Select Committee on Northern Ireland Affairs Minutes of Evidence


Examination of Witnesses (Questions 120 - 139)

WEDNESDAY 24 MARCH 1999

MR MIKE NORGROVE, MISS HEATHER MASSIE and MR BILL LOGAN

  120.  We have got this problem. Why do you not just tally up fuel deliveries and turnover levels and pump readings and then you would find out that, as a result of all that, there is a significant amount of illegal supply concealed, falsified invoices and doctored meters and pumps, there is a whole panoply of stuff here that they all must be doing? It does not sound like you need a very sophisticated operation unless they are very sophisticated practitioners doing all of these things that they need to do. You ought to be able to detect quite quickly that there is a breach of law in virtually all these places.
  (Mr Norgrove)  Yes, would that that were so. It is not as simple as that and those supplying the oil have got fairly sophisticated methods of falsifying audit trails and so on——

  121.  They clock the pumps for instance, do they?
  (Mr Norgrove)  We have only anecdotal evidence of that but that is an obvious mechanism, yes.

  122.  If you clock cars you can normally detect it, can you not, and it is the same mechanism with a pump?
  (Mr Norgrove)  Yes. I am hoping that the VAT programme of assurance visits to suppliers, retailers and distributors will be one that is based on personal documentary evidence, looking at transactions, looking at suppliers, checking their VAT registration status, following that sort of documentary audit trail that you are describing more than the simple roadside checks and the intelligence driven-activities. I am hopeful that will produce more. Those involved have developed fairly sophisticated methods of disguising their activity.

  123.  I think I know the answer to this question then. You are saying effectively that VAT audits so far have played no role at all in identifying filling stations handling illegal products? You have not been able to make that inference?
  (Mr Norgrove)  It had not up to the time of the memorandum which we submitted in December played a key part. What we began back in January was a series of visits to VAT-registered traders supplying or distributing or retailing. We wanted to take stock after the first 25, I think it was, to see what those visits were throwing up. The results from those visits are quite encouraging. We will certainly go on now to intensify that programme. We do have the objective of visiting all retailers rather than through the normal VAT auditing programme, a fairly intensive coverage of VAT visits over the next year.

  124.  There is a lot of use of the future tense here. I could summarise this by saying that you do intend to use VAT mechanisms to investigate dubious oil suppliers but you have not done so on the whole to date.
  (Mr Norgrove)  25 so far have been visited.

  125.  In that putsch in January?
  (Mr Norgrove)  That is right, with the specific intention of looking not only at that trader's books to see whether his VAT affairs are in order, but looking across the responsibilities laid to us including excise and to look wider using teams from both VAT and excise fraud and looking at the question in a more rounded way than perhaps we have done hitherto.

  126.  The effect of that might be you that simply close more filling stations in a country where already filling stations are being closed because of commercial pressures and there is a disproportionate burden that these stations are taking. Does that occur to you as being not necessarily the result you wanted?
  (Mr Norgrove)  It does occur to us, indeed, and one of the main purposes of this VAT programme is to try and get closer to the source of the supplies that these otherwise legitimate traders are receiving.

Mr McWalter:  Thank you Chairman.

Mr Barnes

  127.  When we met Customs and Excise in Northern Ireland in January, there was a lot of emphasis on co-operation with other organisations. We have already had some mention of connections with health and safety and trading standards. What progress has been made in developing co-operation with the RUC?
  (Mr Norgrove)  As mentioned in our memorandum, and I will leave Mr Logan to fill in some of the details here, we are in the process of agreeing a memorandum of understanding with the RUC. Those discussions are proceeding well and that bilateral arrangement will be an important one to strike. Nevertheless, I would like to see it as part of our multilateral approach so that however good bilateral relations are, they should form part of the wider response to this problem collectively. Perhaps Mr Logan could update us.
  (Mr Logan)  I think I need to say that whilst we have a framework in place, the relationships with the RUC over the years and Customs or Excise, be it on oil or any other revenue sector, have been excellent and co-operation and support have been very, very good. Now because of the issues in oil we are trying to ensure the best possible approach and attempting to get a more targeted, more specific framework to deal with that particular smuggling issue, and consequently we are working with the RUC in drawing up something that will be more meaningful in terms of getting it communicated to the deployment of personnel on the ground, but we have not finally agreed the framework. What we have done already is to agree certain aspects particularly on the intelligence working and the intelligence from the police is working very closely with Customs intelligence in this matter.

