Alaco

21.04.2017 | Warsaw’s turf war

The capital grapples with a property ownership controversy that has caused a political storm.

A poster hanging in Złote Tarasy, a shopping mall in the centre of Warsaw, boasts that the Polish capital has one of the highest concentrations of skyscrapers in Europe.  While the old town remains quaintly unchanged, over the past two decades the landscape of the business hub has been transformed as the race for the skies continues.

In January 2017 the real estate developer HB Reavis began the construction of Varso, a 53-storey commercial and residential complex, due to be completed in 2020.  By then Varso will be the highest skyscraper in the EU, if only because of Britain’s exit from the Union, as it will still be smaller than The Shard in London.

The rising skyline of central Warsaw is a testament to the capital’s rapid economic growth.  However, as if a reminder that the country has not fully escaped the legacy of Communism, the city’s tallest building is still the Palace of Culture and Science, a 231m structure erected in 1955 as one of the “Seven Sisters” – identical buildings dotted across the former Soviet Union. 

The legacy is not just symbolic: the city’s authorities and private owners continue to grapple with the complicated and controversial issue of ownership rights to many coveted plots of land and buildings in Warsaw. 

The origins of the problem date back to 1945 when Bolesław Bierut, Poland’s first Communist President, issued a decree legalising the confiscation of almost all private land in the centre of the capital.  Some of the owners were later compensated, but many were not. 

After the end of Communist rule in 1989 the issue of expropriation returned, with many heirs submitting claims to the Warsaw city authorities for restitution of their property.

The so-called ‘reprivatisation’ process became mired in controversy because while some restitution claims were legitimate, others were brought by opportunists.  The latter exploited legitimate heirs and, in some cases, colluded with municipal officials to illegally transfer the ownership of land and buildings into private hands.  Because there is no law regulating the restitution of confiscated property, reprivatisations are carried out on a case-by-case basis through administrative and judicial proceedings.

One of the most high-profile cases was the reprivatisation of land at number 70 Chmielna Street, a prestigious plot adjacent to the Palace of Culture and Science, worth some 160 million Polish zlotys (€38 million).  The restitution claim for the land was brought by lawyer Robert Nowaczyk in 2012.  The Warsaw Bureau of Land Management transferred ownership of the plot to Nowaczyk, despite the fact that the claim was invalid because the original owner had been compensated for it in the 1950s. 

In August 2016 the daily newspaper Gazeta Wyborcza exposed this and other dubious reprivatisations in Warsaw, unleashing a political storm.  Since then Poland’s Anti-Corruption Bureau has initiated dozens of investigations into reprivatisation transactions, some of them involving Warsaw city officials.  There was also a major reshuffle in the city administration and some have called for the resignation of Warsaw Mayor Hanna Gronkiewicz-Waltz.

The investigations into the reprivatisations are another arena for the ongoing power struggle between the ruling Law and Justice (PiS) party and the opposition Civic Platform (PO) party.  On 31st March President Andrzej Duda signed a law calling for the creation of a special commission to investigate irregularities relating to reprivatisations.  Gronkiewicz-Waltz said the commission was unconstitutional, as it would combine the authority of the executive branch and the judiciary, undermining the tripartite division of power in Poland. 

Instead, Gronkiewicz-Waltz urged parliament to adopt a law introduced by the PO in September 2016, which would regulate the process of evaluating restitution claims.

Rapid reform of the restitution process is in the interest of the developers, but the government’s moves remain uncertain and overshadowed by political finger-pointing about responsibility for the historic abuses.  The investigations by the Anti-Corruption Bureau are wide-ranging and extend well beyond examining restitution claims: they probe dealings many developers have had with municipal officials in Warsaw and other cities across Poland.  With a multitude of cases pending and only limited resources, there is a danger that political considerations may dictate which cases will reach trial and which will not. 

The reprivatisation scandal highlights two things: how intertwined business and politics in Poland are; and that for any major investor, steering clear of politics is no longer a straightforward matter.