The price of Polish transformation
Follow the money, find the communists

By G. Krumbel & Co.
The Devil is in the Details

 

The Foreign Debt Service Fund (FOZZ) was created in accordance with a Sejm (Lower Chamber of Parliament) bill dated 15 Feb 1989. The strategic goal of FOZZ was to collect and manage funds for servicing foreign debt. These funds come from the central budget, foreign state loans, deposits at Bank Handlowy, the Polish National Bank (NBP) in Warsaw, income from joint venture companies, income from treasury bonds and credits. FOZZ was set up to pay the country’s foreign debt.

FOZZ has been supervised by Director Grzegorz Zemek and Deputy Director Janina Chim. Poland’s Ministry of Finance established a board headed by vice minister for foreign debt Janusz Sawicki who served between 14 March 1989 and 30 December 1990 as the main official responsible for foreign debt and for overseeing FOZZ. Other names associated with this business are Jan Boniuk, Grzegorz Wojtowicz, Dariusz Rosati, Zdzislaw Sadowski, Jan Woloszyn, Slawomir Marczuk and Wojciech Misiag.

It’s important to note that FOZZ was not the only debt repayment organization of its kind, but a continuation of previous existing structures (also referred to as FOZZ). The mother organization was informally created by the [communist] Ministry of Finance in December 1985, using money from state subsidies and monthly fees taken from companies and skimmed from foreign loans. In 1992 the Ministry of Interior said that FOZZ had financed construction of the Urengoi-6 pipeline. It was estimated that FOZZ had more than $5 billion of which $2 billion was provided by Polish companies. The financial transactions of FOZZ were murky and its books were not open to public scrutiny. It was impossible to know, with any certainty, how much money was going in or out of the organization.

It wasn’t long before fraud was discovered. Michal Falzmann, special inspector of the General State Chamber of Control, stumbled upon illegal transfers of large sums of money, $1 billion and $2.5 billion respectively, to accounts in foreign banks through a State Trade Company (PHZ). It is important to note that State Trade Companies were and are agencies of the Ministry of Finance that falsely present themselves as independent Polish companies attempting to conduct business in foreign markets. In some instances, these companies are controlled by military agencies [i.e., military intelligence]. They are also used to lure foreign companies to the International Trade Fairs in Poznan, where Polish engineers learn important details regarding U.S. and Western technology with the object of copying these technologies for sharing with Russia. Mr. Falzmann was alarmed by the illegal transfers he discovered within FOZZ and related operations involving: (1) extraordinary combinations and networks of intermediaries; (2) a small, unknown company named “Universal” that receives large loan guarantees from FOZZ; (3) evidence of joint ventures between “Universal” and other companies for the purpose of  purchasing yet other companies in order to create a chain of subsidiaries; (4) no financial documentation, no written contracts, no book keeping.

Within the above context the following institutions took part: (1) The National Bank of Poland (NBP); (2) Bank Handlowy (the only Polish bank with foreign currency accounts under the communist regime); (3) most of the PHZs; (4) the Ministry of Finance; (5) hundreds of small companies around the world. The people who hold the key positions at these institutions are mostly military intelligence officers according to Mr. Zemek who admitted as much during court hearings in 2002. Supposedly the transactions in question violated agreements made by Poland’s communist regime during the early 1970s when Poland received credits from the West. The credits were not supposed to be used for military purposes, but the communists created secret financial structures for precisely this purpose. According to expert sources, Moscow commanded the Polish communists to specialize in financial fraud operations. This was to be Poland’s specialty within the Warsaw Pact. Strategic financial operations would involve the use of large sums of money for expressly criminal purposes. Success in these debt-related operations specifically required the destruction of all documentation. Nevertheless, it is possible to link FOZZ's current operations directly to Moscow. While it is true that these operations are complicated, they are best understood as based on the exploitation of subsidiaries. 

Falzmann realized that FOZZ involved a plan to embezzle large sums from the Polish financial system. These operations were meant to accelerate the growth of Polish debt. In his notes, Falzmann wrote: “Polish debt is $46 billion of which $12 billion has to be paid to the London Club. But that debt has not been paid since 1981. The debt of Poland to the Paris Club has not been paid since 1984. There are various documents of financial transfers but, legally speaking, the debt is not being paid.”

