The KPO scandal dates back to the PiS era. "You can't audit everything."

The quiet resignation of the head of the Polish Agency for Enterprise Development (PARP) at the end of July proved to be just the prelude to the turmoil surrounding the PLN 1.2 billion in funding from the National Recovery Program (KPO) for companies in the HoReCa sector (including hotels and restaurants). "Rzeczpospolita" was the first to report on Katarzyna Duber-Stachurska's unexpected resignation on August 1st . She was replaced by Krzysztof Gulda as acting president, and neither the agency nor the government announced the change or the reasons for it. Today, this decision is clearer after controversial recruitment results for the HoReCa support program, financed by the KPO, came to light.

The outrage over the election results began on Thursday, August 7th, and by Friday, August 8th, it had already reached such proportions that some media compared them to the infamous "octopus" polls of 2014, which contributed to the Civic Platform's election loss in 2015. European Commission spokesman Maciej Berestecki stated in an interview with RMF FM that "Poland has an obligation to take action to investigate." The Regional Prosecutor's Office in Warsaw undertook the "investigative steps" on Friday .

Some selected projects, described by Internet users, among others, on the X portal, caused outrage: funds for the purchase of an apartment to rent it on the platform, expansion of the wardrobe in the hotel, purchase of a PlayStation console and a jacuzzi for relaxation for the publishing house's employees (remember, the support was supposed to apply to restaurants and hotels), and equipment for a swingers' club.

The program's imprecise, undefined criteria are often cited as one of the causes of this disaster. Katarzyna Pełczyńska-Nałęcz, Minister of Funds and Regional Policy, loosened the selection criteria (including reducing the company's revenue loss during the pandemic from 30% to 20%) and expanded the group of companies eligible to apply for funding (HoReCa could be a side business).

"Criteria that changed during the competition, including the possibility of purchasing yachts, appeared after the first round of applications. The question is: who decided this?" asks Katarzyna Obara, a former journalist and current owner of the OKWineBar restaurant in Wrocław, on the X portal. She points out that the entrepreneurs used the criteria that were created for them.

Agency employees recruited during the PiS era were involved in the evaluation of applications, including the husband of former Prime Minister Beata Szydło. "Edward Szydło, Beata Szydło's husband, is the deputy chairwoman of the Project Evaluation Committee for the HoReCa KPO program. Mr. Szydło evaluated projects in regions governed by PiS members: Małopolskie, Świętokrzyskie, Lublin, and Podkarpackie," wrote Dominik Jaśkowiec, a Civic Coalition MP, on X.

Applications were assessed not by PARP itself, but by selected operators, usually regional development agencies. Before her appointment in May 2024, former PARP President Katarzyna Duber-Stachurska served as vice president of the Society for Social and Economic Investments, one of the five operators. The others were the Rzeszów Regional Development Agency (RARR), the Polish Entrepreneurship Foundation, the Regional Development Agency in Bielsko-Biała, and the Kalisz Entrepreneurship Incubator Foundation. Intensive audits are underway at RARR, which has been accused of granting funding to the most controversial projects and has signed (according to the KPO website) a total of over 560 agreements with beneficiaries.

"This is a shocking case. The investment is intended to support the development of Polish hoteliers and restaurateurs, not to expand their wardrobes. (...) I have instructed the President of the Polish Agency for Enterprise Development (PARP) to immediately initiate an inspection of the Rzeszów Agency to ensure the proper use of public funds," writes Jan Szyszko, Deputy Minister of Funds and Regional Policy, Poland's chief negotiator for the KPO revision.

Although PiS politicians are eager to criticize the KPO recruitment process, it was PiS that built the program in 2021 and 2022. PiS-affiliated individuals, like the former prime minister's husband, evaluated criticized applications at regional development agencies, and entrepreneurs associated with the party often profited from the program. This includes Paweł Pecura, a PiS councilor from Ostrów Mazowiecka, who boasted about securing PLN 760,000 for his clients from the KPO HoReCa program, including an entrepreneur with the same name: Marek Pecura's catering company received funding for charter yachts.

As the entrepreneurs themselves point out, the goal of the recruitment drive was to equip HoReCa companies, most affected by pandemic restrictions, with new equipment and diversify their operations to survive future crises. "Thanks to the release of KPO funds, we can now support this industry," said Jacek Protas, deputy head of the Ministry of Funds and Regional Policy from 2023-2024.

