The process of acquiring properties for national road investments had to be speeded up because of the road boom. It was possible thanks to the so-called ”special purpose” Road Act implemented in April 2003. In December 2006, provisions came into force which enabled smooth dispossession of a property for the State Treasury in case it was located on a national road under construction. A real estate becomes the property of the State Treasury when the road investment permit becomes final. The dispossessed persons are entitled to compensation which is fixed by province governors in separate administrative proceedings. The compensation amount is established based on the property valuation made by a property valuer.
In the audited period the General Directorate for National Roads and Motorways (GDNRM) acquired properties based on provisions effective at that time and in the past (by 15 December 2006). The basic solution at that time was concluding contracts with property owners. Only when it proved impossible the road operator applied to the province governor for the property dispossession.
In the period 2008-2013 (1st half), the General Directorate for National Roads and Motorways (GDNRM) spent nearly PLN 7 billion to buy properties as part of the Programme for the Construction of National Roads. It made up 6.5 percent of all expenses intended for the construction of national roads in that period. In four GDNRM branches - of five covered by the audit - over 8.5 thousand properties were acquired under contracts signed with property owners and nearly 2250 properties were acquired for that purpose by means of dispossession.
Key irregularities identified by NIK:
Over- and underestimation of compensation caused by errors in valuation reports
Valuation reports made by property valuers for the needs of compensation proceedings are not always flawless. Additionally, the employees of province offices unreliably verified documents provided to them. As a consequence, the errors overlapped and considerably influenced the compensation level.
In four province offices nearly 500 appeals were made against compensation decisions (4 percent of all decisions). NIK has noted that the Minister of Transport reviewing the cases found as much as 40 percent of appeals justified. According to auditors, in 80 percent of cases the main reason for revoking decisions were errors in property valuations (most often: improper selection of comparative properties, inappropriate specification of property purpose, not including all components of the property or incorrect calculations).
Delays in compensation payments resulting from delays in issuing decisions on compensation level
In the years 2008-2013, about 17 thousand compensation proceedings were conducted with regard to acquired properties. Only 3 percent of decisions were issued within the statutory deadline. In line with effective provisions the governor has 30 days to award compensation (dating from the final decision on road investment permit or 60 days from the date of making the decision immediately enforceable). All of the audited province governors exceeded that deadline. As much as 70 percent of audited decisions were issued in 3 to 12 months, whereas 24 percent in more than a year. In some cases decisions were issued after 2 years.
The waiting time was so long mainly because the compensation proceedings started with delays and so the property valuations were also ordered with delays. According to NIK province governors should start compensation proceedings on the date of issuing the road investment decision. That would make it possible to select valuers and place valuation orders in due time.
As an example of good practices NIK points to the Governor’s Office of Wielkopolska which concluded framework contracts for a definite period (usually for 2 years) with authorised property valuers. This is what made the valuation ordering process much faster.
Lengthiness and arbitrariness in settling cases related to the purchase of so-called remaining properties, caused among others by the absence of standardised and obligatory procedures for all branches of the General Directorate of National Roads and Motorways (GDNRM).
In four dedicated GDNRM branches in the audited period 1949 claims for the purchase of remaining properties were filed. 38 percent of claims for PLN 60 million were considered justified and almost as many were declined. In other cases no binding decisions were made in GDNRM by the audit ending date. In 12 of 730 rejected requests for the purchase of remaining properties the property owners went to court and filed claims of PLN 46 million.
Regardless of whether a claim was accepted or rejected, proceedings for the purchase of remaining properties went on for years. If a claim was accepted the settlement of such a case could take from one week to three years. In the other case : from three weeks to two years. A record-breaker waited 6 years for the case to settle (the claim was accepted in the long run).
In GDNRM the principles of land purchase for road investments did not comply with anticorruption procedures. In a document called Anticorruption policy of GDNRM of March 2012 the Director General of GDNRM defined the principles of preventing corruption and conflicts of interests. It was agreed then that in areas particularly prone to corruption the ”four-eye principle” should be applied, which meant that each and every action of an official should be verified by his or her superior or another eligible employee. In some cases properties for national roads were purchased by single persons. Such practices were formally allowed by the GDNRM by-law but non-compliant with the Anticorruption policy of GDNRM.
NIK stands in a position that lengthy and unreliable compensation proceedings represent a breach of the Constitutional law: dispossessed persons have the right to immediate compensation for their property acquired for public purposes. According to NIK all only minor organisational changes are often needed to significantly shorten the procedure implementation time. That is why NIK recommends:
- essential organisational changes should be made by province governors to make sure the compensation proceedings related to the properties acquired for roads can be conducted without unnecessary delays;
- professional skills of employees dealing with the verification of property valuations should be improved;
- Director General of GDNRM should be represented by two persons when purchasing a real property (in line with the Anticorruption policy).
