Offence of fraud as a means of protecting economic operators against fraud by management

The offence of mistrust has been regulated in the current penal code (hereinafter: k.k.) of 1997 This article will provide an approximation of the rules on this type of crime. The problem of a categorized act under Article 296 k.k.

will be examined, starting with a description of its subject-matter and subject-matter, contained in case-law and writing, and ending with a comparative analysis, covering the statistical effectiveness of criminality for such an act compared with certain offences against economic turnover and property interests in civil trade.

The purpose of this Article is to examine whether the fraud of trust as a means of protecting economic operators effectively protects against fraud by management.

Police statistics indicate that in years 1999-2019 in connection with a suspected offence of abuse of trust, regulated under Article 296 Criminal Code 1 (hereafter: k.k.), launched 13,618 proceedings, of which 6,272 ended with a finding of a crime.

This type of crime was already known in times II of the Republic of Poland (criminal code with 1932) and the Polish People's Republic (Final Code from 1969), as well as first years of the current system (regulated by the Act on Trade Protection with 1994).

The Code of Commercial Companies in Criminal Law also contained a criminal offence of action to the detriment of the company for which the imprisonment of up to years was punishable 5 and fine, however the amendment of the Criminal Code with 9 June 2011 repealed that provision.

As we learn from the government's justification for the draft penal code, the site of the crime of unprofitableness, specified under Article 217 k.k. z 1969, has taken the offence of mistrust (Article 296), based on different criminal-political grounds, referring to Article 269 k.k.

z 1932, However, as defined to cover all entities carrying out property or economic activities of another economic operator, regardless of the title of their conduct (contract, legal provision, decision of the competent authority). According to the cited Article 296(1) k.k.

is subject to imprisonment 3 months to years 5 who, under the law, the decision of the competent authority or contract, is obliged to deal with the property or business activity of a natural, legal or organisational person without legal personality and who, by abuse of the powers conferred on him or failure to fulfil his or her obligation, causes him or her significant damage to his or her assets, the Code of 1997 Acknowledges that the management staff will be selected on the basis of high qualifications, trust, high competition and market forces, and that there is therefore no need for criminality in the behaviour of unintentionally damaging.

It should be pointed out here that the type qualified for the purpose of achieving the asset benefit is to correspond to the reality of life (Article 296(2)).

Another type of qualified, however threatened by more severe penalties, is associated with large-scale property damage (Article 296(3)). The Sejm added to Article 296(4) (governing the liability of the perpetrator acting unintentionally) and section 5, exempting the criminal liability of the offender who, before initiating criminal proceedings, has voluntarily repaired the damage caused in full[2].

Therefore, the legislator's assumption was to protect economic operators from managerial staff, whose task should be to act in the interests of the entity, rather than at the expense of the entity, on behalf of its own individual interest.

In spite of the need to introduce such a crime into the criminal code, which is well-defined in the explanatory memorandum, it is, however, problematic to design the rule itself. The legislature used out of focus concepts that became the source and cause of reflections and numerous analyses in courtrooms and in doctrine.

These are expressions such as "handling property matters", "abuse of allowances granted", or "incomplement of a mandatory obligation". These phrases, although colloquially can be interpreted quite freely, nevertheless, for the purposes of law enforcement, require interpretation in the context of the entire provision.

Not all misuse of rights or failure to comply with the obligation will involve criminal liability, but the phrase “handling property” will not always mean entrusting someone with their money in the context of a categorized action. Under Article 296 k.k.

Entity party — person liable as perpetrator

The perpetrator of a tycoon under Article 296 k.k. is a person obliged to deal with property or economic activities of a natural, legal or organisational person without legal personality[3]. Court of Appeal in Krakow in its judgment dated 29 March 2019 He briefly pointed out that the limits of the crime of abuse of trust were formed by the following indicators:

• 1) the formal specific duty of a specific conduct for the victim,
• 2) abuse by the offender of his or her powers or failure to fulfil his or her duties; and
• 3) the damage to the injured person as a result of performance by the perpetrator of the functional characteristics.

