Examination of Witnesses (Questions 100
- 119)
WEDNESDAY 24 MARCH 1999
MR MIKE
NORGROVE, MISS
HEATHER MASSIE
and MR BILL
LOGAN
100. You feel that these operations are
shutting down and the whole problem is going away?
(Mr Norgrove) I wish that were the case; unfortunately
that is not true. There is still evidence of laundering of fuel
on both sides of the border as there is on the mainland. We have
not been entirely successful in shutting down all operations and
new ones may always spring up when old ones have been closed down,
regrettably.
101. Sometimes you chop off one head and
two appear, is that what happens?
(Mr Norgrove) It can seem like that but I think
the incidence of our seizures of laundered fuel and so on is not
rising as steeply as on the general smuggling of duty paid fuel.
102. You would describe these relationships
with the other units that are needed to be involved with the Road
Fuel Testing Unit, you would describe those as cordial, successful,
transparent, maximal, shared intelligence, all of that?
(Mr Norgrove) I was describing the relations between
the Revenue Commissioners and ourselves, first of all. Certainly
the co-operation with other agencies in the North of Ireland,
with the Health and Safety Executive for example, Trading Standards,
Inland Revenue and others, is very good and very fruitful. As
I was describing earlier, though, I would like to see it improved
and the co-ordination between the parties stepped up and that
is something that we have got in hand now.
103. We heard last week that people are
running around with Mother's Pride bakery vans full of fuel, that
sounds very dangerous but if these unofficial organisations keep
springing up hydra-headed, it seems fairly clear that the pressure
you can put on them is inadequate to the task, would that be fair?
(Mr Norgrove) It has been inadequate in that we
have failed to solve the problem entirely, yes, though the Mother's
Pride example quoted is the one that is always quoted because
it is unusual and striking. Our observation is that the smuggling
of fuel and transportation of fuel is much more in regular, even
if old, vehicles which are properly equipped to transport oil.
This is a serious matter that we are in contact with the Health
and Safety Executive on.
104. These experts you have got and you
are very proud of, can they just do on the spot tests on particular
fuel to ascertain its status? You have a portable spectroscope?
(Mr Norgrove) Yes, we have vehicles which are
specially equipped to test there and then in a matter of seconds
the nature of the fuel that is being transported.
105. That cannot give you the origin can
it?
(Mr Norgrove) No.
106. Because the same stuff is circulating
round.
(Mr Norgrove) The colour of course is an indication
of origin.
107. Unless it is washed.
(Mr Norgrove) Unless it is washed.
108. After the colour has been removed using
cat litter or whatever fancy device is available to you, presumably
there could still be residual colour not clear to the human eye
that would show up on suitable equipment?
(Mr Norgrove) Yes some chemicals are more effective
than others in removing all trace of the marker and those that
are less effective, yes, will leave traces including colour which
might be an indication of the source. You are right.
109. But could you also do an analysis which
allowed you to say definitively that a given diesel had been green
or had been red?
(Mr Norgrove) You are straying beyond my scientific
knowledge here but I do not think such a process exists.
110. Is anyone else going to deal with this?
You do not think so?
(Miss Massie) I have to confess it is straying
somewhat beyond the limits of my scientific knowledge but I might
be able to assist a little bit more and say that rebated fuels
in both the Republic and in the United Kingdom have both a coloured
dye and a chemical marker and there are varying degrees of washing.
Some washing will just remove the dye so that to the naked eye
it appears to be fully duty paid diesel but chemical analysis
either in the van itself, or of course we also back everything
up with laboratory analysis later, may reveal the presence of
the chemical marker although the dye has been removed. I believe
that some of the very sophisticated techniques may be able to
remove both the dye and the marker but I would need to give you
further information on that and I can write to you later on that
if you would like.[2]
111. I think, Chair, it is clear we do need
that information. Although I appreciate that you are not scientists
I am a little surprised that this seems to be an area in which
it is possible, as far as you know, for complete evasion to be
achieved. I would have thought you might need more sophisticated
equipment than you have at the moment because these days laboratories
can tell you from the structure of methane in a certain area which
cow's digestive system's expulsion produced the offending substance!
