The Supreme Audit Office (Najwyższa Izba Kontroli, NIK) carried out an ad hoc audit of investments financed from the Fund for the Vocational Activation of Convicts and the Development of Prison Work Schemes, examining the activities of the Central Board of the Prison Service between 2016 and 2024. The audit revealed significant irregularities, including the unlawful allocation of 70 million zlotys for the construction of housing for prison officers and the spending of 34.5 million zlotys on the construction of production halls in which no prisoners were employed. It was also established that the investments were carried out on the basis of a programme to increase prisoner employment that did not formally exist. NIK recommended that procedures be followed and that oversight of spending from the special-purpose fund be strengthened; it also referred the matter to the Public Prosecutor’s Office on suspicion of a criminal offence.
The audit covered the Central Board of the Prison Services (Centralny Zarząd Służby Więziennej) in Warsaw (hereinafter: (Prison Service Board or CZSW). Its aim was to assess the proper implementation of selected projects financed by the Fund for the Vocational Activation of Convicts and the Development of Prison Work Schemes (Fundusz Aktywizacji Zawodowej Skazanych oraz Rozwoju Przywięziennych Zakładów Pracy) (hereinafter: the Activation Fund or FAZ) by organisational units of the Prison Service.
During the period under review – from 1 January 2016 to 30 June 2024 – 509 grant applications were approved, totalling PLN 940 million, of which 59 applications, amounting to PLN 275.9 million, related to the construction or renovation of production halls.
The Supreme Audit Office has covered by its audit
- 50 investment projects totalling PLN 216.8 million, of which 43 involved the construction of new production halls (100% of projects of this type) and 7 involved the refurbishment of halls (44%);
- two grants totalling PLN 70 million for the construction of two complexes of buildings to be used as temporary accommodation for Prison Service officers.
NIK has given a negative assessment of the Prison Service Board’s actions regarding the planning and implementation of selected investments funded by the Activation Fund, as well as its supervision of Prison Service organisational units in this area. Illegal, ineffective, inappropriate and wasteful practices have been identified. The total financial impact of the irregularities identified amounted to PLN 149.5 million.
Successive Directors-General of the CZSW, in their capacity as Administrators of the Activation Fund, have, in managing public funds, allowed the following in particular:
- the allocation and expenditure, in breach of the law — i.e. outside the scope of the statutory purpose of the Activation Fund — of funds amounting to PLN 70 million, through the granting of undue subsidies to two prison establishments for the construction of temporary accommodation (flats) for Prison Service officers;
- thewasteful spending of FAZ funds amounting to PLN 34.5 million on unprofitable (loss-making) investments, namely the construction of 14 production halls in which no prisoners were employed and which, as at 31 December 2024, were not in use, whilst the costs of their ongoing maintenance were incurred (in 2023 these costs amounted to PLN 102,430, and in 2024 to PLN 179,110). The process of assessing the market in terms of the actual needs of local contractors, which preceded investment decisions regarding the construction of new production facilities and their location, was carried out in an unreliable manner;
- thewasteful and inappropriate spending of funds from the FAZ and the state budget, totalling PLN 45 million, on the unjustified commencement and execution of the construction of temporary accommodation for Prison Service officers in Racibórz.
The audit found that:
- the investment projects were carried out despite the absence of a formally established programme for increasing prisoner employment, i.e. solely on the basis of a letter from the former Director-General dated 30 May 2016, which set out indicative targets for the programme; these indicators were not updated, despite the passage of time and the general rise in prices and the inflation rate, which constituted an unreliable conduct; the values of the indicators were repeatedly exceeded or failed to be met;
- no evaluation was carried out of the outcomes of the programme to increase prisoner employment, which has been running since 2016, even though the level of public funding and the scale of the investments involved were significant; this was deemed to be unreliable;
- applications for grants from the FAZ were processed without regard to internal regulations on investment planning;
- the terms of the grant contracts relating to the requirements for employing prisoners and the leasing of newly built halls were repeatedly breached.
The significance of the irregularities identified highlighted weaknesses in the management control mechanisms at CZWS.
In its post-audit statement, NIK presented recommendations to:
- the Fund Administrator to cease to award grants for purposes not specified in Article 8(1) of the Act on the Employment of Persons Deprived of Liberty;
- ensure that internal procedures relating to investment planning are followed regardless of the source of funding, in particular by carrying out comprehensive analyses of the merits of undertaking an investment project in a given location;
- implement control mechanisms to strengthen the oversight exercised by the Director-General and the organisational units of CZSW over Prison Service organisational units regarding investment projects planned and carried out on their premises, the leasing of production halls and the employment of prisoners therein, including consideration of strengthening the staffing of organisational units carrying out on-site control activities.
Following the findings of the audit, NIK issued notices to:
- the Prosecutor’s Office regarding the reasonable suspicion of an act constituting an offence under Article 296(1) and (3) of the Criminal Code, consisting in causing financial loss on a massive scale within the meaning of Article 115(6) of the Criminal Code (i.e. amounting to PLN 149.5 million);
- the Public Finance Discipline Ombudsman regarding a breach of public finance discipline due to the award of a grant (amounting to PLN 70 million) in breach of the rules governing the award of grants.