 Falzmann also stated: “Between 1989 and 1991 there came to be organizations operating in Poland which are siphoning money to military circles, intelligence organizations and clandestine projects. In effect we find (1) discrepancies in the payment of Polish state debt; (2) the complete and intentional disordering of Polish state financial records; (3) corruption and theft taking place in order to pay for clandestine [intelligence and military] projects.”

After his initial discovery, Falzmann proposed to create a center for investigating FOZZ operations. The final goal of this investigation, he said, would be the reform of Polish state bookkeeping. He then wanted to take his case to international arbitrage and demand a return of stolen funds from Moscow, various East European countries and entities in the U.S., Canada and Japan. But then a strange thing happened. Shortly after discovering that bank Handlowy was bankrupt since the 1970s, Falzmann has a heart attack and dies. 

FOZZ connections to the Polish United [Communist] Workers Party (PZPR)

Consider the political connections of Andrzej Wroblewski who was (at one point) responsible for FOZZ as Deputy Minister at the Ministry of Finance. Wroblewski’s name is known in relation to important financial scandals like the “alcohol affair" and the "PZPR property and Polisa affair." In the latter case Wroblewski guaranteed a loan that the Polish United Worker’s Party (PZPR, the ruling political party in communist Poland) used in its 1989 election campaign. Instead of paying cash the new party created out of PZPR’s ashes gave party buildings to the bank. After a period of years the court said it was an illegal transaction. This did not stop Wroblewski, however, who went into business. He became a president of NYWIG Company, which was established by FOZZ. Grzegorz Zemek was on the board of NYWIG. Andrzej Worblewski has been president of NYWIG Group for 14 years. NYWIG is involved in building the Odessa-Brody oil pipeline. NYWIG also signed contracts with Gazprom with regard to building the Jamal pipeline. These projects are part of schemes hatched by communist politicians.

Adding it all up

FOZZ gave a large loan to the Bank of Economic Initiatives (BIG) in February 1990. (It is a leading post-communist company created with state funds.) Eight days later BIG transferred that money to an account at the National Bank of Poland (NBP). BIG was established by communist politicians like Aleksander Brochwicz (who served as political advisor to former Polish Prime Minister Leszek Miller) and Anatol Adamski (director of State Insurance) and Andrzej Cichy (director of State Post) and Dariusz Przywieczerski (director of Universal) and Andrzej Olechowski (minister of foreign affairs in 1992, a leading politician who admitted that he was an “industrial spy” during the communist era!). The partners of BIG were from the Yachting Development Foundation established by Mieczyslaw Rakowski (prime minister, long-time editor-in-chief of Trybuna, a communist daily) and Boguslaw Kott. One of the first buyers of BIG shares was the spokesman of [communist dictator] Jaruzelski, Jerzy Urban. The other BIG owner was a company called “Transaction” established by the Central Committee of the PZPR ruling communist party, the communist youth organization ZSMP, the Academy of Social Sciences (i.e., the propaganda department of the communist ruling party), and the octopus that controlled the communist media system – RSW Prasa, Ksiazka, Ruch. We must not forget to mention Mr. Piotr Szynalski (his daughter is now a member of the Polish parliament), Mr. Wieslaw Huszcza and Mr. Jerzy Szmajdzinski (Poland’s current minister of defense), who joined Transaction a year later. In is important to understand that Transaction sold shares of BIG to Universal. On the board of BIG we also find Mr. Krzysztof Czeszejko-Sochacki, the present director of the Polish Parliament Office. 

FOZZ and Trybuna (communist daily)

FOZZ is connected to Trybuna directly. Dariusz Przywieczerski, director of Universal, through "Univ-comp" company has financed Trybuna, the communist daily. The publisher of Trybuna was "Ad Novum" company. The board of it consisted of Mr. Marek Siwiec (now he is a secretary at the Polish National Security Council at the Presidential Office. Siwiec is very close to Polish President Kwasniewski and probably the most influential person in that circle), Mr. Krzysztof Janik (recently Minster of Interior), Mr. Marek Ungier (advisor to President Kwasniewski), Wieslaw Kaczmarek (a leader of the new communist party SDPL who served as Minister of Finance) and Edward Kuczera (until today responsible for communist party finances).

It has to be said that Grzegorz Zemek, who was Director of FOZZ, was an officer of the Second Department of military intelligence. In 1989 he was responsible for supervising the finances of Polish military intelligence and transactions at Bank Handlowy’s International branch in Luxembourg. Mr Klamecki, deputy director of military intelligence in late 1980s, confirmed this information.