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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 886(i) House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE Northern Ireland Affairs COMMITTEE
Organised Crime in northern ireland
Wednesday 1 February 2006 MR NIGEL SMYTH, MR WILFRED MITCHELL and MR GLYN ROBERTS MR TOM WILSON and MRS VAL SMITH Evidence heard in Public Questions 1 - 120
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Northern Ireland Affairs Committee on Wednesday 1 February 2006 Members present Sir Patrick Cormack, in the Chair Mr David Anderson Mr Gregory Campbell Rosie Cooper Mr Christopher Fraser Mr John Grogan Mr Stephen Hepburn Meg Hillier Dr Alasdair McDonnell Stephen Pound Sammy Wilson ________________ Memoranda submitted by the Confederation of British Industry Northern Ireland and the Federation of Small Businesses
Examination of Witnesses
Witnesses: Mr Nigel Smyth, Director of CBI Northern Ireland, Mr Wilfred Mitchell OBE, Chairman of the Federation of Small Businesses and Mr Glyn Roberts, FSB Parliamentary Officer, gave evidence. Q1 Chairman: Good afternoon and welcome. This is the first public evidence session in the Committee's inquiry into organised crime. We have had a visit to Belfast before Christmas and to Dublin last week where we had informal background briefings and discussions with a wide range of people, but this is on the record evidence. If there is any evidence that you do wish to submit to the Committee off the record we would be very happy to see you in a private session briefly when the formal evidence is concluded. If there are points which you wish to bring up following your reflection on this evidence session you can of course submit further paper or papers to our clerk and the Committee will see those. If they are for publication we will publish them; if they are for background information we will not publish them. We are very conscious of the fact that there are some extremely sensitive and delicate issues involved. Mr Smyth, would you like to introduce your colleagues? Mr Smyth: I am Nigel Smyth; I am the Director of the CBI in Northern Ireland. I have a brief number of comments then I will hand over to my colleagues in the Federation of Small Businesses. We welcome the opportunity both to submit written evidence and to be here today. Organised crime is an important issue of concern to the business community - and indeed particular sectors of the business community - in Northern Ireland. It is a difficult issue to comment on in detail. As you rightly said there are very many sensitive issues particularly around the area of extortion and it is extremely hard to get hold of firm evidence. From a business perspective the four most significant issues facing us in Northern Ireland from the CBI's perspective are firstly fuel smuggling and laundering, violent and armed robberies, extortion both in and across the construction sector and the retail sector, and counterfeiting. There is a final area which has maybe a less direct impact on businesses which is organised crime involvement in illegal drugs. That is all I intend to say at this stage. Q2 Chairman: Would either of you like to add to that? Mr Mitchell: My name is Wilfred Mitchell; I am the Chairman of the Policy Unit at the Federation of Small Businesses in Northern Ireland. I am joined by Glyn Roberts who is the Parliamentary Officer. I would like just to make a few remarks. Q3 Chairman: Can you just tell us how many small businesses you represent? Mr Mitchell: Five thousand. Q4 Chairman: What is your definition of a small business in Northern Ireland is employing less than ...? Mr Mitchell: Close to 200. Mr Roberts: The majority of our members would be in the region of nought to ten. Mr Mitchell: We also welcome this opportunity to contribute to the inquiry on organised crime and, as you aware from our submissions, we have focused on extortion and racketeering by paramilitaries and illegal organisations at a local level. While we recognise that the Organised Crime Task Force has had a measure of initial success with some individuals, we believe not at the grass roots level. To date there has never been a serious attempt by government to fully identify the core problem and find a solution to extortion of the SME business sector. Northern Ireland is dependent on the SME sector and the FSB can demonstrate through research that illegal donations are a hidden cost of doing business. Due to the sensitivities we are unable to speak in a public forum on specific case studies that we have obtained. However, the FSB survey has identified that 6% of businesses are affected by perceived illegal donations. Replicating this sample study we would suggest that up to four thousand businesses could be affected. As well as the economic impact, the fear that many businesses face is unacceptable. It is unrealistic for an individual business to report this type of crime as the consequences in terms of personal security and business sustainability are too high. The problem is growing throughout the Province and into new locations outside the historical Belfast area. SMEs make a vital social and economic contribution to Northern Ireland and the Federation of Small Businesses recommends that the Organised Crime Task Force makes racketeering and extortion against the business community a core priority. Research into the cost and impact of racketeering and extortion should be commissioned and the present politicians who are responsible for making decisions must demonstrate a willingness and take a leaf in dealing with this issue. The FSB recognises that reforms proposed for charity administration and legislation would be useful in assisting to tackle this issue. We also believe that a marketing campaign with a dedicated independent brief could be piloted to encourage businesses to report incidents or to seek advice on racketeering and extortion which again is very sensitive. All this appears to be spreading throughout the Province and the FSB recognises that time is of the essence in tackling this issue before it becomes rooted in future generations. The FSB would recommend that these issues are moved up the agenda and an immediate course of action be implemented. Q5 Chairman: Thank you for your opening statements. Before I begin the questioning, could I just ask, would you wish to have quarter of an hour with the Committee in private? This is a public session, being televised; everything you say is on the record. Do you wish to have quarter of an hour off the record afterwards? Mr Smyth: Not from my perspective at this stage. Mr Mitchell: Nor from ours. Q6 Chairman: Thank you very much. Mr Smyth in your CBI evidence you talk about organised crime increasing in Northern Ireland. Would you like to explain to the Committee how you come to this conclusion and what evidence there is to support the assertion, and whether you believe this is going to be a continuing and growing problem? Mr Smyth: If I take the four areas I have identified, I think in terms of fuel smuggling that certainly increased rapidly during the 1990s. It is fair to say it probably peaked around 2000/2001. Certainly recent statistics indicate that the level of legitimate fuel is actually increasing and has increased maybe by about 25% in recent years, but that would still highlight the very vast amount of fuel smuggling and fuel laundering continuing. If you look at cash robberies in the 1990s there were probably less than ten armed robberies a year; that peaked at around 90 or 100 again around 2000/2001. It appears to have fallen back and is now levelling off at round maybe 50 or 60 partly I think because companies have more stringent measures in terms of safety precautions plus the additional resources from the PSNI. In terms of racketeering and extortion I think the view there would be that that is continuing at a very high level. The view is that this has exploded in the late 1990s and I have no evidence to indicate that the situation there is easing. It does vary between areas, certainly where paramilitaries are involved both in terms of the nationalist and in the loyalist side our major concern is both across the construction sector and in terms of the retail side. In the final area of counterfeiting I think the view there is that the situation continues to get worse. There have been some very major finds by the PSNI prior to Christmas. The view out there is that there are more and more counterfeited goods - alcohol, DVDs, these types of things - distributed through markets across Northern Ireland but also through people and skills, hospitals, local markets and various other markets. The PSNI have had some success there but the people in the industry say there are various distribution mechanisms in Northern Ireland. Overall in one or two of the areas certainly in the last couple of years there has been some easing but a number of areas are still continuing at a high level in most cases. Q7 Chairman: From your conversations with your colleagues in the rest of the United Kingdom is it your impression that it is much worse in Northern Ireland than in the rest of the United Kingdom? Mr Smyth: Absolutely. If we look at construction the view is that this is very widespread in Northern Ireland, particularly at the moment in loyalist areas. It is a much bigger issue in Northern Ireland. Q8 Chairman: Would you like to add to that? Mr Roberts: I think it is important to put on the record that looking at the wider context on the basis of a survey that we did two years ago - "Lifting the Barriers to Growth" - it actually showed that two out of every three business owners were the victims of crime. Northern Ireland itself is among the top four in terms of regions for the highest level of business crime. Obviously that is overall crime and not just organised crime, but there is a real problem in terms of the business community and crime. There is a perception that the PSNI are not making much of an effort to engage with the business community to tackle this problem and this is backed up by our own survey which showed that up to 36% of all businesses believed they will not achieve anything by reporting incidents. That figure was reinforced by the Minister, Sean Woodward, yesterday when he said it was somewhere near 40%. Q9 Chairman: When was that survey done? Mr Roberts: It was done in the last two years. Q10 Chairman: Did that include all your members? Mr Smyth: The "Lifting Barriers to Growth" survey is a bi-annual survey which we do across the UK and obviously we have the Northern Ireland figures, but it was also useful in terms of crime to have a look at a comparator in terms of other regions of the UK. Crime is one of the top issues for the business community to deal with in Northern Ireland; there is absolutely no getting away from it. Q11 Mr Anderson: In your submission you talk about a perception from the CBI that one of the main reasons why organised crime is still getting worse is the reduction of the police as a result of the Patten proposals. Do you have any idea what the numbers have been reduced by? Mr Smyth: I spoke to many people in preparing our written evidence before coming here today. I think it is a very broad view that the PSNI is extremely stretched in terms of its resources. Many of our members, particularly those involved in cash and transit, have a good relationship with PSNI but there is a general view that the numbers on the ground are significantly less, the scale of experience is significantly less and it was certainly put to me that some of the intelligence is not as good as it was some years ago. It is starting to improve but it is going to take time. The view is that there is a big threat out there; the PSNI are under-resourced and under a lot of pressure in terms of