NAV scandal linked to EØS ignorance

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As Norway wrestles with its biggest welfare scandal ever, legal experts claim that the real scandal extends far beyond state welfare agency NAV. They stress that it shows just how poorly Norwegian politicians, bureaucrats and prosecutors understand and interpret the European (EØS) regulations they’re supposed to follow, or what their consequences really are.

Norway’s economic agreement with the EU goes far beyond trade and business issues. Legal experts claim that problems occur when Norwegian authorities don’t understand how EU rules can override Norway’s own. PHOTO: Statsministerens kontor/Juha Roininen/EUP Images

“This is an EØS scandal, not just a welfare scandal,” declared Hans Petter Graver, a professor and former dean of the law school at the University of Oslo.

Graver, in a commentary published in newspaper Aftenposten, was referring to the so-called EØS agreement that Norway has with the European Union that gives Norway full access to the EU’s inner market. Known as the EØS avtale, short for Europeisk Økonomisk Samarbeid (European economic cooperation), the agreement also obliges Norway to go along with EU directives and regulations. Norway can attempt to reserve its right not to go along, but has never defied the EU since the EØS agreement took force in 1994.

“The EØS agreement is not only a trade agreement or an economic cooperation,” Graver stressed. “It is a legal fellowship that builds upon everyone covered by it having rights.”

Norwegian and EU rules can conflict
NAV made the mistake of following Norway’s own rules when it punished recipients of welfare, including sick pay and unemployment benefits, who had traveled to other countries within the EU or the European Economic Area (EEA) of which Norway is a member. Norwegian law restricts the export of such benefits across borders, the theory being that if you’re too sick to work or need to be searching for a job, you can’t go on holiday or otherwise leave the country without obtaining permission in advance. You’re supposed to stay home and either get well or actively look for work, and check in with NAV regularly.

Law professor Hans Petter Graver PHOTO: University of Oslo

Police, prosecutors and the courts upheld NAV’s practice for years, even though the EU and Norway’s EØS agreement with the EU allow free flow of people, goods and services across borders in the EU and the EEA. Graver finds it “incomprehensible” that no one realized how NAV’s practice defied the EØS’ principle of free movement over borders: “If you lose your social rights if you move across borders, then you’re not being allowed to move freely,” Graver pointed out.

NAV has thus been violating the EU/EØS rules since at least 2012, when they were clarified, and probably for long before that. The police and prosecutors who took NAV’s charges against alleged welfare swindlers to court didn’t think to question NAV’s practice, nor did a long line of Norwegian judges hearing the cases. At least 48 people have thus been wrongly convicted and even been sentenced to jail, while thousands of others were stripped of their benefits and ordered to pay back those they’d received.

Newspaper Klassekampen reported Friday that NAV had also doubled the number of people it employed to sniff out welfare cheats during the past 10 years. It was actively trying to restrict export of benefits, in line with the governments’ political wishes over the years. NAV had been eager to track down and prosecute anyone breaking the rules, including the rules that were illegal.

‘No one raised questions’
Alarms didn’t ring until November of last year, when NAV was notified that one of its rulings was finally being challenged by Trygderetten, which initially hears appeals from NAV clients. Trygderetten notified NAV that it was considering taking a case to the European court after one of its young judges had finally noticed that NAV wasn’t following EØS rules. NAV quickly decided to change its practice, but it took another year before NAV officials and the government fully realized what the discrepancy meant to all those wrongly convicted earlier, and the scandal was revealed this week.

Graver stressed in his commentary that the system-wide violations of the EØS agreement illustrate how so many state officials have failed to study the EØS well enough. “No one in the prosecutors’ offices, in the courts og even at the Supreme Court raised questions,” he noted, suggesting that NAV alone can’t be blamed for determining that it could forbid welfare recipients from traveling, when no one (in the judicial branch) challenged them or questioned how they could think that was right.

It was wrong, and that in turn raises questions about the independence and authority of the judicial branch when it’s handling cases from the administrative branch. Bjørn Stordrange, an attoney in private practice in Oslo, told newspaper Dagens Næringsliv (DN) that he thinks prosecutors are not critical enough when called upon to represent the positions of their state clients.

“Relations are too tight,” Stordrange said. Prosecutors don’t sufficiently question or challenge the finding of control organs, to make sure they have a strong enough legal case against, for example, an alleged welfare swindler or someone cheating on their taxes. Complaints were also airing on Friday that jail terms for convicted welfare swindlers are often much tougher than those against business executives caught abusing their power.

‘Shocking, but not surprising’
Another law professor specializing in welfare law expects many more cases will emerge based on misinterpretation or ignorance of the EØS agreement. “It’s difficult to understand how warning lamps haven’t been blinking,” Ingunn Ikdahl at the University of Oslo, told DN on Friday. “This case is shocking, but unfortunately not surprising.”

The biggest problem is how Norway implements and then practices EØS regulations. She predicts more trouble with how NAV has regulated paternity leave benefits for men, since they’re different for women.”This is problematic with regards to our own Constitution, our equality laws and EØS rules,” Ikdahl said.

Graver further complains that many politcians have not received good legal advice from state attorneys when new EØS rules come up. Since Norway is not a member of the EU, it has no say in how the rules are formed but must accept them when they take effect. That’s given rise to lots of public debate in recent years over Norway’s EØS agreement, not least since it often overrides Norwegian law. As it is now, state employees charged with enforcing EØS rules are left to reconcile Norwegian law, Norwegian regulation and EØS regulation, with the EØS expecting its rules to prevail.

Investigation, accountability loom
“The problem is that the difficult questions are not answered and are just shoved farther down in the system for functionaries to deal with,” Ikdahl said. She equated Norwegian practice to “hopping over the fence where it’s lowest,” calling that “very stupid, especially when people’s lives and well-being are affected.” In NAV’s case, most of the people they’re dealing with are already in a difficult personal and economic situation, lacking resources to contest NAV’s or a court’s decisions.

In the current NAV welfare uproar, Ikdahl summed up, NAV officials failed to recognize that according to the EØS agreement, “if you have permission to travel from Oslo to Tromsø, you can also travel from Oslo to Alicante.”

A special task force set up with NAV is now in the process of contacting NAV clients who likely were wronged, and opening compensation cases. Speculation was rising that the 2,400 cases of people who were punished for traveling to another EØS country while receiving benefits may just be “the tip of the iceberg.” Labour Minister Anniken Hauglie, who’s also in charge of social welfare issues, is due to address Parliament next week as an external investigation of NAV’s practices begins. Others are calling for establishment of a special commission to carry out the investigation, since the ministry, NAV and public prosecutors are subject to conflicts of interest.

newsinenglish.no/Nina Berglund