East European Nations Swamped by Post-Communist Restitution Claims

MILANOWEK, Poland —  Konstancja Dolega belongs to a distinct social class in Poland--those whose families lost property after World War II and haven’t been able to get it back since the fall of communism.

Her grandfather’s candy factory in Milanowek, near Warsaw, represents her only real link to the life her family knew before the communists seized it in 1948.

When communist rule ended almost a decade ago, Dolega’s family began a painstaking and eventually failed effort to reclaim the plant, which the communists had lumped into a state company called Wedel.

Before the countless forms were filled out and interviews completed, the post-communist government sold Wedel in 1991 to PepsiCo, which closed the factory.

The plant stands idle today, but PepsiCo plans to sell it to a private buyer, which will end Dolega’s chances of getting it back and force her family to settle for either money or perhaps other property--at best.

“There is no restitution law, and everybody does what he wants,” she said bitterly at her house, where the family still makes candy in a small building in the backyard.

Restitution is a mixed picture in former Soviet-bloc nations.

The Czech Republic, Hungary, Bulgaria and Romania have enacted laws allowing at least partial restitution. Romania, for example, returned land, but only up to 25 acres. Hungary issued compensation coupons that are traded on the stock market and can be exchanged for shares in privatized companies.

Russia has yet to enact any significant restitution laws, which are opposed by the communists who control the parliament.

Faced with severe social needs and rebuilding an economy left bankrupt from the communist era, Poland’s government is working on a restitution plan that everyone agrees won’t fully satisfy claims.

“It can be done only in a limited way,” said Waldemar Kuczynski, a former privatization minister who still sits in parliament. “It is impossible to make up for the injustice of history.”

The main problems are the huge amount of property involved and the high costs. Communist rulers, usually violating then-existing laws, took over farms and factories throughout the country and nationalized all of central Warsaw under a rebuilding program.

Officials estimate they will get 170,000 claims totaling $32 billion to $37 billion, roughly the amount of Poland’s annual government budget. In central Warsaw alone, officials face 2,500 claims for some of the city’s prime locations, including the site of the U.S. Embassy and plots around the Palace of Culture and Science, which dominates the downtown skyline.

So far, the city has returned at least 840 properties since 1995.

Some former owners have gotten courts to order the government to pay compensation for illegally seized property. Since 1989, it has had to pay out $15.5 million in 130 cases.

Stanislaw Kolanowski, head of the restitution department at the Treasury Ministry, said the government cannot afford to pay many claims in cash. So its compensation plan is focusing on noncash alternatives, such as stock in former state companies and return of land.

But some former owners have little choice but to seek money.

Elwira Fibiger’s family owned the Calisia piano factory, in Kalisz 150 miles north of Warsaw, for almost 80 years.

But after years of communist mismanagement and saddled with $1.5 million debt, the plant would require too much investment. The toilets are still the same ones installed by her grandfather, she noted.

So Fibiger accepted payment--she wouldn’t say how much--instead of reclaiming the factory.

“It hurts,” she said. “My original intention had been to continue family tradition.”

Once laws are in place, the government plans to return to former owners property still held by the state or local authorities. That could cover up to $20 billion worth of property, the Treasury Ministry says.

Former owners of property legally acquired by someone else would get vouchers for the value of the property. The vouchers could be used to purchase shares in state companies being sold off by the government. Some $9 billion worth of state property is being allocated for the vouchers.

Vouchers also could be exchanged for stock in a special investment fund managing $11.5 billion worth of shares of privatized companies.

Cezary Jozefiak of the Monetary Policy Council argues that too much state property already has been sold off or allocated elsewhere to meet the demand of former owners.

“Claims are bigger than the ability to satisfy them,” said Jozefiak, who advocates compensating people for only a portion of their property. “We cannot burden the next generations.”

Despite the obstacles, many former owners say they won’t give up.

Jerzy Moscicki can’t recall how many visits to city officials and lawyers he made during the seven years before he got back his grandfather’s apartment building in downtown Warsaw a year ago. Now he is nagging the city to return another apartment building.

“I must fight,” said Moscicki, 59. “My family worked hard for so many years. All its property should be mine.”