meeting the threat that there is there in a whole range of areas. Q12 Mr Anderson: Has the number come down? Mr Smyth: In terms of the number of police on the ground that has come down quite significantly over a number of years but I cannot give you a figure. Q13 Mr Anderson: We understand from Her Majesty's Revenue and Customs there has been an increase in the number of officers engaged in tackling oils fraud from 25 to over 160. You say it seems it peaked in 2000 and the police are getting better now. Do you think that has had an impact? Mr Smyth: I think it has had an impact. I think you have to look at a number of things. I think you need to look at exchange rates, particularly the exchange rates in the 1990s when it increased that discrepancy. You also need to look at excise duties and they have narrowed slightly. So those are two things on that side but I think at the same time there has been more coordinated action and more resources put into this. However it is still quite frightening. I think we are down to about 610 filling stations at the moment, about half of those are what we call branded petrol stations and half of them are not branded. I believe from the previous Committee's inquiries it suggested that a majority of filling stations use some degree of illegitimate or illegal fuel. Q14 Chairman: We will be taking evidence from the petrol retailers in about a fortnight's time. Do you wish to add anything to that? Mr Roberts: Not at this stage. Our colleagues in the petrol retail trade will take care of that. Q15 Mr Fraser: You are calling on the Northern Ireland Office to look at the performance indicator for business crime to give the same priority, as I understand it, as for domestic crime. Can you tell us about the discussions you have had with the Northern Ireland Office in that respect and how you think the performance indicators will affect the recording of crime? Mr Roberts: I think that is basically FSB national policy and we would like to see the Home Office take that line as well, so that is a consistent line we have put across the UK. We have put forward a range of suggestions in terms of tackling crime, for instance if a small business invests in security that they should get tax relief, that they themselves will perhaps take part in a business confrontation scheme. There are practical things, but what we want to do is to ensure the PSNI have business crime right at the top of their agenda. It is unacceptable in any serious economy that two out of three small business owners are the victims of crime, from the very low level crime right up to the more serious. I think that there is a real problem in that many people are not contacting the police and what you have is a huge difference between the figures that we produce and the figures that the PSNI produce. The PSNI are relying basically on what is recorded crime and there is a difference between what is recorded crime and what our members are telling us on the ground. Q16 Chairman: From what your members are telling you are they consistent victims of crime, not just one off? Mr Roberts: Yes. I am aware that in Dr McDonnell's constituency on the Lisbon Road there is one small retailer who in one year had six burglaries. That in itself is unacceptable. You are all aware of the small businesses in your constituencies, you are aware of all the pressures they are under from things like insurance and energy costs and to have this level of crime is a burden too much. Mr Smyth: : I was looking in detail at the Policing Board's target and when you look at it in detail the first two priorities are public order and road traffic. The third priority is reducing crime and the fear of crime. If you look at the business aspect of that it comes well down the list. From a business perspective we are seen to be coming well down the list rather than right at the fore. Q17 Mr Campbell: I just wanted to establish beyond any doubt about what Mr Roberts and Mr Mitchell have said about this figure of 2000 small businesses suffering some form of criminal activity whether it is low level or high level. That is a huge indictment surely of where we are in 2006. On a national scale if that were replicated it would be at the top of the political agenda in terms of finding a solution. What I wanted to ask you was, obviously criminals in Northern Ireland as elsewhere will evolve and, as police forces crack down on their present activities, they will then move into other activities. In terms of human trafficking how much evidence is there that criminal activists and organised gangs of criminals are getting involved in that type of activity and the crimes that flow from that (there are a number of crimes that flow from the illegal trafficking itself)? Mr Smyth: I think as to illegal immigration trafficking we have identified that as one of the new issues. I think it is also probably one that Northern Ireland is less exposed to than in the GB. I think it is also one where you are going to be looking at UK networks and the networks for the Republic of Ireland on the back of that. It is a relatively new phenomenon in Northern Ireland. Obviously migration has been increasing very significantly over the last number of years. It is certainly not one we would see linked with paramilitary type activity but it is a fairly new area that has appeared in the last few years. Mr Roberts: Crime is crime whether it is carried out by paramilitaries or criminal gangs; we do not see any difference in the two. It is extremely hard to get small businesses to go on record and come in front of committees like this even if it is in camera or behind closed doors. Obviously you are aware of the circumstances that prevail and that is always very difficult. What we are looking at is to ensure that at the grass roots level there is the attention on the small retailers who are facing the problems of organised crime. One of the comments we got back in our survey which is in your submission was: "If the small amount to be paid is seen to be paid there is no problem. My windows and personal safety are worth a lot more than £100 a year". That is from a barber's shop with two employees. That one statement gives perhaps a human face to what quite often can be statistics and reports and I think we have to remember the sheer pressure that many business owners are under as a result of organised crime, as a result of extortion and that is why we want to see this issue addressed on the ground for small business owners. Many of the areas that have small business owners that are victims of extortion are crying out for investment, they are crying out for jobs. Let us face it, it is not Sainsbury or Tesco that are the victims of this; it is the small retailers, the small newsagents, the small grocers, the small barbers on the ground who find it hard going enough. Q18 Chairman: Is it your impression that most of them are subject to some form of this? Mr Roberts: It is difficult to say every small business but certainly within our survey there is a very significant amount. It is very hard in one respect to put a complete figure on it because when other organisations have tried to do surveys in the past they have always found it difficult to get a response. Q19 Chairman: I appreciate that very much, but it is helpful to the Committee to have a steer. You are intimately involved in all of this. Is it your impression that 50% of the crimes are reported? Or 20%? Or 80%t? What sort of figure would you put on it? Mr Roberts: In terms of an overall figure it is somewhere in the region of 36% who believe reporting crime will not achieve anything because there is a lack of confidence in the police to actually catch the criminals. That is on overall crime but obviously in terms of victims of extortion and racketeering that figure would be a lot higher than that. Q20 Mr Campbell: I know it is difficult to generalise but given what you have said about the scale and the response or lack of response, if I were to ask you, generalising insofar as you can, on a scale of one to ten where would most of your members put the confidence of the police today to deal with the crimes your members are facing, between zero being not confident at all and ten being very confident? Mr Mitchell: I would say about five. Mr Smyth: I would have to say six. Mr Roberts: I suppose as well it depends on the small business owner you are talking about. Q21 Mr Fraser: What measures would you put in place so that there is more openness and less fear of retribution? Mr Mitchell: We believe the PSNI have been aware of this in the past. This knowledge that we are giving today has been out there and it comes back to the point that we are saying that the decision makers and the politicians responsible have to demonstrate the willingness to kick a leaf in dealing with this. They might have to put money and resources in the proper places. Q22 Mr Fraser: If there was that resource and money what are the specific measures you have in mind? Mr Roberts: One of the points that we have put forward is for research. It does not really matter who does it but as long as we get the information there and have researched into the cost and impact of racketeering and extortion so we actually know the impact on the whole economy. It is difficult to get that and I think that is one of the things that we would like to see out there. Obviously we need to see the Organised Crime Task Force put this grass roots extortion at the top of the list. Mr Smyth: There are a lot of very small family owned retailers, corner shops, who are being targeted for £100 or £200. If you look at construction sites, building sites, you are looking at sums of £10,000 to £30,000. Certainly in a number of cases a lot of developers do not work with the PSNI because they have been threatened; some do. Resources are put in quietly by specialised resources and various things. I think you have to create more confidence. There have been one or two cases of suspicions of leaks over the past number of years. You have to get a lot of confidence that if you are going to go down that route and expose yourself that those people are going to be behind bars for your own personal safety. People are put on different levels of safety and security once they start working with the PSNI. There are two different levels, the serious stuff in terms of the big stuff on building sites which even though it is very damaging to the individual and damaging to the business and maybe much more difficult to get hold of when people walk in and say, "Can you give some money to charity?" or whatever it might be. Q23 Sammy Wilson: You have highlighted a lot of the problems that the police have with numbers, lack of confidence, leaks and the belief that the police cannot actually do anything, and also lack of intelligence. However, the police would tell us that intelligence is not just for them to gather; intelligence comes from the people who are victims of crime as well. I have listened quite intently to what you have said and the only measure which you have mentioned so far which you believe would get people to respond to police is a confidential line. If 36% of people are not even reporting crime to the police what do you believe in practical terms needs to be done to get people to come forward and give the information to the police? After all, they are the people who are most likely to be able to give the police this information to catch criminals. What practical steps can be done to encourage that 36% of people who currently do not even go near the police to come and give this information which enables them to start the process of catching the criminals? Mr Smyth: Obviously there is the Crimestoppers line but what we want is something that is specific, manned by people who