Examination of Witnesses (Questions 132-139)
MR MARK
FUCHTER, MR
GUY WESTHEAD,
MR DAVID
RICHARDSON AND
MR DAVID
GREEN QC
1 MARCH 2007
Q132 Chairman: Gentlemen, good afternoon.
You are most welcome. It is good to see you for the second consecutive
year. For the record, would you like to introduce yourselves to
the Committee?
Mr Westhead: You did not see me
last year.
Q133 Chairman: Forgive me.
Mr Westhead: Not at all. I am
Guy Westhead, the Deputy Director of Frontiers and International
Business Unit at HM Revenue and Customs.
Mr Fuchter: I am Mark Fuchter,
Head of Prohibitions and Restrictions Group within HMRC.
Mr Green: I am David Green, Director
of Revenue and Customs Prosecutions Office.
Mr Richardson: I am David Richardson,
head of one of the prosecutions divisions at HM Revenue and Customs
Prosecutions Office.
Q134 Chairman: You are very welcome.
Could I start by drawing attention to the fact that when you gave
evidence to us last year we raised a number of concerns that the
Export Group for Aerospace and Defence, EGAD, put to us and you
said that you were going to go and, I think, establish good relations
with them, or some phrase to that effect. I understand there has
been contact between you and them, and EGAD have been very helpful
to this Committee in advising us of their experience about how
the export control regime works. I wonder if you could indicate
what, perhaps, has happened over the past 12 months in relation
to their concerns?
Mr Fuchter: EGAD have a sub-committee
they call the HMRC Sub-Committee. We have established with that
sub-committee a joint working group and we have met twice so far,
once in July last year and once in January, and we intend to keep
meeting with them about twice a year. We have worked up a draft
of an action plan, which contains actions for us and actions for
EGAD members as well, and I have to say so far that co-operation
is extremely good, and there is a number of detailed points on
that action plan. More specifically, on their point about the
concerns that they raised, we have made some progress on those.
Whilst I think at the moment our views probably differ from EGAD's
to the extent to which there may be widespread non-compliance
out there, we have accepted the point, especially the point about
the level playing field, and we have put in place two particular
courses of action to address that for our own purposes, and I
can explain more about those during the hearing.
Chairman: Perhaps we could come back
to that if we have time a little later on. I would like to move
on to Judy at this stage.
Q135 Judy Mallaber: In your memorandum
you point out that as of December you had secured two successful
prosecutions, which was one more than the previous year so you
are doing quite well. You made the point that the number of prosecutions
is not going to be high and should not be taken as an indicator
of whether the controls are successful or not. Do you have any
thoughts on what might make a better indicator?
Mr Fuchter: Certainly. Looking
at it fairly narrowly in terms of export controls rather than
the overall indicators of frontier enforcement, if I answer that
first of all from the point of view of export controls, and bear
in mind there are all sorts of models about how effective frontier
controls can be, I would say a number of things. Firstly, preventing
exports to a WMD programme, or a similar programme of concern
or similar country of concern, either in response to, say, tasking
from the Restricted Enforcement Unit that I talked about last
time, perhaps based on sensitive intelligence, if we were to take
steps to prevent such consignments going through, or through the
initiative and skills of our frontline officers in identifying
consignments that are subsequently rated as licence-required under
the end-use catch-all control, and also I think preventing similar
trafficking in conventional arms. So more broadly it is about
prevention combined with other departments to ensure that the
Government's export controls outcomes are achieved, broadly exporters
are aware and incentivised to remain compliant, those considering
or behaving in a non-compliant way are deterred from doing so
and, to go back to the point I made earlier, that there is a level
playing field. Finally, if proliferators and middlemen enter the
field, that they are detected quickly and either dissuaded, taken
out or denied the goods. That is a sort of broad answer from the
point of view of export controls.
Q136 Judy Mallaber: That is a helpful
list in terms of what needs to be done. Are any of those areas
where you can pin it down, for example, and give us any indication
as to how successful you have or have not been, or are they by
definition areas you cannot really say you stopped 10 instances
of this happening and five of that happening?
Mr Fuchter: Yes, we can broadly
talk about outputs achieved. For example, we have published in
our annual report the number of times that we have detained goods
that has led to the end-use catch-all control being invoked but,
of course, we do not have a baseline against which to measure
that. The obvious analogy would be in comparing us, say, with
police where there is reported crime against which you have a
baseline, there is no baseline or report. Smugglers do not report
or citizens do not report a successful smuggling has taken place.
There is no comparator against that, but we do report our outputs
and we assess that against the intelligence received.
Q137 Judy Mallaber: You mentioned
middlemen, for example, a subject which has been of some interest
to this Committee. How would you make any assessment on whether
you are stopping people acting as middlemen or brokers?
Mr Fuchter: It would depend entirely
on the intelligence assessment. What we would do is we would expect
to tackle any cases like that. It is probably fair to say, if
they are working on behalf of a proliferation programme, middlemen
are unlikely to be deterred by some of the measures that we are
talking about in partnership with EGAD, but we would expect to
take on such cases.
Q138 Judy Mallaber: You also said
in your memorandum that some cases are abandoned before they are
reported to the Revenue and Customs Prosecutions Office "in
order to optimise our resources". What types of cases are
abandoned and how many are we talking about?
Mr Fuchter: Firstly, I think,
on reflection, using the word "abandoned" was probably
not a wise move and it may have caused some concern, and I apologise
if we have done that. In very simple terms, this is a straightforward
process which takes place within our investigation teams. Managers
are expected at all stages to critically review each case that
is active to determine whether or not it is likely ever to secure
sufficient evidence that would support a report to RCPO alleging
offences, or whether or not there may be already emerging issues
around disclosure of unused material so, in essence, it is an
early review of the sorts of issues you have heard us mention
to this Committee before. That is business as usual, managers
are expected to do that, and if such a case is going nowhere,
then managers would be expected, for obvious reasons of efficiency
in terms of managing resources, to discontinue cases rather than
continue to pour resources into a case.
Q139 Judy Mallaber: At what level
is the decision taken not to proceed?
Mr Fuchter: Most regularly at
team leader level, there are additional layers of supervision
at the management tiers above that. I have to say, there are cases
that are discontinued because there is insufficient evidence where
subsequent evidence emerges and the case is re-activated, so it
is a dynamic process.
| 