All these elements must occur together and there should be a causal link between them[4]. This provision provides protection for each entity, both natural and legal persons and organisational entities without legal personality.

In turn, the Court of Appeal in Katowice in its judgment 27 October 2005 has identified a circle of entities likely to commit fraud. The court found that the offence with Article 296(1) k.k. is an individual offence and therefore is only subject to a specific circle.

According to the Court of Appeal, the legislature has accepted that in the case of Article 296(1) k.k. in the circle of these persons there are only persons who are obliged on the basis of one of the sources listed therein.

In addition, they are obliged to deal with property matters of persons or individuals in the sphere of decision making on the assets they manage, and this also implies an impact on decisions on the formation of certain financial values of the assets they manage.

The Court of Appeal notes that these persons include directors and their deputies of individual, separate establishments operating within the company and employed on the basis of a contract of employment, although they are not part of the company's bodies[5].

The relationship between the obligation to deal with property or economic activity may only be established by law, contract and decision of the competent authority. A unilateral declaration and action without an order shall not lead to the subject of a legal standard specified under Article 296 k.k. 6 .

The subject of action with Article 296 k.k. can only be a person who has independence in decision-making, and therefore must be a higher management position, which ensures that he or she has the power to have the assets entrusted or to manage the business[7].

However, it is important to distinguish between dealing with other people’s property and caring for the property entrusted. As the Supreme Court rightly points out in its ruling dated 27 April 2001: „the person concerned with other persons' property matters can only be considered to be the person whose responsibilities and powers include together, both the care to protect the property entrusted from damage, destruction or loss, deterioration of property interests and the use of that property in the management process in such a way as to increase or increase its value. Thus, those who have only obligations to ensure that the property entrusted does not deteriorate cannot be regarded as dealing with other persons's property." 8 . As the Court of Appeal in Warsaw states, dealing with property matters in the sense of Article 296(1) These include:

• 1) contracting,
• 2) the decision on the assets resulting in the transfer of ownership, the charge on the assets,
• 3) abolition of obligations or acceptance of obligations chargeable to assets’ 9 ,
• 4) carrying out activities with authority,
• 5) directing property matters in an identical or similar way to what the powerful person can do,
• 6) carrying out activities involving property management,
• 7) court settlement,
• 8) the protection of the interests of the legislator.

Page - Abuse of powers

A crime of abuse of trust involves abuse of powers or misconduct. The legal relationship between the person dealing with other persons' assets or economic activities with the powerholder depends on its responsibilities and powers.

The abuse of rights will be when a person who is dealing with another person's property or economic activity acts in excess of his or her powers, or when he or she takes actions falling within his or her competence, but contrary to the direction of the powers conferred, while failing to fulfil his or her duties in practice will mean failing to perform or inadequately perform the task assigned[10].

Mr Cardas advocates a broad understanding of the scope of powers and responsibilities. According to the author: “The obligations and powers arising from the provision of the law, the decision of the competent authority or the contract are not always fully defined.

Their clarification may result from other than the mere entrustment of sources, and in particular from the nature of the assets or economic activities carried out, the nature of the functions and activities carried out, the nature of the tasks performed, or the nature of the activities carried out, which require reasonable action, in accordance with the principles of the art of property management and the general rules for the conduct of economic activities and the internal division of duties adopted.

Therefore, they should be taken broadly and taken into account as both obligations and powers under the relevant legislation and as arising from situations which are not covered by the rules of law and which are the implementation of the principles of sound operation." 11 .

A crime of abuse of trust is a material crime, which means that a certain effect must take place in order to commit it. In this case, it will be to cause damage to property (significant or large size) or to bring about a direct danger of causing significant damage to property. In the event of material damage, these will include both actual injury (damnum ergens) and loss of benefits (lucrum cessans)[12].