have the understanding of the pressures that businesses have who are going through this particular problem and who can give advice. There are no easy solutions for the small business owner who is the victim of this type of intimidation and their concerns for their business, their livelihood, their family. One of the local commanders in Belfast said that if an owner of a business does contact police it is usually not the local police officers from the local station who go down, it is usually somebody from headquarters because they do not want the risk of being identified by the local police. There is no easy answer. What we need firstly, as we put forward in our submission, is to find out the extent, to have the clear facts, figures and statistics of the problem and obviously use the Organised Crime Task Force to ensure that they themselves have a key role. They have had some success but they need to get at the grass roots. They have already moved forward because the respective agencies are all coordinating and working together through the Crime Task Force and that is a start in the right direction. Q24 Sammy Wilson: You have told us there are people who are being robbed four or five times a year. We already know there is a significant problem. Knowing how much is being done does not lead to criminals being put behind bars; they are put behind bars when the police have evidence to put them behind bars. What I want to know is what practical steps do you believe could be taken in order to gather the evidence from the victims with confidence so that the police can pursue this? Mr Roberts: The PSNI have a big role themselves in ensuring that they themselves are more user friendly to the business community. One of the things we have now is the District Police Partnership. There has not been an engagement with the business community with them. Many of their public meetings are badly attended and it is not seen as a forum to address this type of thing. One of the things we have suggested in our submission is that it has come to our knowledge that many paramilitary groups are actually using - or abusing - the charity status and using setting up front groups and we would like the Government again to ensure that that door is closed. Mr Smyth: Everybody I spoke to wanted a more significant visible presence of police to create that confidence and various things on the ground. There are examples of some success in various things. There are cases of where things have been addressed and how you go about that. Touching also on what my colleagues have said, it is about service and responsiveness. Some people have had a car stolen or whatever, you are not going to find the thief so the view is what are the police going to be able to do about it anyway? You have to try to challenge that in some way. Mr Mitchell: It is a two way process and, as I said earlier, you need to get to the core of the problem. Once the business world can see that there is genuineness on the police side to get to the core they will feel safer in reporting. Q25 Mr Hepburn: Can I just ask some questions specific to the construction industry? Racketeering is widespread in the construction industry: can you tell us something about the size of it? For example are the Laings and the Wimpeys on Belfast dock affected the same way as the spec builder? Can you tell us something about the mechanics about how it is actually done? Mr Smyth: I cannot give you any details about the mechanics; you would have to speak to individual construction companies and builders. In terms of the scale, our view is that it happens mainly well down the supply chain. The top strand - the top ten or twelve - (we have certain multinationals, a number of big construction companies in Northern Ireland) there view is they do not pay and it is on the record. Most of the work in construction is done by sub-contractors anyway. We certainly believe - and it is the evidence I have collected from various members - that it is the small and medium sized family owned builder who is going to be most exposed to that. I do not know the mechanics but the view is that someone comes along and suggests a contribution to something or whatever it may be (but I think there are a number of mechanisms there) and then they get invoiced or whatever on the back of that. It tends not to be the top line construction companies. They generally have a policy not to pay. The site manager would say, "Look, we don't do that". It is the small family guys who are most exposed in terms in some sort of personal threat. Interestingly a comment that I did pick up on is that there is more prevalence in loyalist areas. In the catholic areas the local community has got behind this. They see the damage in this. You are not going to get redevelopment and regeneration; no-one is going to come into some of these sites. Developers are not going to go in there if they see this significant threat. In a number of catholic communities there is much stronger community leadership and local political leadership and some of the problems that may have been there over the years tend to go away. The criminal activity is more subtle now. The loyalist view is that it is just thugs out there, intimidating and threatening. Rosie Cooper: Somebody who is just sitting listening to the evidence being given, is hearing phrases like, "Well, people are not expected to report it for various reasons; reporting crime does not achieve anything" and the throwing up of hands. I have listened very carefully to some of the exchanges and you have been asked about finding a solution. You mentioned research and confidence building, but why can these small businesses not be set up as part of the process to try to catch these people and send out a big signal: "Look, this is going to be tackled". Has that type of thing been tried? I know the scale is huge and I am not underestimating it, but the reality is that I almost hear you are almost giving up, that people are not engaging and if you do that I do not see how you can make progress. Chairman: I think I must appeal for slightly shorter questions. Q26 Meg Hillier: Can I just ask something on the back of that about third party reporting? Have you thought of that as a solution? You mentioned the issue about charity fronts; do you have criticisms of the Charity Commission? Perhaps you could just expand on how you think that can be tackled. Mr Mitchell: I do not believe this is ordinary crime. We are on the verge of having two mini mafias in Northern Ireland and we need to use the same tactics to address those issues. We are on the verge of that becoming established in Northern Ireland. It is very important that something is done quite quickly. Mr Roberts: Very recently we met with the Deputy Chief Constable and we put a number of these points to him. The PSNI, particularly in Belfast, we have bobbies on bikes and many of the city centre traders feel that is a positive move. We are working and engaging with all the major stakeholders on this and we are determined that this issue does get serious political attention. The PSNI have their work cut out in addressing this problem of business crime, as have the Policing Board. Obviously they have a key role to play in ensuring that crime does go down. The difficulty is that the PSNI then broadcast some months ago that crime in Northern Ireland was reducing and the situation that we see on the ground is the opposite of that. I think there is a further point as well. Obviously if you are a victim of paramilitary extortion then it is that much harder to contact the police. I think that should be made clear. In terms of the other aspects of crime the problem is that many of the police record these things and that is the last thing the small business owner actually hears from the police. They do not catch the criminal and they just see the crime rate being endemic in their areas. In terms of the charity point, as I understand it Northern Ireland does not yet have a charity commissioner although I understand there are moves within our Department of Social Development to update that legislation. It is a rather difficult thing to quantify but in the course of preparing our evidence today it was one of the points that was made to us. Mr Smyth: As far as I am aware there has not recently been any coordinated high profile campaign to say, "Right, over the next number of months we are going to go in with big resources". Certainly in terms of the construction side it is very sophisticated. A number of big developers are reporting but it probably is a minority. A lot of it goes unreported; people are too worried about their own safety. Q27 Chairman: We are just beginning to touch specifically on the paramilitary involvement. You made that comment - a fairly low key comment but a rather important comment - about two mini mafias. Is the correct inference for me to draw from that that you are saying that Northern Ireland could be in the grip of a catholic and a protestant mafia? Mr Mitchell: Yes. Q28 Chairman: Do you believe that that is what will replace the bloody and dreadful things that have happened in the past? Mr Mitchell: I think that will come out as a consequence of what has been set up previously. Q29 Chairman: Do you think one side is more involved in this than the other? Mr Mitchell: One seems to be more professional than the other. Q30 Chairman: Can you specify? Mr Mitchell: We were concentrating on racketeering in that area and it does not seem to be as sophisticated; it seems to be more ad hoc. Fuel laundering could be more professional. Q31 Chairman: Are the more professional ones in the catholic community? Mr Roberts: As we said earlier on, we do not make any difference between whether it is crime by the paramilitaries or crime by criminals. There is no difference at all in our view; it is all wrong. In the survey that we produced - with responses from right across Northern Ireland - it indicated that this problem is right across Northern Ireland in every community. Obviously there are respective groups within that and there are going to be different ways of operating, but it is the same outcome. I think that what we are concerned about, obviously some time after the cease fire because there is a vacuum there, the paramilitaries could turn into mafia organisations and that is a concern that we have. Q32 Chairman: It is a concern that we obviously have and what Mr Mitchell said is very significant. He said that he felt that there could be a catholic mafia and a protestant mafia developing. I asked him which was the more sophisticated and he did not actually answer that question. Mr Mitchell: I believe the nationalist community could be more professional. Mr Smyth: From the CBI perspective it is difficult to generalise. If you look at cash robberies the perception there is that 90% involve paramilitaries or ex-paramilitaries probably on both sides. There is a lot of small scale stuff and what you are seeing is joy riders being brought in to rob the local corner shop and then they are enticed into bigger and more sophisticated operations by those involved in that. In terms of extortion I think it has already been commented on construction both sides involved, perhaps more subtly on the republican side but certainly pretty blatant on the loyalist side. As to counterfeiting I think the view there is the majority of stuff has paramilitary or ex-paramilitary links and a particularly high level of loyalist activity. Mr Roberts: We very much want to see this being addressed but one thing we are not going to try to do is get dragged into what has become obviously a political crossfire. We have identified the problem; we want to see action taken on the basis of our submission. We want to get on; we want to see the politicians in