms to state media and the judiciary it said had been captured by nationalists who lost power last October.

Deputy Prime Minister Krzysztof Gawkowski said that the coalition had collected the 115 signatures required for the 68-page motion to oust National Bank of Poland (NBP) chief Adam Glapinski, who denies wrongdoing, to be submitted to the parliament speaker.

“These are very strong allegations, these are allegations that, in my opinion, give me full right to say that there will be a state tribunal,” Gawkowski told TVP Info television on Thursday.

The motion will be investigated by a parliamentary commission before going to a vote by the full chamber.

If convicted by the tribunal, Glapinski, whose mandate expires in 2028, could lose his job and, possibly, be banned from running for office or holding managerial positions.

However, starting proceedings against him could be risky. Christine Lagarde, head of the European Central Bank, told Glapinski in a letter that he could refer any such move to the EU’s top court as it might affect the independence of the NBP.

The eight charges in the motion, seen by Reuters, include lacking independence from the previous government, breaking constitutional rules that prevent the central bank from financing government borrowing when it launched a quantitative easing programme during the COVID pandemic, and misleading the finance ministry about the bank’s financial results.

They also include a charge that Glapinski engaged in currency interventions without proper authorisation and cut interest rates, despite high inflation, for political reasons.

“Allegations of breaking political neutrality are the hardest to prove, but lowering interest rates when there were no rational premise or operations related to the purchase of bonds were actions for the benefit of one party, the (former) ruling party,” said Marek Sawicki from the current ruling coalition.

MARKETS CALM

Markets have so far shrugged off any concerns related to the process, with the zloty currency holding on to gains of around 5% against the euro made since October’s general election, amid expectations that Glapinski’s departure would not alter the central bank’s cautious policy stance.

“Essentially the topic of putting him before the state tribunal was widely mentioned in the media and market comments so people were aware that this was a risk,” said Piotr Polawski, senior economist at ING.

“Since other Monetary Policy Council (MPC) members show a lack of willingness to cut rates… it seems even if Glapinski goes out there won’t be a meaningful change in the MPC policy.”

Poland’s main interest rate has been on hold at 5.75% since October.

Glapinski, whose ties to the leader of the former ruling party Law and Justice (PiS) go back decades, says he has always done his job independent of political influence.

He has staunchly defended his record, pointing to a sharp fall in inflation over recent months and saying that quantitative easing was essential to rescuing the largest economy in the east of the European Union during the pandemic.

After the October election, the PiS tried to block the investigation of Glapinski by asking the Constitutional Tribunal – which vets legal acts issued by state bodies – to rule that the procedure guiding the inquiry is unconstitutional.

In January, the Constitutional Tribunal, which critics say became politicised under PiS, set a higher bar for bringing Glapinski before a state tribunal.

But Tusk said the Constitutional Tribunal’s ruling was non-binding and there were other ways to investigate Glapinski.