NCBR responds to allegations regarding auditors

• Startup Human Culture has been arguing with NCBR over the evaluation of the project for 16 months.
• There is an ongoing prosecutor's investigation into potential conflicts of interest related to the actions of the auditor assessing the company.
• The NCBR director upholds the decision issued by auditors. "The given location [the company's headquarters - ed.] contains a leased area, which, however, prevents the introduction of equipment and people to its premises," he writes.

The District Prosecutor's Office of Warsaw Wola is conducting an investigation into the abuse of power by employees of the National Center for Research and Development. The case concerns the commissioning of a financial audit of a project by Human Culture sp. z o.o. in November 2023 to DPC Audit Partner sp. z o.o. According to the notification submitted by the startup's president, these actions could have exposed the company to damage. As the spokesman for the prosecutor's office informs us, the investigation is ongoing in the case, not against specific individuals.

Problems of an AI startup

What is it about? The startup received funding under the Smart Growth Operational Program. Just before the project was completed, an audit commissioned by NCBR showed that IT work on the project was done remotely, which according to the auditor was against the program's rules - a necessary condition for applying for funding was the implementation of the project in a less developed region. The auditor found that the company had not met this condition.

Human Culture claims, however, that it has evidence in the form of contracts and invoices that confirm the existence and operation of the office in Szczecin, where the project was carried out. It also argues that remote work was a necessity resulting from the COVID-19 pandemic, which was in line with the law and practices in force at the time of the project.

In the report to the prosecutor's office, the company's president argues that the auditors were linked by capital and personal ties to the company's direct competition. We described the case in more detail in the text "New problems of NCBR. The prosecutor's office has initiated an investigation, in the background a possible conflict of interest and the company's collapse".

After the publication, the director of NCBR sent us additional explanations on the matter. Prof. Jerzy Małachowski believes that the auditors were right.

NCBR position on the Human Culture company:

We would like to inform you that as part of the project POIR.01.01.01-00-2039/20 "Development and verification in operational conditions of an IT platform using artificial intelligence models and psychometrics to automate selected elements of recruitment processes", the Project Control Department of the National Centre for Research and Development conducted one on-site inspection on December 6-7, 2023. The scope of the inspection included an assessment of the implementation of the project by HUMAN CULTURE sp. z o. o. in both substantive and financial terms.

We emphasize that it is not true that the reservations about the implementation of the project concerned remote work due to the pandemic - this was not the main problem. In accordance with the Rules of the competition 6/1.1.1/2020 "Fast Track", a necessary condition for applying for funding and later granting financial support for the implementation of the project was the actual implementation of the project in a less developed region. However, the audit team determined that the address in Szczecin provided by the Beneficiary in the application and the Funding Agreement as the place of implementation of the project was in fact the address of a virtual office for registration and delivery purposes. During the audit, the Beneficiary did not provide any documentation confirming that the work in the project was actually performed in Szczecin.

The beneficiary of HUMAN CULTURE sp. z o. o., in a letter dated 20 August 2024 addressed to the POIR Managing Authority, indicated doubts regarding the objectivity of the assessment of the Control Team carrying out an inspection on 6-7 December 2023 in the project "Development and verification in operational conditions of an IT platform using artificial intelligence models and psychometrics to automate selected elements of recruitment processes".

In connection with the above, the Intermediate Body decided to conduct additional activities in order to verify the occurrence of irregularities identified by the Control Team in the scope of the project implementation location. The final assessment of the correct implementation of the project includes the full material and financial scope of the project, as well as its compliance with the original assumptions and the concluded Agreement.

This verification was carried out by the Beneficiary Cooperation Department of the NCBR on the documents with the final payment application and the control at the end of the project, referred to in Article 22 of the Act of 11 July 2014 on the principles of implementation of cohesion policy programmes financed in the 2014-2020 financial perspective, about which the Beneficiary was informed in a letter dated 18 September 2024.

It is worth emphasizing that the verification and final inspection carried out between 18 September and 10 December 2024 was a process independent of the aforementioned inspection carried out at the end of 2023. Hence, the Beneficiary was again requested to submit full documentation for the purpose of verification and final confirmation of the project implementation location in accordance with the Co-financing Agreement and competition documentation (including by submitting agreements, protocols, and possible photo documentation).