Northern Ireland taking and addressing this problem and using their expertise. They have the knowledge on the ground and I think that has always been the best thing in trying to tackle this and many other problems in Northern Ireland. Q33 Rosie Cooper: We have quite extensively gone into the overview of the paramilitary involvement. You have suggested there may be two mafias at the bottom of the layer which is the ordinary criminal element. What would you say the balance would be, paramilitary, non-paramilitary? What would the inherent criminal activity be? You did not mention before about third party reporting, not necessarily going to the police. What would you see the level of crime being in the sense of how much of that is just ordinary criminal activity? Where should we direct our resources? Mr Roberts: Certainly we will look into third party reporting and pass on information. We cannot directly answer your question today and we will look into that to see what the options are. There was a point asked earlier about PSNI setting up some sort of false businesses basically to try to catch the racketeers. That has been tried but as the commander said they clock onto the fact that it looks rather suspicious, in terms of two policemen trying to run a newsagent for six months. In terms of the response and the number of arrests they get from it I think from what we have heard from local commanders it is not worthwhile in terms of getting the results. Q34 Rosie Cooper: I am sure it is not beyond out wit to find a mechanism whereby you could get an expert witness or somebody to witness what is going on, give evidence, but not necessarily the person being threatened. You have not answered my question on balance. On the one hand you are saying you have two mafias; do these two mafias manage 90% of the organised crime? Mr Roberts: It is not an easy thing to survey. It is difficult to comment on but I suppose we could give a precise figure on and how that breaks down. Mr Mitchell: It is even more difficult because maybe the mafia is controlling it within their own area. Mr Smyth: The feedback I got from my members is 89%. Of the four big areas that we identified - fuel smuggling, armed robberies, extortion and counterfeiting - the perception certainly is that the vast majority of that is paramilitary or ex-paramilitary. I would say it is more than just two mafias, particularly in the loyalists; there are a lot of splinter groups. You just need to read the Organised Crime Task Force annual report to see that these groups get addressed, they keep merging and coming together and various things. There are a lot of sub-groups with all of that. Mr Roberts: It is certainly in extortion and racketeering. Yes, the vast majority of that is paramilitary, but in terms of other organised crime and other crime it is perhaps a little bit difficult to give a break down of paramilitary and non-paramilitary. Q35 Meg Hillier: I wanted to ask about the impact it has had on people who are in business and then who might choose not to be in business. Do you have any idea of the numbers of people who close down their business as a result of this? Or, as you say, because they are on the margins will they just go along with it in order to survive? Is the effect of all this that people may choose not to set up businesses or to move businesses from certain parts of Northern Ireland to other areas where they feel there is less opportunity? Is there any geographical link? Mr Mitchell: I think it is clear that inward investment is restricted because of the risk factors and the control. Q36 Meg Hillier: People coming into Northern Ireland? Mr Mitchell: Even within Northern Ireland there are certainly areas they will not go into because of loss of control. That will hamper development and if they have to pay something if they are successful it is not a very wise thing so far as business is concerned. Q37 Meg Hillier: Looking at the wider impact on those local communities, does that mean that some individuals living there are losing the opportunity to shop in certain areas? Mr Smyth: Yes, particularly in services whether it is DVDs, off licensing, retailing, there are certainly companies in Northern Ireland who have decided they could not make money in certain areas because there is too much illegitimate activity going on. They would either be extorted or the business is not going to be there because they would be undermined by the level of illegitimate business. Mr Roberts: Many of the communities with these small businesses and small retailers are actually crying out for investment, they are crying out for jobs and to have this further burden put on them could well push businesses over the edge or they decide to close down. In Northern Ireland we already have the highest insurance energy rates anywhere else in the UK so with a further burden on a business it becomes extremely hard to start and run a business. In some of the areas where there is a particularly high level of paramilitary intimidation or racketeering or extortion it is very, very hard. As we said earlier on, they are not chasing after Tesco or Sainsbury; it is quite often the small local shops that are bearing the brunt of all that. Those local shops provide a valuable service for many, particularly the elderly. We have had a problem in Northern Ireland with out of town shopping centres and many of our smaller businesses, particularly in urban areas, have lost out considerably and obviously the paramilitary element is yet another burden on them. If you are going to start a small business you are not going to start it in areas that are blighted by particular problems of paramilitarism and high crime. Q38 Meg Hillier: Do you have any idea of the costs incurred by businesses of giving in or accepting offers of extortion? Mr Roberts: Obviously there would need to be an analysis of widespread business failures and bankruptcy and so on and obviously there are a lot of reasons for that. As we said, it could be relatively small amounts. I read out the quote there from a barber; these could be very small amounts but it does make the difference for a very small business to have this level. If they have staff as well they are worried about friends and family who do live in these areas as well and they are part of the community. Mr Mitchell: I would suggest you check with the PSNI. If you see what happened to the families who did report things to them that would paint a picture for you. Q39 Meg Hillier: You talk about £100 for the barber's shop, do you have any analysis of the sorts of figures that extortionists are demanding and also the racketeering and other illegitimate business? I realise this is difficult because people may not report it, that is why I asked about third party reporting. Mr Roberts: We would not have a precise figure in terms of amounts; again it would vary. It is extremely hard to get this type of information. Our survey looked at business donations and other aspects as well. It is extremely hard to get this information because of confidentiality and we work extremely hard to try to get even this level of information but it is something that none of the other respective agencies have managed to do. The Northern Ireland members here all know that this is taking place in their constituencies; every local counsellor in Northern Ireland knows it exists. The problem is that it has always been a very hard thing to set down and give firm facts. Mr Mitchell: We know certain things like the added increase to rent in certain areas and the value of land when people sell sites. There is a clear impact there. Q40 Mr Fraser: You mentioned the big organisations - Tesco, et cetera - because of the sheer size of the organisation they are able to say no, but with all respect both organisations represented here are large organisations, national organisations. Are you saying that you need to be empowered so that all your members, by membership, are able to say, "We say no"? Is that the point you are trying to make? Mr Roberts: Obviously in a perfect world we would give advice and say, "Don't pay" but we are not in their shoes, we are not there when these individuals come and ask for donations. The fact that we are here today, the fact that we have spoken in public on numerous occasions about this in terms of every aspect of crime and have produced a broader report. Chairman: You are very eloquently making your point this afternoon. Q41 Dr McDonnell: I would like to dwell on some of the points you have made but time does not permit that. I want to mention the Organised Crime Task Force. I was picking up that the FSB were fairly critical of the approach taken by Government to tackle organised crime and it argues that politicians and government are aware of the geographical areas where such activity takes place but choose not to tackle it, whereas the CBI on the other hand appears to welcome the strategic approach of the Organised Crime Task Force and the work undertaken, emphasising the need for sufficient resources et cetera. The FSB claim that the Government is ignoring the problem; what steps do you think the Government ought to be taking? Mr Mitchell: I think, as I said earlier, a lot of evidence that we are hearing today has been out there for some time and the Government has been aware of it. We consider there have been no serious attempts to fully address the matter. Q42 Dr McDonnell: Why? Mr Mitchell: That is what we would like to know. We are concentrating on businesses so it is the Government who need to answer that question. Mr Roberts: We do give credit where credit is due in terms of the Organised Crime Task Force. They have had initial successes. They have been very successful in tackling the godfathers, if you like, but what we want is for them to concentrate on the ground troops, so to speak, of the paramilitary organisations. We are also now involved with the Organised Crime Task Force in an advisory capacity; the CBI, the FSB and the Chamber of Commerce are now part of the Organised Crime Task Force in terms of advisory. We will keep our eye on the ball. It is one of our core objectives and we will not rest until this issue is addressed, and there is light shone on this particular problem. It is fine confiscating the assets of the godfathers but we need to get down to the grass roots. If there is one point that we want to make today, it is that. Mr Mitchell: There needs to be a clear strategy and then at least monitoring how effective they are at implementing this strategy. That has not been happening to date. Q43 Dr McDonnell: Would you care to comment on the effectiveness of the multi-agency approach that has been adopted by the Organised Crime Task Force? It is pulling together various agencies; how can the joint working there be improved? Mr Smyth: It is early days but one needs to read the annual report from the Organised Crime Task Force; it does give you some confidence that there is a lot of activity happening out there. There are certainly some resource issues. Certainly from our respects it is maybe not the priority that it would take if I look at the policing plans. In terms of the Asset Recovery Agency we believe it should have a more pro-active approach; it seems only to come into play at the last resort. We are maybe looking at the Republic there is a more pro-active approach out there on the back of that. It is quite clear that there is a sort of educational role in getting the community on board and educating them about the damage this is doing, so probably more effort and resource could be put into that too. It is a very complex, difficult area and there is a lot of work and effort going in to try to address it but it is not easy. Mr Roberts: The Organised Crime Task Force has brought together all the