“Though the bribe be small, yet the fault is great.” The words of Edward Coke, the great Elizabethan jurist. How much greater, then, the fault if the bribe be big? For that is the question potentially facing the Polish government as it is alleged that the head of Poland’s financial supervision authority (KNF) solicited a bribe from a private bank.

On Tuesday newspaper Gazeta Wyborcza reported that Leszek Czarnecki, the owner of Getin Noble Bank, had alleged that Marek Chrzanowski had offered him favourable treatment in return for about PLN 40 million (EUR 9.3 million, USD 10.5 million). The KNF denied that Chrzanowski had made such an offer and claimed that the report by Gazeta Wyborcza was untrue. In a statement, the KNF said Chrzanowski had “taken legal steps in connection with false accusations put forward by Mr. Czarnecki and in connection with defamation” which it claimed was aimed at undermining public trust in the head of the KNF.

The Polish prime minister, Mateusz Morawiecki demanded an immediate explanation from the KNF president, and directed the country’s prosecutors and state agencies to “promptly gather information” on the matter, his chief of staff told Polish radio station RMF FM on Tuesday. Michał Dworczyk, the head of the Prime Minister’s Office, said that “there will be no leniency” if the allegations against Chrzanowski proved to be true. Chrzanowski resigned, while insisting that he had done nothing wrong.

As reported by theFinancial Times, Czarnecki and Chrzanowski met in the latter’s office on 28th March, which meeting was recorded by Czarnecki. During this meeting, the head of the KNF, according to the deposition which Czarnecki made to prosecutors, was advised to engage a particular lawyer and to pay him over three years a fee which Czarnecki understood to be equal to one per cent of the value of Getin Bank.

The meeting discussed Getin Bank’s financial problems and the fee was to be for “support and confirmation of the procedure of restructuring of the bank, including ensuring protection by KNF.” In the recording the head of the KNF is heard telling Czarnecki: “I don’t know whether that suits you. You can talk with him. However, it seems to me that it is a solution that in a certain way is motivating in the environment in which exists, and we are talking about this institution and restructuring this institution.” Czarnecki said he did not contact the lawyer or pay any money.

A KNF spokesman said that the KNF interprets Czarnecki’s action as an attempt to influence the regulator as he had not immediately notified the prosecutor as he should have done in the case of a justified suspicion that a crime had been committed. Czarnecki explained the delay in reporting the crime – he submitted his deposition to the national prosecutor’s office on 7th November – as being due to his concern about the impact that allegations would have on the bank.

Rather surprisingly, one might think, despite resigning on Tuesday, Marek Chrzanowski spent several hours in the KNF office on Wednesday with possible access to documents that might be of interest to investigators and which hadn’t been yet taken away. Indeed, the fact that the authorities have not yet secured the material is, according to experienced prosecutors who were contacted by, “scandalous”. “It may be assumed that certain things may get lost,” said one. Be that as it may, on Thursday, Marcin Pachucki was appointed as the acting head of the KNF. Pachucki has been the deputy head of the KNF, responsible for the oversight of Poland’s capital and insurance markets.

Is it a case of there being no smoke without fire, or, as the KNF suggests, an accusation that conveniently coincides with media reports that the regulator may take action in relation to another lender under the control of Mr. Czarnecki? We won’t know for sure until the investigation is concluded, but it is clear that the regulator, like Caesar’s wife, must be above suspicion. The integrity of the financial market in Poland, as elsewhere, depends on this. Which is no doubt why the prime minister, a former banker himself, was so quick to act.

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