In the indicated period, i.e. from September 18 to December 10, 2024, the NCBR Beneficiary Cooperation Department exchanged correspondence with Human Culture Sp. z o. o. on the subject matter, several times requesting the submission of full documentation for the purpose of verification and final confirmation of the place of implementation of the project, in accordance with the Funding Agreement and competition documentation.

In the documentation and explanations provided by Human Culture Sp. z o. o., the Beneficiary argued that:

a) The beneficiary clearly indicated that the project was fully implemented remotely, using cloud IT infrastructure to accumulate R&D work.

b) The team carried out project tasks remotely.

The agreements were concluded during the COVID-19 pandemic, i.e. at a time when generally applicable regulations allowed employers to use remote work based on agreements with employees. However, the beneficiary did not submit confirmation in the documentation that such agreements took place in this case.

c) According to the Beneficiary's declarations and explanations, R&D works creating intellectual property in the project were carried out via cloud services, which were registered and managed from the headquarters in Szczecin as the place of project implementation. The company used the possibilities of the cloud registered in Szczecin as a place of accumulation of all industrial research and development works.

d) The submitted copies of reports on research and development activities for 2021, 2022 and 2023, submitted by the beneficiary to the Central Statistical Office, did not contain information on the town where the organizational unit is located (where the research work was carried out in the reporting periods).

"Process management is not the same as its implementation"

We inform you that according to the competition documentation, "the place of project implementation is the place where the applicant conducts the largest part of industrial research and development work in terms of value - independently as an individual applicant and independently as a consortium member when implementing the project as part of a consortium. If the above cannot be determined - then it is the place where the applicant conducts the most important part of industrial research and development work - independently as an individual applicant and independently as a consortium member when implementing the project as part of a consortium. If this cannot be determined either - it is the place of implementation of the results of R&D work (place of investment). If none of the above conditions can be determined - it is the place appropriate for the seat of the individual applicant, and when the project is implemented as part of a consortium - for the seat of each consortium member.

After analysing the submitted documentation and explanations, NCBR found that the source documents do not indicate that the company’s headquarters, i.e. Szczecin, ul. Cyfrowa 6, was the place of implementation of the project, consistent with the competition documentation.

The given location contains a rented space, which, however, prevents the introduction of equipment and people to its premises, and the availability of the conference room (provided for a fee by the Lessor) was used by the Beneficiary solely for the purposes of meetings with the Audit Team in December 2023. However, no documents were submitted that would confirm the use of the room in the course of the research project.

The criterion of place of implementation of the use of Google Cloud and MongoDB cloud services cannot be considered as met, as (according to the Beneficiary's declarations) they were registered and managed from the registered office in Szczecin, cumulating the implementation of all work within the framework of industrial research and development work.

Managing the process is not the same as its implementation itself, and this actually took place in other locations, not indicated in the application (due to the use of the remote work formula).

Taking the above into account, NCBR in the letter "Findings from the inspection at the end" dated 10 December 2024, found that the project implementation location was inconsistent with the competition documentation. NCBR's position was also upheld in the letter dated 20 January 2025.

This constitutes an irregularity in the place of implementation of the project, inconsistent with the competition documentation and the Agreement: § 3 section 1 of the Agreement "The Beneficiary undertakes to implement the Project, within the scope specified in the Project budget, in accordance with (...) the Agreement and its annexes...";

Items 6 and 7 of the Competition Regulations 6/1.1.1/2020 "The competition is open to projects implemented in the territory of the Republic of Poland, only in less developed regions. Less developed regions include all voivodeships except the Mazowieckie voivodeship (a more developed region)."

In accordance with § 15 section 3 item 2 of the Funding Agreement, "The Intermediate Body may suspend funding or terminate the agreement with immediate effect if (...) the beneficiary has ceased to implement the Project or is implementing it in a manner that is contrary to the Agreement or in breach of the law."

We also note that NCBR procedures specify in detail the rules for submitting personal declarations of impartiality and lack of conflicts of interest by members of the control teams and external companies. The selection of external companies for project control is conducted as part of tender procedures.

Companies are selected in unrestricted tenders, in accordance with the Public Procurement Law. The selection of the offer is always carried out in a transparent tender process. In this case, all requirements related to the control were met. The declarations of the members of the control team and DPC Audit Partner sp. z oo are included in the control documents.