main agencies responsible for this and that coordination can only be a good thing. I think that they themselves recognise that. I think they recognised as well that the business community themselves, as we have demonstrated today, have a particular view on this and that is why we are now in an advisory capacity with the Organised Crime Task Force. We will ensure that our analysis, our views and the views of these grass roots small business owners will be heard loud and clear by the Organised Crime Task Force. Q44 Mr Grogan: Just to follow up a point that Mr Smyth made earlier, you were beginning to make a comparison between the work of the Assets Recovery Agency and also the Criminal Assets Bureau. I think you were implying that one was more pro-active than the other. Mr Smyth: From feedback that I have received from members is that CAB in the south appears to be more pro-active. The ARA in Northern Ireland appears to just come in at the last resort when every other channel has been gone through. Our view there is, could they not have a more pro-active approach? I do not know how they are instructed or whether they are hamstrung or not in terms of what they are doing there. They have certainly made some inroads with some success but it is probably fairly limited compared to what we are actually looking at. Q45 Chairman: You think they are more effective in the south than in the north. Mr Smyth: Certainly they have been established longer. I do not know the technicalities of the rules and regulations and what their strategy is, but certainly from some comments coming back to me the CAB appears to be having more effect, they seem to be out there more pro-actively. Q46 Mr Grogan: What about cooperation between the Customs and the PSNI, is that good in your experience? Do they work together? Mr Smyth: It is good and it certainly has improved in recent years. The HMRC tend to take a lead in this and the PSNI tend to come back only when they are having raids. I do believe that cooperation there is good. Q47 Mr Fraser: Do you agree with the IMC's observations about local councils and the courts being fully brought into the system in terms of their roles in tackling organised crime? Mr Roberts: I think we are here primarily talking about our own submission and I think we have a big enough job getting our message across and articulating what we have said in our submission without perhaps getting on to what the IMC are doing. As I said, we are very careful not to get caught in a political crossfire; we want to see this issue addressed. We want to see crime, we want to see paramilitary extortion and racketeering made a top priority. It should not be dragged into politics. We know what the problem is; let us try in terms of bringing all the agencies together in a united response in tackling this. Q48 Sammy Wilson: There was one issue that was raised at the end of your list and that was about immigration crime. You mentioned perhaps that it is not a big issue but it is an increasing one. The Government in the Asylum and Immigration Act is going to place the onus or asking for greater onus to be placed on employers to do checks on those who they employ to ensure that they are legitimately in the country and have work permits et cetera which will be a big way of tackling some of this crime. There has been some opposition to it but I would just like to hear the views of your both your organisations as to how you believe that will impact on your members and would you welcome checks at that low level as a way of combating this crime? Mr Smyth: I am going to dodge that one to some degree. I know the CBI have been working on this; it is not something I am familiar with. Clearly from an employer's representative any additional regulation on a business is a concern but there is a recognition that employers have a role and responsibility here. I am afraid I am not in a position to respond; I am not aware of the details of what is on the back of that. I am willing to come back if necessary and put in a short submission. Q49 Chairman: That would be an easy way to deal with that, yes. Mr Mitchell: There are terms of employment where people have to be registered and meet certain criteria and they are asked for photographs and things like that to identify them and to be sure about responsibility and qualifications. We welcome that. Q50 Sammy Wilson: A number of us probably receive lobby letters lobbying against that provision. It seems an eminently sensible provision because it is a way of checking at employer level as to whether or not people are being drawn into the country illegally and even being brought in as part of organised gangs. I really just wanted to hear the views of yourselves. Mr Mitchell: What we have heard so far we have supported. Q51 Chairman: You can certainly add to that. We are at the beginning of this inquiry. We shall make our report to Parliament in due course, probably May/June time, and our report will obviously contain a number of recommendations. If your wishes were fulfilled would you like to tell us what in particular you hope that we would recommend that would make life a little easier for your respective members? Mr Roberts: I think that we have put forward three or four main ideas that we would like to see put forward. As we have said it is perhaps to get the recognition out there from decision makers, from Government about the impact that this is having on a vital part of our economy in Northern Ireland: 99% of all businesses in Northern Ireland are small and this is a critical burden upon small business owners. If we get that recognition of the pressures on these business owners on the ground and an awareness of their problems and a commitment at every level to tackle this, then I think from the point of view of the FSB we would be very happy. Mr Mitchell: We would clearly like to see Government demonstrating a lead role and seeing something happen. Mr Smyth: We would be looking for resources, to make sure that this is a priority; pro-activity on the ground and educational campaigns to educate the community and get the community on side to recognise the damage that this is doing to the fabric of society. A culture has been created out there and that culture takes some effort to change. Q52 Chairman: If your equivalent in the rest of the United Kingdom were giving evidence to a committee looking at crime in England or Scotland or Wales or indeed all three, and you were talking about burglary and breaking into shops and things, there is one word that would keep cropping up and that word is "drugs". Is there a significant element of that in crime in Northern Ireland that affects your members or not? Mr Smyth: I suppose it indirectly affects our members if people are off sick and absent and various things. I think it would be fair to say that the level of drugs in Northern Ireland has been increasing but coming from a relatively low level. Certainly the problem is getting worse. Q53 Chairman: Crime is not as drug fuelled as it is elsewhere in the UK. Mr Smyth: It is certainly on the increase. Q54 Chairman: How far do you believe that the drugs are being peddled by the perpetrators or organised crime? Is there evidence of that? Mr Roberts: It would be difficult for us to come up with figures for that. I understand you are speaking to the PSNI and I am sure the chief constable and his officers would be more than helpful in answering that question. There has been a perception in the past that Northern Ireland did not have a drugs problem. The fact is that we do have a drugs problem and that dimension of our problems cannot be ignored. Q55 Mr Fraser: Are you entering into information sharing with other organisations world-wide in the light of international terrorism? Mr Smyth: We as an organisation are not. My understanding is that the PSNI and the Organised Crime Task Force is quite actively involved up there and have participated in a number of international conferences and meetings in various things. We have just been invited to participate in the Organised Task Crime Force in the last few months. Q56 Chairman: Are there any points that you would like to make to the Committee before I bring this session to a close? Do you feel you have been able to say to the Committee everything you really wanted to say, and the points you have wanted to make you have been able to make? Mr Smyth: Yes. Chairman: Good. We are very grateful to you. There are bound to be things that will occur to you maybe even as you listen to some of our other evidence which you may see on the television. Of course you may want to come and listen to some and you are welcome to attend. We shall be taking some evidence in Northern Ireland in March and of course you are welcome to all those public sessions. If anything does occur to you, please do not hesitate to contact the clerk. Anything which you say, before the termination of our inquiry, will be taken carefully into account. We are grateful to you and I do personally appreciate that it has not been all that easy for you to be as frank as you have been, but thank you. Thank you for what you do in Northern Ireland and we wish you continued success. Memoranda submitted by the Freight Transport Association and the Road Haulage Association Ltd
Examination of Witnesses
Witnesses: Mr Tom Wilson, Manager of the Freight Transport Association Ireland and Mrs Val Smith, past National Chairman of the Road Haulage Association Ltd and Manager of Bondelivery Northern Ireland, gave evidence. Q57 Chairman: Could I welcome you both, Mrs Smith and Mr Wilson. As you know the Committee has embarked upon a major inquiry into organised crime in Northern Ireland. We have taken informal evidence and had informal briefings both in Belfast and in Dublin. Today we have seen representatives from CBI Northern Ireland and the Federation of Small Businesses Northern Ireland. I think you have heard some of that evidence. We are grateful to you for coming to give us some more specific evidence. We are going to be seeing the petrol retailers and others at later stages in our inquiry. You have very kindly submitted some written evidence, but before we begin the questioning is there anything that you would like to say by way of opening submission and could you tell us precisely what your role is in your organisations? Mrs Smith: My name is Val Smith. I am the past Chairman of the Road Haulage Association; I also run a company in Northern Ireland which is a distribution company; I am a member of the board of Crimestoppers in Northern Ireland. Because of the job that I do in Northern Ireland organised crime affects me greatly and I think that is why I am here as the Road Haulage Association's representative. Q58 Chairman: You are most welcome. Mr Wilson? Mr Wilson: I am Tom Wilson, Regional Policy Manager of the Freight Transport Association, looking after the membership in Northern Ireland. I come from a background of almost 30 years in petroleum distribution and much of the activity that is going on is familiar to me. On behalf of our membership in Northern Ireland we welcome the opportunity to put our points across today, to say how certain activities in Northern Ireland are adversely affecting the well-being of what is a very valuable industry to the economy of Northern Ireland. Q59 Chairman: Could you just tell us how many members your respective organisations have? Mrs Smith: As a whole the RHA has ten thousand members; in Northern Ireland we have about three hundred members. Mr Wilson: We are really very similar. I think in total throughout the UK we have twelve and a half thousand members and some three hundred in Northern Ireland. Q60 Chairman: Will some of the three hundred belong to both organisations? Mr Wilson: Yes. Q61 Chairman: A large number of