Examination of Witnesses (Questions 80
- 99)
WEDNESDAY 24 MARCH 1999
MR MIKE
NORGROVE, MISS
HEATHER MASSIE
and MR BILL
LOGAN
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.
Chairman
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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