PFR is suing for the return of subsidies? You can defend yourself. A negative recommendation from the CBA is not a sentence.

More and more entrepreneurs are receiving lawsuits from the Polish Development Fund, which is demanding the return of funds granted under the financial shield. These are often based on laconic, negative recommendations from the Central Anti-Corruption Bureau (CBA) stating that there is ‘reasonable suspicion of any kind of abuse’. No evidence, no checks, but a demand for millions to be returned.

If you have received a lawsuit from the PFR, it is not worth delaying an analysis of your legal situation. Effective defence requires knowledge of the specifics of these cases and experience in conducting similar proceedings.

Why is the PFR not always right? Check out the key arguments

Limitation period for claims. PFR files lawsuits in civil courts, claiming that its activities in the implementation of financial shield programmes are not economic activities. Why? This would allow for the application of a 6-year limitation period instead of the 3-year period applicable to claims arising from economic activities. However, many lawsuits are filed after this period, which may result in PFR’s claims being dismissed. In court proceedings, it must be demonstrated that PFR conducts economic activity in the implementation of government financial shield programmes. Assistance in this regard is provided, for example, by the Act of 4 July 2019 on the system of development institutions, the agreement between PFR and the State Treasury (which PFR intentionally submits to the courts in an anonymised version regarding PFR’s remuneration for the implementation of the programmes) and PFR’s individual annual reports for 2020 and 2021, which present the exact amounts of remuneration received by PFR from the State Treasury for running the shield programmes.

Inappropriate changes to the shield regulations. The programme regulations did not originally provide for the possibility of requesting the return of subsidies on the basis of a negative recommendation from the Central Anti-Corruption Bureau (CBA) (only the refusal to grant subsidies in the event of a negative recommendation from the CBA was regulated). Subsequent amendments to the regulations were often not effectively implemented in relation to a significant proportion of beneficiaries due to a failure to follow the appropriate procedure, meaning that the demand for the return of subsidies on the basis of the amended regulations is completely unfounded.

Expenditure of subsidies in accordance with the objectives of the programme. Funds from the shield could be used to cover most of the costs of running a business. Proving that the subsidies were spent in accordance with the objective of the programme eliminates any ‘reasonable suspicion of any kind of abuse’. It is therefore worth submitting evidence of the proper expenditure of the subsidy to the court. A demand for repayment by the PFR in such a situation should be considered by the court as an abuse of the fund’s rights.

The non-binding nature of CBA recommendations. A negative recommendation from the CBA does not automatically oblige the PFR to demand repayment. The PFR should make an individual assessment of the risk of abuse and, first and foremost, identify the cause of that risk. No legal provision provides for PFR to be bound by a negative recommendation issued by the CBA. PFR did not carry out any assessment and, as if automatically, issued a decision to recover the subsidy upon receipt of the CBA’s negative recommendation.

PFR failed to provide evidence of the risk of abuse. Not only did PFR fail to assess the CBA’s recommendation at the stage of issuing the decision on repayment, but even at the stage of filing the lawsuits, PFR did not know what the alleged risk of abuse concerned, as it did not make any factual allegations in this regard in the lawsuits. PFR’s litigation strategy is an attempt to persuade the courts to obtain information about alleged abuses on the part of the defendant companies from the CBA. However, this is a flawed strategy, as evidence is not intended to establish facts that the party itself has not presented (or, as in the case of PFR, is not even aware of).

How can we help you?

Our law firm specialises, among other things, in civil proceedings and issues related to obtaining subsidies. We have experience in court proceedings in which PFR sues entrepreneurs for the return of subsidies, as well as in pursuing claims against PFR for improper settlement of subsidies.

It is worth consulting your options and available legal remedies, as this may be crucial for further proceedings.