So I would be very surprised if you could arrive at some washing
process that did not continue to have appropriate markers at some
level or other of analysis.
(Mr Logan) I know we offered to give more detail
but if I could add something that has been happening. Of course,
we certainly have identified particular trends in Northern Ireland
that have not previously existed anywhere else and I think that
has been to the credit of the people that have been working on
the Road Fuel Testing Unit but we have had commissioned some work
with Queen's University to make the testing more sophisticated.
That has not always been totally successful, but I think it indicates
the lengths to which we are going to try and keep ahead of the
smugglers.
Mr McWalter: When
you write to us on this I would be grateful, Chair, if it could
be made very clear whether the current testing regime you have
is such that it is possible for sophisticated practitioners to
entirely evade detection. That is the point that I am particularly
interested in.
Mr Beggs
112. The Legitimate Oil Pressure Group were
very critical of HM Customs and Excise's apparent tardiness in
following up evidence it submitted concerning suspicious sales.
The group asserted that you took action in only a minimal number
of cases it brought to your attention. What are your criteria
for investigation? Does it always make sense to go after the filling
station?
(Mr Norgrove) It does not always make sense to
do that, Mr Beggs. The criticism you described that was levelled
at us by the Legitimate Oil Pressure Group is understandable.
The position we are in is that we need to evaluate the evidence
or the information because it is often far short of the standards
of evidence that we require. We need to evaluate that before we
act. There are two things here. Firstly, it is not, as you say,
always the most sensible thing to do to take action on the retailer
or the distributor himself because that person or those persons
might be instrumental in helping us formulate a case against a
supplier, a bigger cog in the wheel as it were. But, secondly,
these things take time to progress and the figures that I mentioned
earlier that showed some of our more recent successes reflect
how we have been developing cases which have been going on for
some time which we have not been able to demonstrate the effectiveness
of until the prosecutions are made and arrests made and so on.
113. Have you given the Group any indication
as to how they can better assist you when they register complaints
or make allegations?
(Mr Norgrove) Certainly, when individual calls
come to us alleging malpractice very often these are insufficient
for us to act on and when requests are made for further and better
particulars that has not always been forthcoming. That is not
the Association, that is individual members as it were. What would
be helpful, I think going back to the scale of the problem, is
for us to compare notes with colleagues from the Association on
the graphs and tables they presented to you last week which would
help us in improving our estimates of the scale of the problem.
Perhaps Mr Logan would like to add something on the nature of
the help they might be able give us.
(Mr Logan) I think some months ago we started
having dialogue with the various associations. That was breaking
new ground and I think that we have had a sizable amount of information.
I think there is more to come and what Mr Norgrove mentioned in
an earlier reply is that we intend to set up a more brigaded multi-agency
team which would be headed by Richard Kitchen, the new Deputy
Collector, and I think part of that would be trying to work more
closely with the various groups who can give us additional information
and we can keep them informed broadly as to what we are doing
and what our strategy is and hopefully give them an assurance
that we are doing many of the things that they would expect us
to do.
114. Are you keeping those with specific
interest and the public at large sufficiently aware of your own
effectiveness?
(Mr Norgrove) Certainly we have not been able
to give them the figures that we have given the Committee today
at an earlier date because I have only just received those, but
I do hope that the dialogue between the two parties is a constant
one. We have a lot to gain from co-operation with each other here
and, yes, I think the communication has been reasonably good.
Mr Hesford
115. In terms of detection, I am given to
understand that in January you emphasised the importance of an
intelligence-led approach, in fact you emphasised that today too.
In your September 1997 paper, you referred at paragraph 33 to
enhanced intelligence activity to track the use of rebated fuels
in particular. Can you update us on that, any progress?
