Select Committee on Northern Ireland Affairs Minutes of Evidence

Examination of Witnesses (Questions 80 - 99)



  80.  What is the trend here in terms of the statistics that you have? Is there any indication that this problem is increasing in terms of the figures that you have access to?
  (Mr Norgrove)  Without knowing the size of the overall problem it is difficult to estimate that precisely but certainly the numbers of successes that we are having on these various fronts has been increasing. The targets that we are setting with the Collector for next year are certainly far in advance of this year's likely outcome. Yes, the combination either of an increasing incidence of the problem and/or our own success in dealing with it means that we are coming across more incidents of this kind.

  81.  Do you feel that in terms of that increasing incidence that you are getting to grips with the problem? Are you satisfied that in terms of the evidence that you have of increasing activity that Customs and Excise are on top of the problem in terms of detection?
  (Mr Norgrove)  It would be wrong of me to claim that Customs have this problem solved and that we are as on top of it as we would like to be. It is a big problem. The scale of it is large, it is a serious and widespread problem and the nature of the land boundary and the illicit nature of the transactions involved make it very difficult for us to claim confidently that we are on top of this problem. Nevertheless, I am encouraged by our recent successes. I think we have got the right systems in place to allow us to make as much headway as we possibly can. One or two recent developments and future developments I think encourage me to believe that we will be increasingly on top of this problem. First, there has been a modest increase from 1 April next year in the resources dedicated to countering road fuel smuggling. Six further specialist staff have been allocated to the Collection. Secondly, the Collector and I have agreed recently that, in order to assure ourselves that everything we are doing across the Province as far as Customs and Excise are concerned, first of all, is coherent and well co-ordinated in this matter, we have appointed a Deputy Collector of Northern Ireland to take charge of this issue to make sure that our forces within the Department are brigaded in the most effective way and we make best use of all the skills and the various specialist teams we have around who are, as you know, employed on other activities also for the most part, to ensure internal consistency within the Department; but also to pull together the other agencies involved without whom our task would be much harder all the way from the Revenue Commissioners from the Republic of Ireland through to the Inland Revenue, the Health and Safety Executive, trading standards, those with whom we have daily dealings certainly on a bilateral basis but I think increasingly from now on in a co-ordinated way multilaterally.

  82.  You indicated that you are hoping to acquire six additional staff. How many staff at the moment are devoted to work relating to prevention of road fuel misuse and smuggling?
  (Mr Norgrove)  We have 20 staff dedicated to this single task in the collection. But that is only part of the picture because we deploy our resources generally in Customs and Excise fairly flexibly so there is always within the Collection additional resource that can be brought from other work areas to assist on particular operations whenever the need arises. We also have fourteen members of our National Investigation Service based in Belfast who equally are available as the need arises and every day in their work to pursue investigations. We also have access to the resources on the mainland in Glasgow and beyond from our National Investigation Service to supplement our efforts on particular operations or as required. So although the figure of 20 is uniquely dedicated to this we do have access to much more considerable resources around the Department.

  83.  Given that we have a 300 mile land border in Northern Ireland and some 200 crossing points along that border, do you feel that the problem of illegal smuggling can ever really be countered effectively?
  (Mr Norgrove)  I think the land boundaries and the nature of the country there does make our task extremely difficult. As you know better than I, this is not a new phenomenon. This has been going on for a long time in various ways and covering various goods and not always in the same direction, as you know, so the boundary does pose unique problems for us. It would be wrong of me to deny that, yes.

Mr Donaldson:  I am almost tempted to invoke Irish mythology here in terms of smuggling because, as you indicated, it has been an on-going problem, but thank you.

Mr Beggs

  84.  What is your assessment of the relative prevalence of petrol, diesel road fuel and gas oil smuggling and how widespread is it geographically in the Province?
  (Mr Norgrove)  The relative prevalence of smuggling of petrol on the one hand and diesel on the other is hard to judge because, as we were describing earlier, it is difficult to know the total scale of smuggling. Nevertheless, my own view is that it has been commercial movements of diesel that have posed us the biggest problem so my belief is that is where the lion's share of this problem lies. As you say, there is also a third leg of this which is laundered fuel which is a problem in the Community wherever the same oil is charged at different duty rates through rebate of one kind or another. So it is a problem not unique at all to the island of Ireland. That in our estimation is a much smaller problem compared with the incidence of smuggling of the other two fuels but the profit margins there are potentially larger and the incentive level greater although the complexity of the scientific processes required to launder fuel and the cost of that are inhibitions in themselves. Was there a second element to your question?

  85.  How widespread is it geographically in the Province.
  (Mr Norgrove)  I will turn to the Collector if I may on this. Certainly the incidence is much more intensive in the border area. As one heads north one is less conscious of it. It is something we will be wanting to check in our programme of VAT visits to all retailers in the Province but I think Bill would want to add to that.
  (Mr Logan)  I think from the documentary evidence we have it is widespread and it is clear that there are certain areas where there is a greater amount of cross-border smuggling than others. To date, certainly throughout the whole of Northern Ireland, the seizures of fuel and detections indicate that it is widespread.

