Examination of Witnesses (Questions 120
WEDNESDAY 24 MARCH 1999
and MR BILL
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
121. They clock the pumps for instance,
(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
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
(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
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
(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
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 individuallyno
doubt worthilyin 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
(Mr Norgrove) We have no evidence of that happening,
134. There is no lower level activity. It
is better organised.
(Mr Norgrove) Yes.
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,
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
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,