Poland freezes payments of EU Covid funds and blames former government for misspending

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Notes from Poland is run by a small editorial team and is published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

Poland’s government has announced that it is suspending the disbursement of European Union funds intended for post-pandemic recovery in the hospitality, tourism and culture sectors amid controversy over some of the money being spent on apparent luxury items and other questionable projects.

Meanwhile, Prime Minister Donald Tusk and other members of his cabinet have blamed the former Law and Justice (PiS) government for the controversy, saying that it devised the spending plans and caused delays in Poland receiving the funds, meaning they had to be disbursed quickly.

However, PiS, which is now the main opposition party, blamed the government for the situation. It yesterday launched a campaign accusing the authorities of “gigantic abuse and misappropriation of funds”.

On Tuesday, the minister for funds and regional policy, Katarzyna Pełczyńska-Nałęcz, announced that she has “decided that no funds will be transferred for payments to beneficiaries until each individual contract has been audited and found to be compliant with the rules”.

The money in question is from a section of Poland’s €60 billion (256 million zloty) share of the EU’s post-pandemic recovery funds intended to help the hospitality, tourism and culture sectors, which were particularly badly impacted by Covid lockdowns and other measures.

The minister stressed that only in “a minority of contracts” have irregularities been found and said that funds for “honest business owners” should be paid out as soon as possible. Pełczyńska-Nałęcz also noted that only about 10% of the 1.2 billion zloty for these sectors has already been disbursed.

Meanwhile, the minister announced that two audits are taking place: the Polish Agency for Enterprise Development (PARP), the state body responsible for overseeing the funds, is inspecting all the businesses that were awarded grants as part of the programme, while her ministry will investigate PARP’s actions.

Last week, Pełczyńska-Nałęcz revealed that she had fired PARP’s head in late July after the ministry “learned about the scale of the irregularities and the high probability of a systemic problem”.

However, the issue only came to light publicly after internet users began discovering cases of apparent spending of the funds on luxury items, such as yachts and saunas, and questionable projects, such as creating a platform to teach people how to play bridge and establishing a business called “Glamping with Alpacas”.

The government has faced criticism over the situation, but on Tuesday Tusk declared that “100% responsibility for the problems related to the spending of European funds is on PiS and its stupid, aggressive and anti-European policy”.

He said that the former ruling party had “stolen time” intended for spending the EU funds because, when it was in power, Brussels froze payments to Poland due to concerns over the rule of law. The money was only unlocked after Tusk’s government replaced PiS in December 2023.

“The dilemma was simple: we could either lose the money or spend it as quickly as possible, including so that it could go to Polish businesses,” stated Tusk.  However, he stressed that there is no excuse for “inaction, sloppiness or ill will of the officials responsible for distributing these funds”.

Meanwhile, a deputy minister for funds and regional policy, Jacek Karnowski, told the Money.pl news website that it was the PiS government that devised the section of the post-pandemic spending plans devoted to the hospitality sector and the current government simply had to implement it.

But PiS argues that the problems lie with that implementation. It blames the government for “squandering public funds” and for disbursing the money in a way that favours the friends and family of politicians from the ruling coalition, as well as business owners that have supported it.

“This is a gigantic abuse and misappropriation of funds that were supposed to serve the development of our homeland,” said party spokesman Rafał Bochenek.

On Tuesday, PiS, which is now Poland’s largest opposition party, launched an “exhibition” of graphics illustrating alleged examples of misappropriated funds, which will travel around Poland.

Meanwhile, on Monday prosecutor general Waldemar Żurek announced that an investigation into how the money is being spent has been handed over by Polish prosecutors to the European Public Prosecutor’s Office.

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Notes from Poland is run by a small editorial team and published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

Main image credit: Ministry of Funds and Regional Policy

Agnieszka Wądołowska

Agnieszka Wądołowska is deputy editor-in-chief of Notes from Poland. She is a member of the European Press Prize’s preparatory committee. She was 2022 Fellow at the Entrepreneurial Journalism Creators Program at City University of New York. In 2024, she graduated from the Advanced Leadership Programme for Top Talents at the Center for Leadership. She has previously contributed to Gazeta Wyborcza, Wysokie Obcasy and Duży Format.