Select Committee on Northern Ireland Affairs Minutes of Evidence


Examination of Witnesses (Questions 140 - 159)

WEDNESDAY 24 MARCH 1999

MR MIKE NORGROVE, MISS HEATHER MASSIE and MR BILL LOGAN

  140.  Ever?
  (Mr Norgrove)  I have got no evidence of our ever having pulled out of an operation or prospective operations for fear of our safety.

Mr Hunter

  141.  Forgive me, Mr Norgrove, for pressing you on this but I notice that three times you used the expression "We have no evidence", but with regard to the members of your staff, have you received allegations or interpretations as opposed to evidence?
  (Mr Norgrove)  I am not aware of any such allegations but I ought to check with the Collector.
  (Mr Logan)  I think that it is clear that over the years we have worked throughout the whole of the Province in a range of duties and we have continued to go throughout the whole of the Province. There are occasions when levels of activity are such in certain areas that the managers of the staff would not allow them to go into a particular area at that time. However, as far as the revenue matters are concerned, certainly I am not aware of us not being able to pursue the matter, albeit it may take longer in order to do so.

Mr McCabe

  142.  I think, as one of my colleagues indicated earlier, obviously we heard some criticism from the Legitimate Oil Pressure Group about your performance. I wonder if I can ask: how would you describe the level of support you get from the trade in terms of your effort to detect and stamp out smuggling?
  (Mr Norgrove)  I will give my view first, if I may.

  143.  Yes?
  (Mr Norgrove)  My view is that the relations between the two parties are very good and that co-operation between the two parties is very good. The evidence on which we can act is sometimes not always there and that must be frustrating for those involved in this industry in the North of Ireland.
  (Mr Logan)  I would very much support that and I think we started from a position of recognising the frustration that was within the industry and attempting to discuss it. I think that we would now attempt with looking at our whole strategy to look at how best we can work together. I think there are areas where we can communicate better with the trade and equally I would expect that there are areas where the trade could communicate better with us.

  144.  Would it be right to say that, allowing for the fact that there are areas, as you have just indicated, where you might have some improvements, would it be fair to say that you are happy with the level of support and it has improved over a period of time, is that accurate?
  (Mr Logan)  I have noted a very considerable improvement and particularly by some of the members. They have been very, very constructive.

  145.  What about the public view of fuel smuggling? Do you detect any change in the public's attitude towards the smuggling of fuel?
  (Mr Logan)  In terms of the number of telephone calls and the number of particular events where we are invited to talk to public groups, there is a greater interest and greater awareness. I think that is the one additional issue that we would wish to get on to the front foot and communicate with the public in order to bring them in and make them aware of what we are doing.

  146.  You do not have the impression there is any greater tolerance of fuel smuggling on the part of the public but if anything the reverse, is that accurate?
  (Mr Logan)  I think that it is clear that there are people, particularly in border areas, who are benefitting from their cross-border legitimate travel, it is a talking point day and night throughout Northern Ireland, but I think that there are lots of anecdotal issues and I think one has to be very careful about precisely what the issues are. I think that is the area that we can help and improve the communication with the public.

  147.  If I can just ask about a slightly different area. I understand that one of your objectives is to identify and recover the proceeds of oil smuggling. I wonder really what sort of success you are having in this area and how much you involve other agencies like, in particular, the Inland Revenue?
  (Mr Logan)  As far as I am aware, the proceeds from oil, and we have taken a policy decision that all seized vehicles are not returned, they are disposed of and that in itself has been an issue as to where and how, etc., however, as far as the assets are concerned, we have provision but it has to be under criminal investigation or criminal prosecution. In those particular cases, yes, we will be seeking to confiscate the assets.
  (Mr Norgrove)  Through you, Chairman, if I may, Mr McCabe, you will be aware of the Government's initiative on confiscation of assets on which there has recently been a consultation through the Home Office. I think the period of consultation has ended now. The Home Office are now evaluating the contributions they have. We will need to play a part in that and see what role that unit might have for us or us for them.

  148.  Is there any evidence from the equipment you are able to seize at the moment, I am thinking particularly about the vehicles that you have cited, is there any evidence that this support has any deterrent impact on the smugglers?
  (Mr Logan)  It is very difficult to give any hard evidence in that sort of case.

