Anti-fraud algorithm is silently controlling COVID-19 subsidies in Poland

By Krzysztof Izdebski

In Poland, the emergence of algorithms as control tools did not only take place in the context of contact tracing, during the pandemic. Algorithmic control was also carried out in relation to the money that the state has given to entrepreneurs who have lost their income due to COVID-19. The Central Anticorruption Bureau (CBA), which was involved in the creation of this IT system, does not want to reveal any details about it.

The Polish Development Fund (PFR), with the participation of the National Tax Administration (CBA) and other services, developed and implemented a special anti-fraud algorithm, which, while verifying the granting of public aid to companies, is pointing out anomalies and unusual events.

All we know about the system is limited to some pieces of information which were shared by public officials at launch. In the course of the control, authorities are checking the compliance of the data submitted by entrepreneurs when applying for the subsidy with the actual state of affairs -- for example, whether they are following the limits of the received public aid taking into account the condition of maintaining the level of employment. 

The algorithm also checks whether the received public aid was granted in compliance with the requirements of the agreement, and whether the received subsidy is spent in accordance with the purpose of its granting, i.e. to cover the costs of the conducted economic activity. 

In addition, the algorithm examines whether the decline in the entrepreneur's revenues was actually related to objective circumstances caused by the pandemic or whether it occurred through the sole fault of the entrepreneur -- for example, due to poor business management. This is important in order to eliminate those cases where the deterioration of the economic situation of the company was caused by wrong business decisions, and not the objective, COVID-related, circumstances.

If the system detects anomalies, the concerned company is first asked to provide a written explanation. If the authorities find the explanation to be insufficient and inconsistent with the facts, or if it is not provided at all, PFR will call on the company to return the subsidy. The case is referred to the relevant services or authorities if the company fails to return the subsidy at PFR's request.

On 5 January 2021, the eState Foundation requested the Head of the Central Anti-Corruption Bureau to provide the following public information:

1. identity of the contractor of the fraud prevention algorithm referred to in this article: https://wyborcza.biz/biznes/7,147584,26391650,algorytm-cba-juz-dziala-sprawdza-firmy-ktore-dostaly-subwencje.html
2. identity of the system’s main contractor 
3. whether the contractor belonged to an entity that is external to the institutions indicated in the article (PFR, KAS, CBA); under what procedure it was it selected, and by which of these entities
4. If the contractor was an external entity, content of the contract concerning the development of the system 
5. costs of the implementation of the system
6. who checks the correct functioning of the system, and how.

According to the negative CBA decision, it was impossible to release the requested information, as it constitutes classified information and its release would: 

-- hinder the performance of operational and exploratory activities carried out in order to ensure the security of the state or prosecution of perpetrators of crimes by services or institutions authorized to do so; 

-- significantly disrupt the functioning of law enforcement bodies and the administration of justice;

-- hinder the performance of tasks by services or institutions responsible for the protection of security or fundamental interests of the Republic of Poland

-- hinder the performance of tasks by services or institutions responsible for the protection of public order, security of citizens or prosecution of perpetrators of crimes and fiscal offences, and the administration of justice.

The authority also failed to address the individual questions included in the Foundation's request, limiting itself to denying access to its entire subject matter. According to the proportionality principle, it should have instead checked whether some of the submitted questions could be answered. For example, detailing how much the system costs does not seem to hinder the performance of operational activities of the CBA.

The Foundation has submitted the complaint to the Regional Administrative Court in Warsaw and awaits the date of the hearing.