Will crime and corruption risks undermine plastic waste bans?

by Carly Fabian, Research Associate

Published on November 18, 2020

Will crime and corruption risks undermine plastic waste bans?

Amid growing recognition of plastic waste’s environmental impacts, more and more countries are implementing bans or limitations on imports of plastic waste. China, which previously accepted more than half of the world’s plastic waste, banned the import of most plastic waste in 2018, and countries across Southeast Asia have begun to follow suit. In 2019, more than 180 countries signed an amendment under the Basel Convention making it harder to send plastic waste to developing countries. These new regulations have the potential to produce major changes in how the world produces, consumes, and disposes of plastic waste, shifting some of the costs from the world’s most vulnerable people and ecosystems back to the producers and consumers most responsible.

Without strong enforcement of these bans, however, criminal networks could use corruption and complex illegal schemes to undermine these efforts. A recent Interpol report warns that new regulations have “opened the doors for opportunistic crime” and led to a spike in plastic waste-related incidents. Drawing on case studies from forty countries, the report highlights a link between criminal networks and legitimate pollution management businesses, and it outlines how these groups are exploiting new and pre-existing weaknesses to undermine bans.

Plastic consumer countries, like the United States and the United Kingdom, are often the starting point for trafficking networks that illegally dispose of plastic waste. Investigations in the U.K. into a major plastic recycling scandal found that waste exporters, motivated by high financial incentives and weak enforcement, were falsely declaring how much waste they were exporting and laundering plastic waste through the Netherlands, ultimately allowing the waste to be dumped or burned abroad. In the United States, a federal grand jury recently indicted several individuals for a massive fraudulent plastic waste scheme that involved forged shipping documents, a shell company, and claims for USD40 million in refunds of customs duties.

The complexity of these schemes makes it difficult for law enforcement around the world to consistently detect and prevent illegal waste trade and disposal. Forged documents, fraudulent waste registries, and misdeclarations of waste allow waste to be imported and exported without being detected. By shipping waste through multiple transit points in free trade zones, companies can also obscure the origins of the waste and mislead investigators. Illicit activities regarding the disposal of waste often take place within existing licensed recycling facilities and waste treatment centers, making it difficult to differentiate legal and illegal practices.

Amendments to the Basel Convention on plastic waste have been highlighted as an important new tool for streamlining enforcement. However, Interpol warns in the plastic waste report that if the Basel Convention is not properly implemented in 2021, an increase in illegal plastic disposal is likely. In order for plastic waste bans and the Basel Convention amendment to succeed, they must be supported by strong enforcement. Yet, with only minimal attention devoted to the illicit waste trade and a shortage of investigative resources devoted to waste enforcement, law enforcement agencies around the world need assistance.

Whistleblowers could help fill these key gaps in enforcement. Around the world, whistleblowers are the first line of defense against corruption, fraud, and wrongdoing and the most effective source for information about fraud and other illegal activities. Whistleblowers are particularly effective in detecting the complex corporate schemes that otherwise allow crimes to go undetected.

Whistleblower reward laws, which allow whistleblowers to report outside of the company, could be a powerful tool for incentivizing insiders to report companies for plastic waste fraud. By establishing government-protected channels for reporting, these laws ensure that whistleblowers have a confidential path to report directly to law enforcement. The financial reward for whistleblowers whose original information leads to a successful prosecution also creates an important incentive to take the risk of reporting. American whistleblower reward laws, such as the False Claims Act, can provide a model for successful reward programs.

The False Claims Act allows whistleblowers to confidentially disclose fraud that results in a financial loss to the U.S. federal government. If the prosecution is successful, the whistleblower is awarded a mandatory reward between 15% and 30% of the collected monies. Whistleblowers do not need to be U.S. citizens, and they can report on companies that are not U.S.-based. The False Claims Act has been tremendously successful; in 2019 alone, whistleblowers helped to recover $2.2 billion in monetary sanctions for U.S. taxpayers, with whistleblowers receiving $271 million for their contributions.

The FCA also allows whistleblowers to report “reverse false claims,” false statements made to prevent the government from collecting what it is owed. Using the False Claims Act, whistleblowers can report reverse false claims like the alleged false statements made in the plastic waste export scheme exposed by the Department of Justice.

Plastic waste bans represent a potentially transformative step in the fight against plastic pollution, but the effectiveness of these bans will ultimately depend on their enforcement. Given the complexity and secrecy of plastic waste-related crime, regulators and prosecutors may struggle to collect evidence of crimes, and to understand the nuances of the evidence they collect, without the help of whistleblowers. Implementing strong whistleblower rewards laws, and encouraging whistleblowers to use existing U.S. laws, could ensure that whistleblowers are well-protected and incentivized to help prosecute plastic waste fraud.

This is the fourth installment in a five-part series on the NWC blog on whistleblowing in the plastics industry. Read part I, part II, and part III.

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