NASK lost millions of EUR which were the property of domain owners

As the Polish „Dziennik” informed in July – NASK – the institution which services the .pl domain registry on the territory of Poland, lost 14 millions of PLN (3,5 millions of EUR) in connection to risky financial operations, the amount which constitutes 15% of its annual budget, which amounts to 93 million PLN (23 million EUR). The Minister of Education, Barbara Kudrycka, to whom the institution is subordinate, recalled Maciej Kozłowski who was the head of NASK. “I’m shocked that such an important institution not only had lost huge amounts of money but had also done it breaking the law.” – reports “Dziennik”.

Dziennik refers to NASK as a company and in fact, it is correct. Although that NASK should be perceived as a research and a development unit. In reality, NASK activity focuses of consumption of income generated by the domain department, which in is a hen laying golden eggs. As the .pl domain registry, NASK generates huge profits subject to that fact, with considerably low costs which are connected to the upkeep of this activity.

Despite the growing number of .pl domains, NASK does not intend to lower domain prices. Although registration fees are currently at the low level of (10 PLN net ~ 2,5 EUR), and the extension fee has been lowered to 40 PLN a year ~ 10 EUR (earlier 60 PLN net ~ 15 EUR), nevertheless, domain prices are still a few times higher in comparison to the level of fees obligatory within the developed countries such as Germany, Great Britain, the Netherlands or Spain – where a domain costs just a few euro per year.

Why are domains still so expensive in Poland? Now we know, what NASK spends the money earned from domain fees on. NASK invests domain owners’ money into the so-called “currency options” the fact which is controversial enough bearing in mind that law forbids all public institutions to convey this kind of activity. This fact constitutes a serious infringement of the public finances act, by NASK. In addition NASK does not settle transactions with its partners with application of foreign currency that is why the fact of securing its operation with application of currency options is not supported at all. In this case we are dealing with plain gambling, which was financed from the fee for .pl domain upkeep. The costs of recklessness of NASK acting director has to be borne by hundreds of thousands of domain owners, who every year pay for their upkeep with domain registars.

What is interesting, is the fact that already in 2006, the Highest Control Chamber (Najwyższa Izba Kontroli) criticised NASK accusing the institution that only “a very small portion of resources is used towards research and development works”, and the whole institution is too much business oriented. It is then that the first warnings appeared that NASK finances strange stock exchange investments with application of profits generated from telecommunication services and from domain upkeep activity. Unfortunately at that time no actions had been undertaken, the fact which now raises substantial doubts and questions.

From 2006 NASK profits substantially increased, especially subject to domain upkeep but at the same time no one put much interest in the type of activity conveyed by the institution. Let’s hope that this time NASK activity shall be thoroughly reviewed. Barbara Kudrycka the Minister of Education has already notified the prosecutor’s office considering the seriousness of the matter. She also added: “The operations undertaken in connection to the finances of the aforementioned institution are intolerable. This was completely careless, it is forbidden to blow public money like that”. I will continue to follow the issue closely and will inform of all of the news, which shall be brought to light.

The internet edition of Gazeta Wyborcza (the most popular Polish daily newspaper) quoted Anna Maj from NASK Public Relations department, who claims that, indeed the institution lost assets in connection to financial transactions but this fact stems from breach of authority “by one of the former NASK employees”. Moreover, the institution argues that the suffered losses shall bear no weight in connection to the running operation as well as to the financial condition of the institution. Anna Maj adds that all of the costs of misplaced transactions have been covered only with assets from economical activity of the institution, without the engagement of any of the National Treasury assets.

Unfortunately Ms. Anna Maj forgets to add that the money does not come from the standard economical activity, as it would be in case of every market company. The main source of NASK income is constituted by revenues generated from registration and .pl domain validity extension. Had it not been for that source, domain registry would not have any assets available for the financing of its investments into currency options. NASK is a monopolist – this is the only location where the registar may purchase .pl domains for his clients. The fact that NASK may dictate prices for .pl domains at its discretion and later may cover the costs of its misplaced operations from this type of activity, is surely no the right thing to do.

In countries where domains are cheapest and which have their largest number, the national domain registry is managed by the non profit organisation. That is why domains are cheap and the operation of such institution is clear and transparent. There are no situations when, high domain income, is used to financed the activity which is no respect related to the issue domains. In Poland it is not only NASK which does not want to lower the price of domains – the fees are increased by the introduction of additional fees for the improper registration attempt or extension of the domain after the period of its expiration, when the domain owner still has fifteen days to settle the payment.

The fact of the lost millions of PLN by NASK was communicated by all important Polish websites and magazines: Dziennik.pl, gazeta.pl, onet.pl, Wprost.pl, WP.pl, Interia.pl, interaktywnie.com or Internet Standard. The information also appeared of a foreign blog. The ill operation of NASK is also discussed by internet users on various forums. Join the discussion – write what you think of NASK activity in Poland.

Daniel Dryzek

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3 Comments »

  1. […] […]

  2. […] competition for the director of NASK is connected to the latest revelations of Dziennik about which I wrote in the previous article – NASK lost 14 million PLN (3,5M EUR) in connection to the risky financial operations. What is […]

  3. Constance said

    NASK violates EU law-consider it domain name registration-it is lamentable, if a cybersquatter steals the domain, true owner cannot do anything, as NASK allows the registrants to stop third-party arbitration, if the registrant simply ignores to sign “arbitration agreement”, ha-ha! Also, they invented an incredible rule of free release of the domain for public registration, after the arbitration is blocked by NASK rules, and the rights of the third party, who initiated arbitration, are ignored already by NASK, as they may register who they like, saying that the new registrant was more “successful”. Please tell me, in which EU country it is possible? We in Germany, Hungary and France have nothing like that, and NASK is happy with all this humiliation. As you write here, new DNS dept. head is a NASK lawyer, so he invented all these rules? Why intelligent person like programmer Andrzej Bartosiewicz was not working any longer, and lawyer is appointed to run the computer science-related department at NASK? Strange, Polish friends, unbelievable!

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