October 22, 2013
An Allegory in Court
by Eric Chenoweth
I testified
in a Polish court recently. That in itself is
not unusual. I saw many people in the hallways of the administrative
court
building waiting to testify in various proceedings. But my testimony
was
unusual. I am an American, living in New York, without any claims of
interest
under Polish law. I was summoned to make known what I knew in a minor,
strange,
and inexplicable proceeding that serves as an allegory for corruption
and a
warning for anyone with an interest in democracy, the rule of law, and
human
decency.
The
proceeding is truly strange and inexplicable. After ten
years, two directors of a Polish non-profit organization are resuming a
legal
claim in labor court against the organization’s president for unlawful
termination. In most countries, one would think there would be a
statute of
limitations in such a case. But somehow, here in Poland, it is possible
not
only to suspend a claim, but to resume it at any time, even in a minor
labor
dispute.
The
strangeness and inexplicability of the case, however,
arises from the circumstances.
For one,
there is simply no basis for the claim. The two
directors, Malgorzata Naimska and Urszula Doroszewska, were fired from
their
jobs for gross incompetence and malfeasance: they repeatedly violated
the
statutes and bylaws of the organization; they acted in complete
insubordination
of the authority of the president of the organization; they took loans
using
non-existent future grants as collateral; manufactured fictitious
receipts to
use another grant provided illegally to repay the loan; commingled
grant funds
to pay exorbitant salaries and benefits; generally spent beyond the
organization’s means and used the organization to benefit themselves,
friends,
and family; and ultimately caused the bankruptcy of one of
Poland’s most prestigious non-governmental
organizations. In short, the directors had been running the non-profit
equivalent of a Ponzi scheme: paying past debts with current grants and
taking
loans hoping for future grants. It requires some chutzpah to make a
claim of
wrongful termination against the weight of such facts.
Secondly, the
claim made in this case is against Irena
Lasota, a legend of Poland’s --- and Eastern Europe’s --- democracy
movement. After
two years of being deceived by these directors, people whom she thought
she
could trust, Ms. Lasota was forced to act: she suspended the directors
and the
activities of the organization, asked one of Poland’s most prominent
human
rights activists to investigate the finances and activities, and, based
on that
investigation, ultimately had to order the dismissal of the directors
(and all
the employees) and the closure of the organization because enormous
debts had
been assumed with no ability to repay them --- under Polish law, the
organization was “liquidated.”
The sense of
betrayal was profound. The organization, the
Institute for Democracy in Eastern Europe Foundation (Fundacja IDEE in
Polish),
had played an important role in Poland’s transition period from
communism,
supporting independent press, the creation of civic organizations,
building
community libraries and stocking them with democratic literature, and
generally
fostering a democratic civil society in a country recovering from
forty-five
years of communist dictatorship. But more importantly, Fundacja IDEE,
based in
Warsaw, had been a hub for helping the Institute for Democracy in
Eastern
Europe, based in Washington and founded also by Irena Lasota, to
support similar
initiatives throughout Eastern Europe. Among other things, the Polish
Fundacja
IDEE had carried out a number of activities building IDEE’s Centers for
Pluralism program. This was a network of civic organizations dedicated
to
promoting freedom and democracy begun in 1992 in six Central and
Eastern
European countries that had expanded to include several hundred
organizations
in 22 countries of the former Soviet bloc and former Yugoslavia by
2001-02.
Naimska and
Doroszewska had been appointed to take over the
Polish Fundacja IDEE in 1999. Lasota had known and worked with them for
many
years. Their backgrounds and previous cooperation were thought to be
enough to
entrust them with Fundacja IDEE’s legacy and current activities. But
the two
had been corrupted by a culture of entitlement that had grown among an
important segment of Polish NGOs. Worse, the two had bought into a new
political obsession within Poland’s elite: using Polish NGOs to further
Polish
state interests abroad. It meant that
instead of trying to further citizen participation, democracy, and
human rights
in Poland and other countries, Polish NGOs were encouraged to recruit
clients and
control the activities of foreign NGOs on behalf of the Polish state.
Irena Lasota
had left Poland in 1970 after being imprisoned
for her role in the 1968 student protests at Warsaw University and
since then she
had resided mostly in the U.S. (with some short periods in France and
England)
. Most of her time outside of Poland had been spent supporting
democratic
movements in Poland and other Soviet bloc countries. She was the
coordinator of
the first chapter within Amnesty International dedicated to helping
political
prisoners in Eastern Europe; spearheaded a campaign of support in the
U.S. for
the Workers Defense Committee in Poland; generated support for
Solidarity after
1980, including assisting the AFL-CIO’s Polish Workers Aid Fund; and,
then,
organized the Committee in Support of Solidarity in December 1981, the
main
U.S. group opposing martial law in Poland. In 1985, she expanded the
Committee’s
efforts to the Soviet bloc by co-founding the Institute for Democracy
in
Eastern Europe. In three decades of activism, Lasota had helped
thousands of
democratic activists with financial, material, moral, political, and
other
support. After 1989, IDEE expanded its work to nearly all the countries
of the
former Soviet Union as well as Central and Eastern Europe, trying to
build
democratic institutions where none had existed before.
Lasota had
seen the growing change in a growing part of the
Polish NGO community from one of self-less commitment in the period of
anti-communist opposition to one of “professional” activism. Western
funders
encouraged NGOs to take on more full time staff, eschew volunteers,
move to
attractive offices, and otherwise feel entitled to have more and more
overhead
while doing “good works.” But the good works became less and less while
the
overhead and staff simply grew. In truth,
in the West, too, the culture of NGOs had become more
“professionalized” and
less altruistic, however the culture of democratic institutions and the
long
history of civic-based activism, especially in the U.S., mitigated the
effects
on the NGO culture. In Poland, forty-five years of communism had
disfigured
societal institutions to the point that no real foundation for
non-profit activity
existed. The type of accountability, legal framework, and
organizational
culture that undergird the non-profit community in established
democratic
countries --- and that acts against corruption --- were absent.