(Mr Logan) At that time that was what I was referring
to in an earlier response vis á vis our status as in the
rebated fuel area, the Road Fuel Testing Unit, that we have had
additional resources plus additional techniques in order to identify
the trends. That is coupled with the fact that over the period
of 1998 we have concentrated and developed our intelligence systems,
not only as far as the oil sector is concerned but the full range
of revenue business that we have got responsibility for.
(Mr Norgrove) If I could just perhaps add to that,
Mr Hesford. Intelligence remains and in fact is becoming increasingly
at the heart of our operations generally in Customs and Excise.
In my last but one visit to Belfast, I met the team that are running
what we call our analytical centres project there, which is a
project co-ordinated by the centre in London but which is providing
software and computer technology to widen enormously the amount
of information that people on the ground have access to and does
so in a way which helps pull information in from other disciplines.
It helps us look across the piece. I think that is quite an exciting
development. It is one that we mentioned back in 1997 but is now
coming on stream in local offices and the local team, which is
a very young and enthusiastic one, is now geared up to using that
information. I think the successes that we are already having,
and which I have been able to update the Committee on today, in
the Road Fuel Testing Unit area have also been encouraging.
116. If there was a link between the additional
resources, the additional techniques, the additional information
technology, all that sort of stuff, if there was a link between
all that and detection, percentage link, are you getting better
because of that or are there other reasons as to why there is
more detection?
(Mr Norgrove) I think our increasing success reflects
our greater sophistication in the use of and quality of intelligence.
The people we have got on the ground, which I think is contrary
to an impression you may have received from others giving evidence,
have not been chopping and changing in the recent past, the core
members of the team, the specialists in these teams, have remained
pretty constant though we are always keen to ensure that managers
of those teams do move around from area to area, from VAT, let
us say, to the fraud area, to make sure that techniques useful
in one are transported into another. I think intelligence has
been at the heart of our recent successes.
Mr McWalter
117. If I can talk a little bit about your
relationship with the filling stations. Some people have said
to us that filling station proprietors have really got just a
very straightforward choice either to go bust or to engage in
crime on the basis that the ones that do not take dodgy fuel will
be so uncompetitive, particularly in the border areas, that they
will have very little custom, and we have seen catastrophic declines
in sales for many of those filling stations. I would just like
to ask one thing. In response to Mr Beggs, you indicated that
you had some kind of system of deciding who you were going to
prosecute but in a way you could almost prosecute anybody, could
you, so then it becomes almost vindictive of you to pick on one
particular filling station. How do you do that? How do you select
somebody to be the object of your attention? Is that just because
they are the ones that are complained about so they are the ones
you go for?
(Mr Norgrove) No, that information would not determine
all our action. We have a risk assessment system which seeks to
prioritise the use of our resources. For example, we would go
more readily to a trader whose activities were generating far
greater revenue losses than others, so the value of the smuggling
involved is obviously one determinant rather than just the latest
phone call, as it were.
118. Right.
(Mr Norgrove) Simply the sale of illegitimate
oil, though in itself an offence, is not necessarily the principal
offence that we want to get to the root of. Acquiring intelligence
and information surrounding that supplier's transactions might
and has led us to suppliers where if we can take action on those,
we are having a disproportionate effect, the gearing of that activity
is far more effective. No, it is not a random "who is the
next telephone call concerning ... let us knock that one off".
It is not that sort of process. It is based on risk assessment.
119. I think Mr Logan wanted to say something
but he is not going to now?
(Mr Logan) No, other than to endorse I think some
of the issues that the Committee is aware of which relate to the
particular case on 12 January. I think that case you are aware
of took a considerable amount of time and intelligence and effort
to be able to have that particular activity. Anecdotal evidence
following that suggests many of the former customers went back
to the major legitimate suppliers.
2 Evidence not printed. Back
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