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Byrne in NY Times: Fraud in Global Sugar Trade

The problems that permeate the sugar subsidy system in Europe are indicative of widespread commercial fraud, says Professor James Byrne in a New York Times article discussing irregularities uncovered by authorities examining shipping records for European tanker trucks carrying liquid sugar from a Belgian plant.

Customs officials found evidence that uncovered a variety of fraudulent activity designed to take advantage of a sprawling European subsidy program in agricultural aid.

"There's a whole world of commercial fraud, which goes under the radar for most people," said Byrne, who has studied the global sugar trade. "It is a parallel universe that mimics the real world of commerce and finance."

Critics claim that Europe's subsidy system distorts the market, disrupting competion and resulting in higher prices for consumers. European sugar prices currently run approximately 20 percent higher than U.S. prices and are the highest per capita anywhere in the world.

Fraud Plagues Sugar Subsidy System in Europe, The New York Times, October 27, 2009. By Doreen Carvajal and Stephen Castle.

Excerpt:

"Across Europe there are some 2.5 million acres of beet fields that will produce 16.7 million metric tons of sugar this year for an industry worth 7 billion euros. Last year the European Union spent 475 million euros in price supports for sugar, including export subsidies. Then it spent another 1.3 billion euros on restructuring aid to reform a subsidy regime so that lavish it even prompted cold-weather Finland to start producing more sugar.

"Sugar producers across the Continent cashed in — from Italy, where Italia Zuccheri collected more than 139 million euros, to France, where a handful of sugar producers received 128.5 million.

"With this much money at stake, critics and some analysts say, the sugar subsidy system is like a cookie jar waiting to be pilfered. Europe’s antifraud division, called OLAF, reported that from 2005 to 2008, 67 million euros worth of sugar subsidies were tainted by irregularities and fraud. Many countries have been penalized millions more over the last few years for lackluster sugar inspections. In 2008, OLAF pursued 34 cases of sugar fraud involving 4.4 million euros, a figure they describe as the icing on the cake because so many of the schemes go undetected."

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