them. Mrs Smith: Not really; we represent different sections but there would be a cross-over. Q62 Chairman: What do you see as the major problem facing your industry in the field of organised crime? Mr Wilson: I mentioned the well-being of the industry. We all like to see a level playing field in the business community and if there are competitors working at an advantage which is using illegal means that has to be stamped out. My objective is to try to see measures brought into play very quickly in Northern Ireland that will stamp that out. Some of that will be heavy criminal activity and some of it will maybe not be particularly heavy criminal activity, but it is something that the law enforcement officers would certainly not be happy with and I think the people need to be brought to book. Q63 Chairman: Do you see organised crime in your sector as a growing problem, a growing threat? Mr Wilson: I think is difficult to quantify. As I say, I know it goes on; it can be people who apparently run a fairly legitimate business for half of the time and the other half of the time they are dipping their toe in doing something which is definitely not legal. In terms of an increase I think in the last ten years we have seen a lot of criminal activity, more so than ever before. Mrs Smith: As far as I am concerned in the business that I run - because I deliver high value goods - organised crime has affected our business substantially, in particular over the last few years. I would certainly say that in the last few years in Northern Ireland crime has been worse than it was all through the troubles. Q64 Chairman: Really? Mrs Smith: Yes; 2004 was a particularly bad year with organised crime in Northern Ireland and the type of kidnappings which carried over into 2005. Already in 2006 my company has already experienced two instances. Q65 Chairman: Would you like to tell us about them? Mrs Smith: Mr Kincaid made a statement a couple of weeks ago when he said that paramilitaries were still involved in organised crime. Perhaps I should elaborate, to deliver in some areas of Northern Ireland you cannot deliver with just a driver on a vehicle; I have to have a helper on the vehicle and a Securicor escort for that vehicle. We had a very well organised hi-hacking in west Belfast where my security escort was stabbed in the chest with a screw driver and guns were put to the head of the two people in the vehicle. They were made to drive the vehicle away to an area where the vehicle was unloaded and the goods were taken. The repercussions of that are that I now have three people now off sick - long terms sick - because of the experience of that. I would certainly say that organised crime is hurting businesses in Northern Ireland. Q66 Chairman: Were the villains apprehended in that case? Mrs Smith: No. The goods were recovered because of our own extensive security which we have on our vehicles. Q67 Chairman: What were the goods? Mrs Smith: Cigarettes. Q68 Chairman: The other thing that comes across when we were talking in Northern Ireland and indeed in the south is the great problem of fuel smuggling and fuel laundering. Would you like to comment on that? Mrs Smith: If you go back in time to when Professor Goldstein (who had looked into organised crime in New York) came across to Northern Ireland, I think part of his report said that until the Government looked at the differential in fuel duty between the north and the south of Ireland the perpetrators of organised crime were still going to be able to carry on that criminality because of the monies that they were making out of fuel smuggling. That is still going on today; the evidence is there. My colleague has some information on what we believe are the losses to the Exchequer. Q69 Chairman: We have had indications from HM Revenue and Customs that the receipts for legitimate fuel sales have gone up by something like 28% over the last four or five years. Mrs Smith: There are more cars in Northern Ireland than there were five years ago; I think that has to be taken into consideration. I would certainly say so far as the haulage industry is concerned the majority of hauliers - certainly those in the higher bracket, the 38-40 ton vehicles - all fuel up in the south of Ireland where fuel is just under 20 pence a litre cheaper than it is in Northern Ireland. Q70 Sammy Wilson: Could I just divide the questions into three: firstly around the fuel, secondly around the organised crime and thirdly around some of the measures which you have been critical of - and I think quite rightly critical of - in your responses to us? First of all on the fuel, in your evidence you talk about the level playing field and the effect on competitiveness. In a perverse way does the availability of laundered fuel, smuggled fuel et cetera in Northern Ireland give some road hauliers in Northern Ireland a competitive advantage against, say, road hauliers in Scotland or other parts of the United Kingdom? Mr Wilson: In my submission I stated that some 90% of fuel used by Northern Ireland based operators is sourced in the south. It is only 40 or 50 miles from the greater Belfast area down to the border points and if you are in those areas you will see the magnitude of the operation. It is several artic loads per day servicing those bunkering sites. It is all quite legal. I did some sums just recently on current differences based on the number of commercial vehicles only in Northern Ireland and based on that assumption, 90%. It is coming in at over £200 million currently per year just for trucks. Fifty per cent of all cars sold in Northern Ireland are now diesel cars and they are making that journey. My number one point is that for legitimate purchase of fuel the Treasury is losing anything between £250 million to half a billion pounds. That is a bit of a guess but it is at least £250 million. Mrs Smith basically said what I was going to say: car ownership has risen enormously with a 28% growth. It is great to hear that, but I think digging down deep I could tell you that there is some fuel imported into Northern Ireland and then moved south and there is exchange of duty. That is not telling us that the problem has gone away. I would argue that it is not less than it was. Edward Leigh MP in a statement in February 2002 said that in Northern Ireland large quantities of petrol and diesel are smuggled over the border from the Republic. It is estimated that the revenue losses have increased in 1998 from £140 million to £380 million in 2000. This sum is an astonishing proportion of the overall revenue from hydrocarbon oils expected from the Province of around £750 million so half of the potential duty that the Government should be getting we are not getting. This comment continues to say that over half of the filling stations in Northern Ireland sell illicit fuel and over one third sell only illicit fuel. I know that the Petrol Retailers Association are speaking to you separately; they may well be repeating what I am saying. If we come to the laundering of fuel, it was reported that 77 illegal plants have been shut down - I am not sure if that was last year - but it is so easy to start up another one. It really is an easy job so fuel with a green dye from the Republic, usually brought into a remote location in the border area, can very quickly be laundered. The county councils in the border areas are plagued with having to clean up this acid residue which is harmful and it costs a lot of money to dispose of it. That is happening on a regular basis. I really do believe that Revenue and Customs are only scraping the surface and there is a lot of crime going on continuously. The penalties do not fit the crime. The people who have the power to hand out penalties are frustrated because they are so miniscule. Q71 Sammy Wilson: That brings me nicely onto the next area I wanted to look at. You were critical of the courts indicating that very often when people appear before the courts no action is taken and the courts are simply recommending that Revenue and Customs recover the lost duty. Is this a common occurrence? Mr Wilson: Yes. One of the points we were going to make was that Revenue and Customs use their best endeavours. We have had joint meetings that there is an intelligence group that meets on a regular basis with Revenue and Customs and that is made up of the oil distributors and the petrol retailers and they are feeding back information, there are confidential lines, they have all the channels you can possibly imagine to lead Revenue and Customs to the door or where these activities are going on, but I do not think the phone rings very often, they do not say a lot. I think the difficulty is the frustration that was told to us by Revenue and Customs. It takes almost five years to get them up to a court. When they get them there the judges have said they are not proving that this person has committed a criminal act. They owe the duty so they must be left to carry on to recover that duty. So they are allowed to carry on operating. I know of a number of cases where they were apprehended in the late 1990s owing the Customs a quarter of a million pounds in unpaid duties and those companies are now bigger than they ever were before because they have cleared their debt with Customs and they are now good boys. Q72 Chairman: Are they really good boys now? Mr Wilson: Probably not. Q73 Sammy Wilson: Obviously Revenue and Customs have a role to play here but many of your members are probably aware of either who is selling the laundered fuel because they purchase it for their lorries, or where the laundered fuel is being stored. Are there any particular actions which you believe the authorities could take which would encourage your members who are aware of where are the stores or the sellers of the illegal fuel are located to come forward and give information which would speed up this process? Mr Wilson: Over the three years I have been involved in this fraud there is a frustration from those people who have submitted information confidentially to Customs, to an extent that they would even be reluctant to go back to further meetings. They say they have given them all this information, they have pointed the finger, they have phoned them up and told them where to be at a certain time and it has not been followed through. Q74 Sammy Wilson: Have you any explanation from your involvement in the forum as to why these things are not followed through? Mr Wilson: As I said at the very beginning, the Customs have used their best endeavours with the resources available to them. They are frustrated with being unable to strike these people off the map. There is a combination in there of a lack of will and a lack of resource. The information is being fed through, businesses are being damaged and are very frustrated that the good information they are giving has not resulted in what they want to see. Q75 Sammy Wilson: Is this one or two isolated instances or would you say it was very common, this flow of information and lack of action afterwards? Mr Wilson: I have not been a giver of information. I have been at these meetings where I have witnessed people saying that they are disappointed with the results of people being caught. I think it goes on further than that. I think it is an issue of the power that they have to deal with these people once they are caught. As I said earlier, they are made to go back to work to pay back the duty. Q76 Chairman: You have some power yourself because any trade association can set its rules. Do you strike off people you find are using illicit fuel or if you suspect some of your members use it? Mr Wilson: Our trade association has a very clear set of criteria as being part of membership. If a member is found to be of poor repute their membership does not continue