OPINION: Packaging Recovery Notes are a self-regulated system that enables businesses to generate significant levels of cashflow with minimal degrees of oversight. If you are motivated enough to defraud the system, the question comes down to how much you can make before you are subject to audit. The most effective deterrent is therefore not the possibility of being caught but the value of the PRNs you are generating by doing it, which is a simple way of saying that right now I suspect PRN fraud (especially in plastics) is at an all-time low.
Doing it right Vs doing it wrong
This creates the frustration felt by both domestic recyclers and exporters, when the main deterrent is the amount of money fraudsters can make – you know the next spike in fraud is just around the corner. Not least because of the commitment and work that goes into “doing it right”. Those of us committed to the long term and to delivery of the mission should be under no illusion “doing it right” is a lot harder than “doing it wrong”.
PRN fraud is not a complex web of shell companies, counterfeited paperwork and material smuggling done under the cover of darkness. It is done in broad daylight under the watchful gaze of the regulator. PRN fraud is underpinned with a less is more mentality.
Perception Vs reality
What do I mean by this? Take for example the movement of material from the UK to Germany for recycling. Under Basel, Brexit and the current market this is no easy feat. But feedstock demand remains across the EU, and this is growing as UK infrastructure starts to slow because of closures, business failures and a lack of investment. So, it is a route to market that makes sense, but supporting it takes investment in compliance and logistic expertise.
We start with the requirement to move material under Pre-Informed Consent, the demand and capability being served is in advance sorting of mixed material streams, therefore movement under B3011 (Green List) is not possible. Therein lies the first investment in time and money and the initial flag to the Environment Agency that material is moving.
For those companies that have undertaken an application for Pre-Informed Consent you will know the level of due diligence undertaken by the regulator and the investment in not just application fees but also financial guarantees. But investment in this area is critical and becoming more and more of a requirement if your desire is to ensure legal and compliant export. If that isn’t your goal but instead you plan to fraudulently generate a ‘PERN’ then why raise the flag? Green List and cross your fingers would be the go-to attitude.
You are then faced with the reality of moving material trans-frontier. Even before Brexit movement in and out of the UK was always done under the watchful gaze for the UK Border Force. In some ports these are supported with Environment Agency Officers. Both have the powers to stop and search any vehicle they deem worthy of inspection. Paperwork is and always has been a vital part of exportation and recycling is not different with a greater and greater emphasis (post Brexit) on ensuring the right documentation accompanies a load.
For exporters ensuring this, it can be a full-time job for someone, even with the increasing levels of digitisation we are seeing across Government bodies. Before material can move a raft of documents need to be complied, together with loading pictures that support quarterly sample and inspection protocols. If you know the material, you are moving is not as described why go to all that effort?
Finally, once your material has reached its destination the journey is far from over, not least because until your receiving customer confirms it, your shipment will remain active. Remember the financial guarantee you committed to when you made the application? This now becomes highly relevant as the more activate shipments, the higher the costs. But even after they sort or process the material a full audit trail needs to be submitted showing the final destination and confirmation of recycling, often via a signed and stamped letter provided quarterly. Now to undertake fraud you need complicit customers ready to submit counterfeit paperwork.
While I don’t expect you to all weep openly for the challenges of exporters. I hope this does start to paint the picture that “doing it right” isn’t easy and certainly isn’t without costs. Therefore, if the goal of a fraudster is to secure the maximum return from the least effort, “doing it wrong” when exporting still isn’t a walk in the park.
If the regulator was to look at the challenge from that perspective, then targeting localised fraud makes much more sense.
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