Select Committee on Northern Ireland Affairs Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  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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