with our association. Q77 Chairman: Have you expelled many? Mr Wilson: Not many. Mrs Smith: We represent organisations that believe that their members are of good repute. The majority of the members of our organisations would not buy illicit fuel because illicit fuel will ruin your vehicle; it ruins the engines of your vehicles. When you have a rig that has maybe cost you £90,000 or £100,000 you are not going to put illicit fuel in that. Our members will buy their fuel legally in southern Ireland; they do not buy fuel from the roadside. The people who use this roadside fuel are in the main cowboy operators or the general public who do not know any better; they are buying it from filling stations that are selling it. I would really like to make that point, that we represent legal hauliers. Chairman: It is very important that these questions are asked and emphatically answered and put on the record. Q78 Dr McDonnell: You almost pre-empted my question because we have a figure here of 95% of all diesel fuel used by registered commercial vehicles and not bought through recognised supply outlets paying UK revenue. How do we get that broken down? I am trying in my own mind to decipher where good business practice ends and where crime begins. I am conscious of a number of hauliers - indeed, people who may be members of your organisations - who moved their registration south a few years back. Mrs Smith: That did happen, yes. Q79 Dr McDonnell: That is not a crime. There are some hauliers who would use southern fuel when they pass through; there are even some hauliers who would tank up at Dundalk on the way back north. I do not see that as a crime and I think what we need here is to try to focus in better because the 95% effectively involves all of your members and when I see that I begin to think that I would not be buying diesel fuel in the north at all because nobody else seems to be doing it. How much of the 95% do you think falls into what we might describe as legitimate and how much of it falls into illegitimate? I think it is the illegitimate that we need to get after. It has become common practice that anybody within 20 miles of the border a couple of years ago was travelling because they were saving 25 pence or 30 pence at that stage but it is a totally different ball game they get into when they bleach fuel or whatever. That is where I think we see the crime. Mr Wilson: The 95% referred to there is my figure. I am referring there to the legitimate operators, the bona fide operators who are in the transport business, who are sourcing their fuel from the border either when they are passing through to do a delivery in the south or making specific journeys - as a great lot of them do, it is only 40 miles down to the border - every week to top up their tanks. That is all legitimate fuel I am referring to. I am talking about the bona fide operators who do things properly by the book. Aside of that there are companies in business whose rates are constantly undercut. The supermarkets are saying they can get the job done for less; members are saying to me they do not know how they are doing it. Those companies then can be sourcing fuel which is either smuggled in, a good quality product, same colour as available in the north, delivered into a storage tank in the north. That goes on. There are all the dodges you can think of. The 95% I am referring to is the bona fide operators who are sourcing the fuel but they are paying the Irish Government duty not HM Treasury Q80 Dr McDonnell: How bad does it have to get before the Government say "We need money for things in Northern Ireland and here is £350 million a year" or whatever that figure is? How long are they prepared to let this go on? Mrs Smith: Some time ago when I was National Chairman of the Road Haulage Association I wrote a letter to the Treasury and I asked the Treasury to look at the harmonisation of fuel on the island of Ireland to try to take away the monies that were going in to fuel organised crime. My suggestion to him then was: "You are going to get your £350 million back into the Exchequer and the resources that you are currently wasting chasing around after these fuel tankers that are crossing the border - and remember there are probably more fuel tankers in Northern Ireland operating illegally than legally - you can put those resources to the ports for instance and you can try to stop us exporting the problems that we have to the UK and you can use your resources better elsewhere." The return letter I got from Mr Healey said that because of European legislation that was something that the British Government could not do. I still believe that it is a possibility and I think the European Union would probably look quite favourably on something that is going to help Northern Ireland out of its present problems. I think that one of the Scottish MPs has actually brought to Parliament that he would like to see some dispensation on fuel duties for the highlands and islands and he has gone back to France who I think have managed to give something for some area in France. I am saying I think these things are possible. The Government paid to bring across a professor from the United States to give them advice on how to defeat organised crime in Northern Ireland but they do not listen to what he has to say. They are really only tipping the iceberg with the measures that they are taking at the minute. Q81 Sammy Wilson: Is there not a difficulty with what you are suggesting insofar as Northern Ireland is 22 miles from Scotland; hauliers in Scotland would then say the differential in fuel rates give hauliers in Northern Ireland an unfair competitive advantage to them? At what point do you stop this rolling across? You have made a fairly important point but I just want to know how you answer it? Mrs Smith: For a start you put a timescale on it. You give a timescale so that the Government could put the money it is saving into other resources - in defences, the PSNI and the Organised Crime Task Force - to try to defeat organised crime. At the minute there is smuggling going on to the UK mainland. There is an accident waiting to happen. Hauliers are coming over from the UK who never came into Northern Ireland or Southern Ireland before, they are bringing loads in because they know they can pick up cheap fuel in Southern Ireland and they are not just taking out cheap fuel in their tanks, they are taking cheap fuel out in the trailers they are bringing out as well. At some stage there is an accident going to happen. There is something going to happen to one of these ferries; there is the possibility of one of these ferries going to the bottom of the Irish Sea. It is happening all the time but at least if you can put all your resources onto the ports you can catch what is going on and what is being exported out of Northern Ireland and Southern Ireland into the UK and stop that happening. Hauliers are buying their fuel in Southern Ireland now. They are doing it legally but they are doing it to survive. Every country knows that Northern Ireland needs it haulage industry; that is how it moves its goods. We have to support our haulage industry and at the minute if our haulage industry was not buying its fuel in Southern Ireland we would not be competitive. Q82 Sammy Wilson: You have talked about how long it takes to get a case to court and the lack of action by HM Revenue and Customs, is there any indication that that is because the officers cannot operate in areas where much of this fuel laundering is occurring due to threats and therefore need police back up and that is not available to them? Mr Wilson: I have not heard that personally as a reason but I do believe that is probably correct. Therein lies the question: how good is the communication between Revenue and Customs and PSNI? I am not sure personally; I just do not know if they were really well coordinated collectively together whether they would have more results. Another point mentioned earlier, we talked about the increase in crime I think with the peace process coming along there is much less evidence of troops and police on the ground on a daily basis. It used to be that on every corner you saw the armed forces and thankfully now that is not the case but that makes it so much easier for these guys to operate. Q83 Chairman: You heard the evidence we had earlier this afternoon and the gentleman from the Federation of Small Businesses said that he felt that there were two mafias operating in Northern Ireland. Did you hear that evidence? Mr Wilson: Yes. Q84 Chairman: One from each side of the sectarian divide. Do you believe that is the case as well? If it is, what is their involvement in the subject we are currently addressing? Mr Wilson: Personally I do not have the experience to comment on that. I read what I see in the papers and there have been some high profile cases of people who appear to have been living a very high lifestyle having come from very meagre upbringings and they have come to the attention of the authorities or come to the attention of other people who did not want them to stay around for much longer. Q85 Sammy Wilson: There are parts of Northern Ireland where currently it is well-known that cigarettes, for example, are not taken over the border they are shipped to Liverpool and then back. Maybe you could tell us the difficulties in putting high value loads across the border. Mrs Smith: The hijacking that took place on the border was my company and it was my security officer who found our vehicle because the police would not go into the area where the stolen vehicle was taken. Our company no longer transports the goods across the border but the goods are not taken via the UK to Dublin. That is still happening because the threat is still felt to be such that it is not safe to take those cigarettes across the border. Q86 Sammy Wilson: You mentioned that you recovered the load that was stolen in west Belfast. What kind of cost does that impose on a company like your own to put those security measures in place? Mrs Smith: Absolutely huge. We are spending phenomenal amounts of money. We have to track all our vehicles. We have to have our own control room. Q87 Chairman: How many vehicles do you have? Mrs Smith: We have over 50 vehicles in Northern Ireland; we also operate in Southern Ireland as well so I have experience of what goes on on both sides on the border. We have to track all our vehicles, we have to monitor them from our own control room and we also have two full time people out on the road doing ad hoc tracking for vehicles. In certain areas, as I say, we would not send a vehicle in to deliver cigarettes in particular without a helper on the vehicle. Q88 Chairman: Could you just answer my earlier question about paramilitary involvement? Mrs Smith: If I told you that my vehicles get hit all over Northern Ireland, it is not just in one particular area, but there are certain areas in Northern Ireland where it is much more difficult to deliver in and the drivers themselves know when they are picking up tails and when they know there are people watching them. It is very organised; you have to see these things to believe them. It is from both sides of the community. Q89 Mr Fraser: Going back to the point you were just making, Mrs Smith, in 2003 you had a security seminar and there was a DC Kerr who admitted that the road haulage industry was not at the top of police priorities despite its obvious links to organised crime. At that time certain initiatives were set up, one of which you perhaps alluded to just now, the National Stolen Lorry Load Help Desk and the other one was TruckPol. Mrs Smith: They are here in the UK, not in Northern Ireland. Q90 Mr Fraser: When one looks at how such things have been set up, how would you use such a group or