UK Report Finds No Evidence of Fraud on Shipping Packaging Waste

A UK government investigation into allegations against parts of the paper packaging waste industry has uncovered ‘inappropriate practices’ by a number of exporters.

No evidence of fraud was identified, but according to investigators they found numerous examples of incorrect administrative practices, which tended to suggest that the tonnages of packaging waste reported to have been exported in recent years were higher than they perhaps should have been.

However, the government does not propose adjusting the tonnages of paper packaging waste reprocessed or exported following this mission, since it was not possible to quantify the amount of tonnage to be deducted.

Exports of paper packaging waste for recycling have risen from 177,439 metric tons in 2001 to more than 1.1million metric tons last year according to data provided to the Environment Agencies by paper packaging waste exporters.

The investigation was ordered by Ministers to look into allegations of inappropriate issuing of paper Packaging Waste Recovery Notes and, in particular, paper Packaging Waste Export Recovery Notes between 2002 and 2005.

The investigation was carried out by external auditors with support from the Environment Agency, Scottish Environment Protection Agency, Defra, DTI and the Devolved Administrations - 17 exporters and three reprocessors were visited between November 2005 and June 2006.

The investigation was similar to the wood and plastic packaging waste fact finding exercises in 2003 and 2004. On this occasion, the robustness of existing recording and monitoring systems was examined along with audit trails adopted by paper packaging waste exporters and reprocessors to manage the allocation and issue of PERNs and PRNs, respectively.

Recommendations in the investigators’ report include that:

It is not acceptable for exporters to rely on suppliers (who are often businesses entirely outside the scope of the Regulations) to state/confirm that loads are packaging waste. However, the requirement for exporters to provide the Agencies with a sampling and inspection plan is helping to address this issue;

Exporters must ensure that their freight forwarding agents use the correct code for the type of paper packaging waste exported. The Confederation of Paper Industries informed government that there are large discrepancies in the data submitted to HM Revenue and Customs on paper packaging waste exports and the data submitted to the Environment Agency (through PERNs issued), and subsequently to Defra. It has emerged that freight forwarding companies are often using the wrong customs’ codes on paperwork accompanying packaging waste exports, which could account for a large proportion of the discrepancies in the two data sets;

Where it is found that the moisture content of a paper packaging waste shipment exceeds the agreed industry levels, and an overseas customer makes a claim, any adjustment to the price must also be reflected in number of PERNs issued by that exporter.

All of the paper packaging waste exporters visited receive claims from time to time from their overseas customers that the moisture content of loads is too high, i.e. more than the industry-agreed level, and whilst all of them credit their customers in some way, all but one make no adjustment to their PERN records.

The government expects the paper industry and, in particular, the Agencies to take on board the recommendations in the report, enabling them to carry out a more robust enforcement of exporters and reprocessors of paper packaging waste, and expects that the Advisory Committee on Packaging will review the issues identified in the report with industry and the Agencies.

Future actions may lead to the developing of a voluntary protocol similar to those that exist for the wood and plastic waste sectors.

The full report can be found at http://www.defra.gov.uk/environment/waste/topics/packaging/index.htm