One of the companies that received funding for the purchase of yachts commented similarly – the restaurateur explained in an interview with Money that during the pandemic, restaurants, including his, had to be closed, but the yachts could sail and earn money, so he bought yachts manufactured in Poland, which are currently sailing, earning money and paying taxes on them.

Doctors on the X portal are outraged that luxury purchases from the KPO were made at the expense of hospitals. "Oncology centers in Warsaw, Bydgoszcz, Opole, Brzozów, Lublin, and Kielce. What do these hospitals have in common? They coordinate cancer treatment for the entire country and their respective provinces. And they were positively assessed and not recommended for KPO support," writes on X oncology resident Jakub Kosikowski.

However, healthcare, including hospitals and medical universities, will receive a total of PLN 18 billion from the National Health Fund (KPO), 18 times more than the budget of the program being criticized today. "We allocated PLN 5.2 billion for oncology in the KPO!" writes Izabela Leszczyna , who was until recently the Minister of Health. Information on the Ministry of Finance website indicates that specialist and district hospitals alone will receive a total of PLN 9.4 billion from the KPO, medical universities will receive PLN 3.2 billion, and PLN 4.4 billion is earmarked for medical digital transformation.

Perhaps we should have transferred the money between pools? Unfortunately, this is very difficult and requires Brussels' approval. "The KPO has separate pools for hospitals, transport, and green energy. Unfortunately, we can't freely transfer these funds, because any changes to the savings achieved or the achievement of the indicators require the approval of the European Commission," explains Małgorzata Okularczyk-Okoń, CEO of Collect Consulting.

He points out that this was the case with the Green Urban Development instrument, whose indicators were met, and the European Commission agreed to transfer the funds to the defense fund. "Here, we currently have 'disused' projects with presumably paid advances, so the solution to this problem isn't simply to reallocate funds to other priorities," adds Okularczyk-Okoń, noting that withdrawing support for programs already underway could result in liability for damages.

"The problem with the KPO was that it wasn't actually consulted on, and after the change of government, there was little time for changes," notes Piotr Miecznikowski, president of the Digital Poland Foundation. "The KPO was secretly written by the Law and Justice party (PiS). The consultations were fictitious. A real opportunity arose later, but then there were elections, a change of government, and you can't do audits everywhere," notes the expert.

This indicates the short time between the current government's assumption of power and the start of recruitment. Consultations on the KPO's assumptions and budget were held in 2021, under the PiS government. The European Commission approved it on June 1, 2022.

The Recovery and Resilience Facility (RRF) is the Polish part of the EU's massive Recovery and Resilience Facility (RRF) under the Recovery Plan for Europe, which was intended to support EU economies after the pandemic and increase their resilience to future crises. Poland has secured approximately €58 billion in five areas under the RRF. The support for HoReCa, which has been criticized today, received funding from the first area – economic resilience and competitiveness. Other areas include green energy and reduced energy consumption, digital transformation, accessibility and quality of healthcare , and green and smart mobility.

The first applications for payment from KPO Polska were submitted in December 2023. Mieczkowski points to inadequate consultations, pressure to quickly spend funds, and a delay in the program's launch, which ultimately resulted in beneficiaries spending funds at the turn of 2024/2025 that they needed several years earlier.

EU funding experts point to three factors that led to poor application selection. "Here, we had a domino effect of bad decisions. The victims will be those companies that were actually harmed, experienced a revenue decline of over 30%, submitted applications for interesting projects, and will likely face unnecessary additional verifications of those applications. I suspect all of these projects will be re-verified," says Małgorzata Okularczyk-Okoń. The first weakness she points to is PARP's delegation of project evaluation to five different entities, and perhaps a lack of coordination. The second problem is the very soft selection criteria, as business diversification wasn't defined by parameters. This is what caused absurd ideas, like a kebab shop overnight stay, to slip through the cracks. Time pressure also made the work difficult; the funds had to be spent by June 30, 2026, so PARP prepared the competition in a hurry.

The confusion over funding for HoReCa could harm the entire KPO. InPost CEO Rafał Brzoska wrote on X that this is precisely what he fears.