organisation or entity like that to help yourselves in Northern Ireland if you could? Mrs Smith: We do have links with other haulage companies. We have an association where we do speak to one another and we do have meetings with the police. People who are involved in the distribution of high value goods and the warehousing of high value goods would have regular meetings with the police. We do have some communication happening there. Q91 Mr Fraser: Is it effective? Mrs Smith: I know that the people I speak to work tirelessly to try to defeat organised crime but the resources are limited and the problem we have now in Northern Ireland is that we do not believe the PSNI have the resources to do the job and defeat organised crime. Q92 Mr Fraser: Another point with regard to evidence given by your organisation to the Transport Select Committee in November 2005 was about the automated facility to notify Truck Watch within minutes of a stolen report. Are you aware of that? Mrs Smith: Yes. Q93 Mr Fraser: They then go on the police national computer. What representations have been made by yourselves? Mrs Smith: Because we are a high value goods company we do have links into the police control room so when this happened a couple of weeks ago our control room contacted the police control room in Northern Ireland and it was my control room that led the police to where the vehicle was. Q94 Mr Fraser: Am I correct in saying that this scheme is presently stalled? Mrs Smith: In Northern Ireland or in the UK? Q95 Mr Fraser: Generally in the UK, but do you know any more than that? Mrs Smith: I could not bring you up to date. I can certainly get some more information; I can get someone from the RHA who is involved in what you are asking and get them to update you on it. I know in Northern Ireland we have worked very hard. No matter how much effort we have put into the high value goods haulage that I represent we are still not winning. Organised crime is still there and it is still defeating us. If you go back to what happened in Northern Ireland in 2004 where you had the Northern Bank robbery, prior to that two other companies took substantial hits from the organised crime gang and in fact it was stated publicly that the gang who hit those two companies - one of which was my own - actually robbed the Northern Bank. Not one person has been apprehended for the robbery on our premises and not one case that was stolen has been found. Q96 Chairman: What did they do and what did they take? Mrs Smith: It was a type of kidnap and they held one of my staff and his family hostage. He was made to do certain things and they eventually came to the depot and he loaded a trailer of cigarettes. Over £2.5 million of cigarettes were stolen. Not one case, not one packet has been recovered and not one person has been apprehended. You are asking here, what do we need to do in Northern Ireland? If we do not apprehend the criminals and if we do not bring them to the courts and if we do not put them away we are never going to win in Northern Ireland. Q97 Chairman: A moment ago you were blaming lack of police resources. Is it just a question of resources or do you have the impression that the police are not interested in this aspect of things? Mrs Smith: It is obviously in the interests of the police in Northern Ireland to cease organised crime. They want to do that. I would believe they do not have the resources having unfortunately experienced serious robberies and serious hijackings. I can see that they do not have the resources to be able to do anything about it. Q98 Chairman: Have any of the people who have perpetrated crimes against your company been apprehended? Mrs Smith: No. Q99 Chairman: Not one? Mrs Smith: No. Q100 Chairman: How many crimes are we talking about? Mrs Smith: Last year we had seven incidents of note. That is not counting attempts. Prior to that in October we had the robbery in the warehouse; I could go back further. I can honestly say in the last few years the situation in Northern Ireland is worse than it has ever been. My company has had more incidents against our vehicles and against our premises in the last three years than in the 30 years previously. Q101 Chairman: I am sorry to press you on this, but it is very important and very helpful to us. In the last three years how many incidents are you talking about? Mrs Smith: I am only talking about notable incidents, but in 2004 we probably had about 15 to 20. Then in 2005 we had seven notable ones. Q102 Chairman: You do presumably keep a log of these. Mrs Smith: We do, yes. Q103 Chairman: Would you be kind enough to send a copy of that to the clerk? Mrs Smith: Certainly. So far as I am concerned we are not the worst hit company in Northern Ireland. Securicor, the cash in transit people, are a hundred times worse than I am. At one stage they were having one incident a week. Q104 Chairman: It certainly would be enormously helpful to us. What we are getting at the moment is very riveting anecdotal evidence but if we could have some of those facts and figures and the amounts involved, the number of people who have been hijacked or held hostage or injured (you talked about the man who was stabbed in the chest with a chisel) it would be very, very helpful and we would be most interested. Obviously we are going to be having the chief constable and others giving evidence and we are going to be seeing people both privately and publicly. I do want our report to be able to make some very sensible recommendations. If any of the information you send to us is information you would rather the Committee did not publish but would have for its own information, then on behalf of the Committee I give you that guarantee that we would not publish it, but it really would be helpful. I am frankly staggered by what you say about these crimes and nobody being apprehended. Q105 Mr Hepburn: I would like to know something about labour costs because I think if I were a truck driver in Northern Ireland I would want an awful lot more than I would working in England, Scotland or Wales. You are describing a scene out of the Wild West! Mrs Smith: It is not all bad in Northern Ireland because not everybody carries high value goods. Q106 Mr Hepburn: You say you employ assistants in the cabs. Mrs Smith: Only for certain areas and only for certain deliveries. Q107 Mr Hepburn: Would you say your truck driver is on a higher labour rate than elsewhere in the UK? Mrs Smith: Absolutely, yes. Q108 Mr Hepburn: Is it substantial? Obviously it is going to have a knock-on effect with the industry, the business costs. Mrs Smith: Yes. Q109 Chairman: It must be significant with all your overheads. Mrs Smith: It gets harder every year because the more you have to invest in security it is always coming off your bottom line. It is not just me in the business that I run. We deliver to customers in Northern Ireland and it is your corner shops and your small supermarkets who are having to invest in more security as well because there is more crime against them as well. Q110 Chairman: You mean goods you have actually delivered? Mrs Smith: Yes. Then you have insurance implications as well. Q111 Chairman: I was going to ask you about insurance. In the same way that Mr Hepburn asked you about the wage bill, presumably the insurance has gone up very significantly. Mrs Smith: Yes, insurance cover would go up and you would find it harder to get insurance. Q112 Mr Fraser: Are there any areas where you cannot get insurance? Mrs Smith: We can get insurance to a certain level but it would depend. There are some smaller businesses which perhaps would not be able to get insurance and would have to take the liability themselves. Q113 Chairman: Do you wish to add anything to this, Mr Wilson? Would the experiences that Mrs Smith is having with her company be reasonably typical among your members? Mr Wilson: Maybe some of our members who engage in that type of goods. We do have some members carrying spirits and that sort of thing and we have some evidence there. It is amazing the knowledge that seems to pass across for the incidents that Mrs Smith has expressed: the planning ahead, the knowledge, the watching. It is frightening to think what is going on. I understand that my organisation is currently involved in a House of Commons inquiry into security. I am also aware that there is an American initiative; I think it is called Customs Transport Partnership Against Terrorism and it is likely there is going to be an EU directive coming out on supply chain security. I think it is very evident from cargo shipping into ports, but whether or not when it gets down to the EU level, it will cover this aspect of the final delivery chain, I suspect it might. Perhaps if that EU directive comes out there might be something positive coming out of that which is going to help towards eliminating this type of crime. Q114 Chairman: When we were in Northern Ireland and indeed in the south we had private briefings which I cannot obviously discuss, but one of the things that came out both sides of the border was the amount of counterfeit goods, counterfeit cigarettes but counterfeit goods of all types. Is there anything you can tell us about that and are your members sometimes put under some obligation to carry such things? Mr Wilson: I have personally not heard of that. Certainly it is widely spread, counterfeit CDs and tee-shirts and whatever. There seems to be a disease of that. I think it is transported in smaller types of vehicles than the ones that our members would use. Mrs Smith: It is coming into the sea ports. Counterfeit cigarettes, for example, will come in from places like China and will come in with furniture, built into the wood or packaging material or whatever. I would not imagine that an awful lot of our members would be involved. I do not know of any members of either of our organisations that would be involved in that. Q115 Chairman: Or put under pressure to be involved? Mr Wilson: No. Mrs Smith: No. Q116 Chairman: Are there specific things - you have touched on one obliquely, which was deterrent sentences - that you would like us, if you had your way, to recommend in our report to Parliament? Mrs Smith: I think we would like to see more people on the ground working to defeat organised crime. Q117 Chairman: You mean more police. Mrs Smith: More police. Perhaps more customs. Perhaps, as I suggested, if we were to look at some way of saving money we could use that money and build the resources that are currently being used in those areas in other areas which will maybe have more effect. Until the people in Northern Ireland actually see that the Government or the agencies - the police, Customs and Excise or whoever - are having major successes and are actually seeing notable people arrested and convicted, you are not going to get the support of the whole community. Does that make sense? Q118 Chairman: We understand entirely what you are saying. Mrs Smith: If the people of the community see, if the people of Northern Ireland see that these people are getting away with it, there is nothing to be gained by trying to do anything about it. Q119 Chairman: That of course is where the deterrent sentence also comes in. If somebody gets a derisory sentence, resources having been devoted to apprehending him, then it does not give encouragement to the others. Mrs Smith: To these fuel smugglers it is nothing to pay the duty on a load of fuel; even to lose the vehicle is nothing because they are making so much money out of it. Q120 Chairman: We are going to have a short private session with you, but before we do, are there any other questions or points you wish to raise? Mr Wilson: No thank you. Mrs Smith: We have covered everything, thank you. Chairman: In which case I declare this public session over. |