  128.  However good the arrangements have been, the fact that these new developments are taking place indicates that you feel there are certain areas for improvement. What have been the difficulties that you felt you needed to overcome? You say it has important links in connection with the gathering of intelligence. Would problems sometimes be created by the RUC moving in quickly into areas and involving themselves in arrests that are not appropriate as far as your survey of the situation is concerned?
  (Mr Logan)  Not that particular scenario. I think, like many of the other agencies, they have got particular targets and plans and we need to work with them to determine what the priorities are for a particular activity and to ensure the best possible co-operation for effective controls throughout Northern Ireland.

  129.  Presumably there is some sort of random RUC activity. We were shown the vehicle that had been disguised as if it were carrying sheep and that was something presumably an alert officer would be able to discover and take some action against. Does acting on cases like that present problems for you because you might be involved in tracking a bigger operation?
  (Mr Logan)  I have no evidence of a problem in that particular area.
  (Mr Norgrove)  Could I add one point on this approach. I think it is less an indication of inadequacies of the past system and more a hope that with the Government's emphasis on joined-up working, as it were, we are looking at the outcome we are trying to achieve collectively rather than working individually—no doubt worthily—in all our particular ways. It is more a positive attempt to try and bring all the parties together in a co-ordinated way so it is not so much a reflection of the problems we have had but just an opportunity to improve our effectiveness.

  130.  We understand from other witnesses that there is substantial concentration, we saw it ourselves, of oil supply companies in the South Armagh area which is not an obvious area of high oil consumption. What particular factors do you feel lie behind that location?
  (Mr Norgrove)  Its proximity to the border of course is one obvious factor and perhaps Bill Logan would like to add to this. Whatever the situation in any particular area, of course we have to take account in performing operations what that situation is. The man on the ground would like to add something.
  (Mr Logan)  I think, Mr Barnes, from your visit to Northern Ireland on 12 January you will know that that area has been and is difficult to get information on certainly quickly in order to give us evidence to support any particular revenue activity. I am satisfied that we continue to pursue our seeking for evidence and some of the cases that have been knocked and we are currently working on give evidence to the effect that we have been successful.

  131.  Is this a particular area of close co-operation with the RUC? Have they got any problems in policing that area that might have a knock-on effect to you?
  (Mr Logan)  I think that area has always been difficult to police and currently I am not aware of any situation where we have asked for support that we have not been given.

  132.  There are legitimate sales that take place over the border because of the differential duties and there is a lot of advertising that takes place in Northern Ireland for people to make use of sales or filling their tank up. Does the legitimate activity present problems for yourselves or could it be used in order to hide exercises that are taking place so it looks like somebody is just filling a tank up and they are actually involved in smuggling activity?
  (Mr Norgrove)  I think the rules on cross border shopping, which as you say is legitimate, are strict enough to preclude transportation, other than in a normal tank of a vehicle, of larger quantities of oil.

  133.  It is not worth someone's while who has got a large tank to be dashing back and forth over the border collecting oil legitimately and then depositing it and going back again?
  (Mr Norgrove)  We have no evidence of that happening, no.

  134.  There is no lower level activity. It is better organised.
  (Mr Norgrove)  Yes.

Mr McWalter

  135.  Are you worried some of your staff might potentially have their safety compromised as a result of some of the operations you are doing in this regard?
  (Mr Norgrove)  I think for any law enforcement agency operating anywhere in the world we are always conscious of the dangers to our own staff be they our own VAT staff or anti-drug staff on the Mainland and in the Province, of course, it is no different. We are conscious of the dangers of our work.

  136.  Have any of your staff been subject to intimidation as a result of their inquiries, stopping vehicles?
  (Mr Logan)  We have no evidence to that effect, no.

  137.  There is, if you like, not a huge amount of evidence that the disturbances to which the Province has been prone have had any real effect on this particular operation?
  (Mr Norgrove)  No, we do not have evidence to that effect.

  138.  It is no more difficult in Northern Ireland than it would be on the mainland?
  (Mr Norgrove)  I think particular circumstances apply in Northern Ireland which make our work very difficult. It would be wrong to claim that it is any safer in Northern Ireland than elsewhere and, of course, the history of the Province is a troubled one. Everyone who goes about their business for Customs and Excise is aware of that.

  139.  It does not cause you to back off ever?
  (Mr Norgrove)  It does not cause us to back off, no.


 
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