  86.  Given then that it is widespread and that tankers must travel a considerable distance from the border, is it not now becoming easier for the detection of these smugglers?
  (Mr Logan)  Our strategy has been intelligence-driven and I think from the information that we have gathered through the various visits, through the sources of interviews and seizures, we are building up a pattern which we are now using to good effect in determining the seizures and, as Mike Norgrove said, we have started a series of visits to various outlets be they distributors, be they retailers and in addition to the information we already have we are looking at the patterns which the documentary evidence is giving us. That is certainly determining where the smuggling patterns exist.


  87.  We are still engaged in ground clearing and we will come on in a moment to detection and preventing abuse. You may feel that my next question has already been covered by your answers to Mr Beggs but it would be quite helpful if you are able to give any kind of percentage calculation. What is your assessment of the relative prevalence of the following products being used or offered as road fuel either on their own or mixed with legitimate fuel, first, red diesel; second, green diesel; third, washed red diesel; fourth, washed green diesel; and, fifth, kerosene? If there is any rough and ready indication that you can give us of proportions that would be very helpful.
  (Mr Norgrove)  I am sorry, Chairman, I do not have figures on that.

  88.  That is okay. In the memorandum you sent us of December 22 you describe the arrangements for lawful importation of road fuel across the Irish border. This seems to depend entirely on the honesty of the importer. First, is that a fair statement?
  (Mr Norgrove)  Are we discussing there, Chairman, the export of duty free product from the Republic of Ireland?

  89.  It may be helpful if I give you the opportunity of looking up paragraph six of the memorandum. This is affected by a system of Accompanying Administrative Documents, described more fully at Paragraph 166.
  (Mr Norgrove)  Yes, the import tanker movements should be notified to Customs in the UK in advance. That is the system that operates between Members States' tax authorities as agreed under the EU Directive in 1992. So that is the system that can operate and as far as we can see does operate very well. That is the legitimate export of duty free products with the duty being payable as with all Excise products in the state of consumption or destination.

  90.  Is there direct co-operation with the authorities in the Republic to provide information on lawful imports of fuel or what would actually be lawful exports of that?
  (Mr Norgrove)  Yes, there is.

  91.  My next question obviously follows on from this. Is it possible to export fuel from the Republic free of RoI export duties to Northern Ireland without notification to you by the relevant authorities in the Republic?
  (Mr Norgrove)  I am not aware of any circumstance where that could be possible, Chairman, no.

  92.  Categorical negative on that question?
  (Mr Norgrove)  Yes.

Mr Grogan

  93.  I am interested in co-operation between yourselves and the Revenue Commissioners in the Republic to seek to counter smuggling. It can be both ways, can it not? I understand kerosene is duty free in the North but there is duty in the South, that has an implication. What sort of structures have you in place to co-operate with the Revenue Commissioners?
  (Mr Logan)  I think that in the first instance we have the mutual assistance, everything that we do is under that framework. We have in addition a member of the Customs and Excise staff based in Dublin, a fiscal liaison officer. We have got also a Memorandum of Understanding with Revenue Commissioners on excise matters as well as other matters but that is the particular one. That is the agreement at the Revenue Commissioner level. Then we have at operational level many structures in place and I think that if there is a need for any operational support that we consider that is beneficial, either in supplying this information or carrying out various tasks, the Revenue Commissioners supply that.

  94.  You mentioned the fiscal liaison officer in the British Embassy in Dublin, could you just expand on that role? Is it full time? Is it gathering intelligence? What precisely is their role?
  (Mr Logan)  It is full time and the fiscal liaison officer was appointed there about two years ago. It is very much involved with protocol issues, conduit, communication and also any information that is applicable under the vires of the mutual assistance.

Chairman:  I think that probably concludes our ground clearing. We move on to detecting and preventing abuse, Mr McWalter?

Mr McWalter

  95.  The Road Fuel Testing Unit, when they come across a case of improper fuel, do they try and establish where the fuel is procured?
  (Mr Norgrove)  Yes, that would be the normal practice.

  96.  Do they normally succeed in establishing that or hardly ever?
  (Mr Norgrove)  Certainly in my experience on the mainland, when I have been out with RFTUs, that has been remarkably successful. Drivers are surprisingly forthcoming as to the source of that fuel. Very often that can lead on to a helpful investigation for us. I do not know if Mr Logan has particulars for the Province.
  (Mr Logan)  Yes. I am not sure whether your note to the Committee updated the outputs of the Road Fuel Testing Unit but I think they have been very successful and have identified something like 255 detections in the year ending 28 February. In terms of follow-up, the key activity of the Road Fuel Testing Unit, which just happens to be a centre of professional expertise for the Department from the experiences they have had in Northern Ireland over many years, and their first objective is to get back to the source, they have been very successful in getting and identifying laundering and other large sources of rebated fuel.

  97.  What happens then? Do you liaise with the Garde Sionhia? How does the RFTU conduct itself in relation to other interested parties?
  (Mr Norgrove)  The source of that laundered fuel could well have been in the North of Ireland because that laundering could well go on on either side of the border.

  98.  Yes.
  (Mr Norgrove)  The natural next step following perhaps arrest and seizure of the vehicle by the RFTU would be to our National Investigation Service based in Belfast who if they need to pursue it on the other side of the border, would do so.

  99.  Do you have full co-operation in such?
  (Mr Norgrove)  Yes, the operational co-operation between the two sides is first class.

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