The NAV scandal: The largest social security scandal in modern Norwegian history

NAV Sigrun VågengPhoto: Håkon Mosvold Larsen / NTB
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For many Norwegians this year, the Norwegian Labour and Welfare Administration (NAV) has been a vital economic and financial savior. With much of the country receiving, for the first time, some form of social security benefits, 2020 has highlighted the absolute important role that the NAV plays, to the economy and society, in these uncertain times. 

However, in recent years, the NAV has grown accustomed to plowing on with crises and challenges looming large. No crisis has been larger than the so-called “NAV-scandal,” which is seen as the largest social security scandal in modern Norwegian history. 

The scandal revolves around the NAV, in cooperation with other legal and political entities, illegally restricting the export of social security benefits to other European Economic Area (EEA) countries. 

This has led to 86 wrongful convictions of welfare fraud, including jail time and expulsion from Norway, 1100 people being forced to repay benefits that they were rightly entitled to, and an overall financial cost of some NOK 110-115 million. 

These people were wrongfully targeted and then prosecuted for the crime of simply being in another EEA country while receiving Norwegian social security benefits.

 Almost two years after the scandal first came to public light, the repercussions are still being felt, not least by the estimated 16,000 NAV users affected.

Roots of the NAV scandal 

On January 1, 1994, the Agreement on the European Economic Area came into force. 

Signed by 30 European countries, including Norway, it saw the creation of a European “internal market.” 

The foundation of this internal market is the so-called “four freedoms”: the free (and totally unrestricted) movement of goods, services, capital, and people. 

This free movement of people has seen many Norwegians reside in warmer climes while over 400,000 EEA citizens make Norway home. 

Thus, the EEA’s “four freedoms” have made Norway one of the EU’s most ‘inside outsiders.’ 

Essentially, the EEA should have seen Norwegian economic, legal, political, social, and governmental systems (of which NAV is just one entity) integrate, cooperate, liaise and work with its fellow EEA members. 

NAV requirements

Accounting for a third of the national budget, the NAV is almost, it seems, an omnipotent presence in Norway. 

Sickness benefits (sykepenger), attendance allowance (pleipenger), and work assessment allowance (arbeidsavlkaringspengers) are but three of the social security benefits offered.  

Under the EEA Agreement, all have the right to be paid these benefits while staying in another EEA country.

Yet as part of the Norwegian National Insurance Law (Folketrygdloven) passed in 1997, there is a “requirement to stay” in Norway. 

To receive any of the three mentioned benefits, the recipient MUST stay in Norway in order to be eligible. 

There are exceptions, but the Folketrygdloven makes it quite clear that residing in Norway is the rule. 

In 2012 the European Union actually introduced regulations on the payment of social security benefits for those residing in another member country. 

Furthermore, the “requirement to stay” part of the Folketrygdloven fundamentally contradicts two of the four EEA “freedoms”: the free movement of people and money in the internal market. 

NAV
Photo: Vidar Ruud / NTB

Legal and judicial sloppiness

The “requirement to stay” was used as the basis for the NAV to target welfare fraud. It remained in place despite a change of government and various legislative amendments to the National Insurance Act.

Successive governments have been focused more on fighting welfare fraud of the NAV’s users than guaranteeing these same individuals their rights under EEA law.

The NAV itself estimates that over 16,000 people were affected by this wrongful application of EEA law.

Those who spent time in other EEA countries were then generally regarded, by the NAV, to have committed welfare fraud.

That led to 86 wrongful prosecutions, including jail time.

Furthermore, some 1,100 NAV users were told to repay benefits received (in part of full), with the average repayment totaling NOK 94,000.

The NAV clients also saw these benefits canceled, halted, or welfare eligibility reversed due to time spent in EEA countries.

The NAV scandal also impacted the legal and judicial system. The court of the last appeal, for welfare cases, is the National Insurance Court.

When a criminal case was being heard in 2012, a lawyer pointed out that the NAV was misinterpreting EEA law.

However, this was quickly dismissed as the “accused was under a duty to abide by Norwegian rules,” disregarding the EEA agreement.

Furthermore, the Supreme Court of Norway also agreed with the “requirement of stay” to receive benefits, even though the EEA Agreement has been law since 1994.

Two courts, along with all the legal professionals employed, seemingly had little fundamental knowledge of a law in place for more than a generation.

Unprecedented scandal

In October of 2019, the government, headed by the then Minister for Labour and Welfare Issues, Anniken Hauglie, and the then NAV chief Sigrun Vågeng, held a press conference that shocked Norway. 

The government admitted that it, through NAV, and the courts, had wrongfully prosecuted NAV users due to both a lack of EEA law knowledge and a misinterpretation of the Norwegian National Insurance Law. 

By November, the government had appointed a committee for an external review of the scandal.

This August, the committee released a damming report of the review, entitled “The Blind Zone.” 

It stated that “while the NAV bears primary responsibility for the misapplication, the Ministry of Labour and Social Affairs, the National Insurance Court, the Norwegian Prosecuting Authority, lawyers, courts and academia carry a considerable responsibility as well…” 

The main cause of the scandal was a supposed lack of knowledge of the EEA agreement amongst NAV employees, their superiors, the government, and the Norwegian judicial system. 

No real consequences?

As of late 2020, there has been little political repercussion as a result of the scandal. 

This January, a government reshuffle has seen the former Minister of Labour and Social Welfare Issues, Anniken Hauglie, replaced by Torbjørn Røe Isaksen. 

Sigrun Vågeng resigned as the Director of NAV but still is employed by the agency. 

Perhaps the most damning repercussion is that the ESA is now in legal proceedings against the Norwegian government in the European Court of Justice for a breach of EEA law. 

Although there was a public apology from the government and Prime Minister Erna Solberg, it will be of little use to those who were dragged through the court system and labeled “welfare cheats.” 

The “Blindsone Report” recommends that the NAV, and the Norwegian judicial system, be fully updated and educated in all aspects of EEA law. 

The ESA case against Norway is expected to have been finalized by January

Some 16,000 NAV users will, no doubt, be waiting for a belated form of closure.

The opinions expressed are those of the author and are not held by Norway Today unless specifically stated.

Source: #Norway Today / #NorwayTodayNews

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