Mr Hesford:  In terms of practical measures, what advantages, if any, would accrue from (1) having a licensing system for distributors of oil products capable of use in road vehicles?

Chairman

  149.  If this is a question you would rather give a reflective answer on hereafter please do not hesitate to do so, says I taking the matter out of Mr Hesford's hands.
  (Mr Norgrove)  I think we need to think about that to give you a proper answer.

Mr Hesford

  150.  You may want to think about this one. Same idea: reverting to charging excise duty ex depot rather than ex refinery?
  (Mr Norgrove)  That is a difficult one for us because I think that the constraints of European law would possibly impinge on us here.
  (Miss Massie)  If I understand you correctly, the question that you are asking is whether there would be a benefit in essentially moving the duty point further downstream so that instead of the duty being charged when the product left the refinery it would be charged when it left the distribution depot. Generally speaking, we found that the move of the duty point quite a few years ago back to the refinery enabled us to tighten our controls because there was less duty suspended product in circulation, it was not stored in warehouses and it was not being moved between warehouses and everything outside the refinery gates should be duty paid. But in the context of smuggling across land boundaries I think I would like to take up your offer to reflect on whether there might be any advantages there and we could revert to you on that.

  151.  Thank you for that. Whilst you are doing that could you also take into account, and perhaps deal with, whether or not either of those positions would be an excessive on unwarranted additional burden on the trade.
  (Mr Norgrove)  We will certainly include that in our deliberations.

Mr Hunter

  152.  We have been told many times that diesel and gas oil (red diesel) are chemically very similar and the washing process can take place but within the United Kingdom jurisdiction, forgetting in the Republic that there is a duty discrepancy of high duty on diesel and low on red diesel, do you have any evidence of washing of red diesel within either Northern Ireland or the United Kingdom as a whole?
  (Mr Norgrove)  We have evidence of laundering and washing on both sides of the water.

  153.  Can you quantify it at all or could you in correspondence later?
  (Mr Norgrove)  I could not do it today certainly and if we can do I will happily write to you.

  154.  What would be interesting is to see how the figures compare with the changes in the duty levels over the past few years.
  (Mr Norgrove)  Yes.
  (Miss Massie)  I think we will certainly, as Mike Norgrove says, look at it but one of the fundamental problems with this is that it is always extremely difficult to estimate the extent of any illegal activity. We obviously can look at our success in countering laundering but it is always extremely difficult to quantify what we are not detecting.
  (Mr Norgrove)  What we might be able to help you with is when we have, say, stopped a vehicle and subjected its fuel to scientific testing, then in those instances where there is evidence not just of use of rebated fuel but use of washed rebated fuel, we should have figures on that.

  155.  Still on this subject of washing or laundering, obviously a chemical or chemicals are needed to perform that process. A very considerable volume of red diesel is being laundered or washed. That means quite significant quantities of chemicals are being used in that process. Is there any way, do you think, of monitoring the sale of substances which could be used in washing and laundering red diesel?
  (Mr Norgrove)  That is something that would be outside our formal bailiwick.

  156.  I am asking for an opinion.
  (Miss Massie)  I believe that, in cases in the past, instances of extremely large purchases of unusual materials have been a factor in intelligence which have led to successful detections. So it has been a factor in the past but I think it arises less from regular monitoring than from the observation of an unusual activity, possibly the sort of thing that one might detect on a VAT visit.

  157.  I think we put this question to various other witnesses but maybe you can speak with some authority on this. What is the evidence of the quantity of smuggled fuel which originates in the Republic finishing up in Great Britain as opposed to Northern Ireland? Is that yet happening?
  (Mr Norgrove)  We have some evidence of that happening but on a very small scale so far. Although there are a lot of anecdotes about it we have very little evidence of that having happened although there have been one or two instances of fuel having been seized at Liverpool.

  158.  Presumably the additional cost of transport is something of a disincentive?
  (Mr Norgrove)  I think that must be one factor.

  159.  What might be the others?
  (Mr Norgrove)  I suppose it is the difference between a tanker travelling along the roads of Northern Ireland for example, which in itself is not exceptional, whereas on ferries from the North to liverpool it is a much rarer occurrence so it would tend to stand out like a sore thumb.


 
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