Criminal rules do not define the concept of abuse of powers conferred. In practice, the transfer of assets to entities of all kinds should be considered as such. third, as a result of which the managed entity suffers damage to property.

In this option, such actions may take the form of the sale of assets without obtaining the required consent, e.g. the shareholders of the company or the supervisory board. It may also be the sale of assets at a low price, the distribution of payment of the price into unfavourable instalments.

Another behaviour that could be considered to be an abuse of the right granted is to enter into unnecessary contracts from a business point of view concerning, for example, the provision of advisory, marketing or procurement of opinions and memorandums.

Liability

In the recipe Article 296 are used four criminal acts:

• basic type, defined under Article 296(1) and 1a;
• the type of qualification for which the qualifying element is that the perpetrator takes action to achieve the asset benefit, specified under Article 296(2);
• a qualified type in which the element justifying more severe liability is the damage caused by the perpetrator in large size, specified under Article 296(3);
• type of unintentional abuse of trust, specified under Article 296(4);
• also under Article 296(5) a non-criminal clause related to voluntary correction by the perpetrator of the damage caused by the offence has been established[13].

In the event of an offence of abuse of trust in the basic type, from section 1, the perpetrator of the act is in danger of imprisonment from 3 months to years 5. Liability of the offender Under section 1a, i.e. direct danger of material damage to property, subject to imprisonment for up to years 3. In this case, the criminal liability due to the absence of damage to property is milder.

For qualified types, the situation is twofold. In the case of a criminal offence that has been referred to Under section 2 it will be a qualified type for the purpose, since the reason for the tightening of responsibility is the motivation with which the perpetrator works, and this in this case is the achievement of a property benefit.

This type of crime, as a directional crime, can only be committed with direct intent. The perpetrator acting to obtain the property benefit shall be sentenced to imprisonment from 6 months to years 8.

It should also be mentioned that the same responsibility is the responsibility of the perpetrator, who did not cause the damage, but merely brought the immediate danger of causing it.

second the type is qualified for effect. The basis for exacerbating criminal liability is the occurrence of large-scale damage[14]. This is a crime that can be committed with a direct intent or a possible intention. In accordance with the Article. Article 115(7a) k.k.

recipe section 6 shall apply mutatis mutandis to the definition of ‘high size damage’, while section 6 k.k. says that the property of great value is property whose value at the time of a prohibited act exceeds 1,000,000 PLN.

So if the injury caused is above 1,000,000 PLN, the perpetrator will be subject to imprisonment from one year to a year 10. The provisions of the Criminal Code also provide for penalties for involuntary damage to property or property of large size. In this case, the offender is subject to imprisonment for up to years 3.

The Code also provides for institutions voluntary disclosure to persons who, before entering criminal proceedings, have voluntarily repaired the damage caused in full.

Conclusion

Protection Article 296 k.k. is the proper management and management of assets or economic activity of management staff[15].

Police statistics on fraud clearly show that the number of offences detected each year is decreasing (with minor exceptions), while the number of other economic offences, such as money laundering, continues to increase (In 1992 – 2 the cases identified; and In 2019 – 1267 cases identified) or economic corruption (In 2003 – 0 cases identified, and In 2019 – 228 cases identified).

On the one hand, may result from greater legal awareness of managers, with second companies increasingly use consulting companies to audit them and help them find abuses.

However, responding to the question raised in the introduction, the offence of inefficiencies is an effective means of protecting economic operators against fraud by management.

This is seen in particular in statistics which clearly show an initial upward trend in the number of offences detected, in order to later record a multiple decrease. For others two crime tends to increase the number of crimes found, particularly as shown in the example of money laundering.

The crime of abuse of trust has been discussed in detail both in the judicature and in literature, which translates positively into law enforcement, and thus into greater public awareness, and this in turn also contributes to a decline in criminality for such an act.

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