As a result,
in many cases,
Western support unwittingly (and sometimes wittingly) went to groups
and
individuals who justified taking money not by the activities they
carried out
but by their stated moral intent or, worse, by a sense of entitlement
for their
previous sacrifice living under communism, a sense made grievous
because of the
prosperity enjoyed in the West while Eastern Europe had been given over
to the
Soviet communist empire. In truth, many of these individuals
exaggerated their
sacrifice, while those who had truly suffered long imprisonment,
deprivation of
livelihood, or other repression received no compensation for their
hardships. And
there remained many stalwarts from the anti-communist opposition who
continued
to work selflessly on behalf of building a democratic society. But the
influx
of Western money and the lack of true mechanisms of accountability
tended to
blur the lines among those committed to principle and those committed
simply to
their own advancement and aggrandizement.
The history
of the transition from
communism is replete with examples of buy-offs of former communists and
sell-outs of workers. This was thought to be necessary in order to pull
off a
peaceful end of communism. This unjust practice, however, transferred
to other
parts of society. Anything could be justifiable in the “transition”
simply
because someone said it was necessary for “democracy.” (Of course, this
type of
justification was a carryover from communism, which also excused
anything because
it was building utopia.) In the non-profit community, it became
“normal” to inflate
budgets, borrow money without the possibility of paying it back,
provide
pay-offs, hire family members, and generally take money for not
carrying out
activities. Western foundations were easily taken in because they did
not want
to be found out to be providing money for such practices instead of
“building
civil society.”
In the case
of Fundacja IDEE, the
directors assumed all of the bad traits of the transition. They
explained away their
betrayal of their president, their organization, and the people they
were
supposed to be helping by their own inflated sense of goodness and
higher
morality, which existed outside of any genuine norms or even reality.
I knew of the
misdeeds of Fundacja
IDEE’s directors due to my role as the co-director and co-founder with
Irena
Lasota of IDEE, the parent organization in Washington. I oversaw the
financial
reporting of the Polish foundation to IDEE for grants related to the
Centers
for Pluralism program. In late 2001, it became clear from my review of
the
financial reports that this grant was being used to pay off any and all
obligations of the Foundation without any regard to the grant’s purpose
or
activities. Ninety percent of the grant was spent (mostly on salaries,
professional
fees, and overhead) while barely any of the activities had been
completed.
Unfortunately, it took another nine months for us to realize that the
poor
reporting and financial practices went beyond the level of professional
mismanagement to that of true corruption and active deception. When we
did
realize it, it was too late.
What truly
astounded us, however,
was how broadly these activities extended and how little Polish
authorities
cared about them. Krzysztof Stanowski, the director of one of Poland’s
main
grant programs as part of the Foundation for Education for Democracy
(FED),
took payments from Fundacja IDEE while providing a grant for fictitious
activities in order to pay off a loan (at 17 percent interest!) from
the Polish
American Enterprise Bank. Receipts were fabricated by both the FED and
Fundacja
IDEE to cover this up. We know that FED provided grants to at least one
other
organization with the same intent to pay off debts. When this was
brought to
the attention of the board of FED, it was discovered that FED’s board
included a
majority whose livelihood depended on FED, including the directors of
these
recipient grant organizations! FED’s board not surprisingly refused to
investigate the actions of Stanowski and instead gave him a vote of
confidence.
Nothing ever
happened to these
individuals. Rather, Fundacja IDEE’s dismissed directors went on to
create a
new organization and receive more grants from FED as well as the U.S.’s
National Endowment for Democracy, which ignored its own financial
investigation
of Fundacja IDEE and the incestuous relationships of its grantee
organizations
in Poland. Ultimately, the two directors, as well as Stanowski, FED’s
director,
went on to high positions in the Polish government. The prosecutor’s
office dragged
its heels in investigating these misdeeds until the statute of
limitations
prevented legal action. (Even so, the office’s final official report,
issued
seven years later, details many of the misdeeds.) Stanowski now heads
the
Polish Solidarity Fund, supposedly modeled on the National Endowment
for
Democracy, in charge of millions of dollars of funding to Polish NGOs,
who are
subject to the “training” and accountability mechanisms established by
Stanowski.
It is no
wonder then, that the two
former directors of Fundacja IDEE think nothing of resuming a claim of
“wrongful termination” in Poland’s labor court, even though the initial
proceedings ten years ago were presenting fully all the evidence not
only of
mismanagement but also of corruption that clearly justified their
termination.
The two do not even feel the obligation to attend the proceedings
(attendance
is not required unless the judge orders it). They believed they could
simply
win the reinitiated proceedings by default and thus gain additional
pension and
rewards.
Even after
ten years, however,
Irena Lasota believes it is an important matter to contest their claim
and she
is using her own funds to fight it. In her view, an uncontested default
finding
of wrongful termination would affirm the corruption of an important
segment of
Poland’s non-profit community. If she did not actively contest the
claim,
Lasota would be herself betraying and undermining all those who are
seeking to
build another organizational culture, one of honesty and genuine
accountability,
true professionalism, and commitment to actual democratic principles
and
practices. In a Poland where no one contests illegality or challenges
the
unaccountability of NGOs, there can be no real “transition from
communism,”
only a transition from one corrupt culture justifying selfish actions
for
political ends to another.