Cross-border Crime

Lord McCrea of Magherafelt and Cookstown Excerpts

Wednesday 11th March 2015 Commons Chamber

[Dr William McCrea (South Antrim) (DUP)]

I beg to move,

That this House notes with concern the continued prevalence of serious organised criminal activity in Northern Ireland on a cross-border basis in relation to fuel smuggling, fuel laundering and the counterfeiting of consumer goods; recognises that this has had a significant and detrimental impact on HM Treasury; regrets the lack of prosecutions in relation to this activity; and calls on the Government to ensure greater co-operation between HM Revenue and Customs, the National Crime Agency and the PSNI so that this criminal activity can be eradicated.

It is a great pleasure to move the motion tabled by my right hon. and hon. Friends.

According to the Home Secretary, organised crime costs the UK at least £24 billion a year. In Northern Ireland, police assessments indicate that there are more than 140 organised criminal gangs in operation. We are all acutely aware of the audacious attempts by such gangs to carry out all sorts of crimes, including the laundering and selling of illegal fuel, and the counterfeiting of consumer goods.

Although the criminals respect neither borders nor victims in their illegal pursuits, Northern Ireland is unique within the United Kingdom in that it shares a land border with a foreign country. The findings of a recent British-Irish Parliamentary Assembly report show that law enforcement agencies in both jurisdictions work together; that illicit trade and smuggling are some of the largest challenges faced by cross-border agencies; and that the number of border area fuel laundering plants, and the number of filling stations selling illicit fuel, is alarming. The report called for a cross-border approach with a permanent multi-agency taskforce to deal with illegal activity and to tackle tobacco fraud, and for legal changes to prevent filling stations prosecuted in connection with illegal fuel from reopening within months of conviction.

I echo the comments made by Fine Gael TD Patrick O’Donovan when he spoke in a debate at the British-Irish Parliamentary Assembly on the report. He said that authorities were turning a blind eye to illegal activity in the border area, motivated by an “appeasement” process of replacing the cowardly butchery wing of the IRA with the racketeering wing, in what has effectively been considered a bandit area, which has helped to support claims that the Real IRA is the ninth richest terror group in the world.

Fuel laundering is currently worth around £400 million a year in lost tax revenues in Great Britain, and £80 million in Northern Ireland, where the problem is particularly acute. According to Mr Pat Curtis, a senior official at Her Majesty’s Revenue and Customs, organised crime gangs have established sophisticated laundering plants to remove the giveaway dye, sourcing chemicals from China and using the internet to improve their techniques.

Figures for 2012-13 indicate that the illicit market is worth 13% of the total. HMRC is responsible for investigating fuel fraud, including fuel laundering—as part of that work, it cleans any sites it uncovers—but in 2012 the Northern Ireland Environment Agency commenced a fly-tipping pilot in partnership with local councils. Between June 2012 and January 2015, Antrim borough council, which is in my constituency, had one fly-tipping incident. The cost incurred by NIEA was £346.76. In the same period and in stark contrast, Armagh city and district council had 114 incidents at a cost of £266,743.65, and Newry and Mourne district council had 198 incidents at a cost of £585,333.94. Those figures are startling.

In 2013-14, some 38 fuel laundering plants were dismantled in Northern Ireland compared with 13 plants in 2003-04. Although a fuel laundering plant is detected every 10 days in Northern Ireland, and despite the fact that this criminality is filling terrorists’ coffers and bankrolling the IRA and Real IRA, no one has been jailed for fuel fraud since 2002. Such statistics are preposterous, and the Northern Ireland public have a right to know whether that is the price of keeping republicans bought off for the sake of the peace process, or whether fuel launderers are tipped off ahead of raids.

[Naomi Long (Belfast East) (Alliance)]

One challenge is that the nature of the fuel laundering process means that people do not need to be present. Part of the difficulty is catching the right evidence. The Northern Ireland Department of Justice is trying to ensure that evasion of the duty becomes a criminal offence so that people can be put in jail for it. That is much easier to prosecute.

[Dr McCrea]

I thank the hon. Lady for that helpful comment. I trust that that will be a warning to those participating in that illegal activity.

[Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)]

I am sure my hon. Friend will mention this, but does he recognise that the criminality extends to drugs, cigarettes, alcohol and many other things in addition to fuel laundering? Does he also recognise that it is not the sole preserve of republican paramilitary organisations, but that some of the loyalist paramilitary organisations have moved into organised crime, and are corrupting our young people in many communities in Northern Ireland?

[Dr McCrea]

I concur. This is not an issue for just one community. However, there is an area of the Province along the border that lends itself greatly to cross-border crime, and republicans are up to their neck in that.

There is a query about whether fuel launderers are tipped off ahead of raids. After the 2013 major cross-border police raid on Thomas “Slab” Murphy as part of Operation Loft, the authorities at the time believed that the IRA chief of staff and his associates had been tipped off just hours before, as salvaged from the embers were the burnt remains of laptops, documents and computer discs. The status quo approach to tackling fuel smuggling and laundering is untenable. When the operators of filling stations are successfully prosecuted—this is not really happening at the moment—for selling illegal, laundered fuel, provision should be made in legislation to ensure that these outlets cannot simply be reopened again after a few weeks, as happens at the moment. The community is sickened by this.

The challenges we face are grave. We must take them head on and the Government ought to take them head on. These fraudsters must be stopped and the criminals must be put behind bars. However, a number of questions must be asked regarding Government proposals that are supposed to tackle this problem. Why are the Government continuing to designate the Dow fuel marker in legislation, when they knew a year ago that it was not fit for purpose? Why do the Government not support their own British science company, when its fuel markers are the only IMS-proven—invitation to make submissions—indelible markers recommended? Why did Her Majesty’s Revenue and Customs director, Mike Norgrove, give evidence to the 2012 Northern Ireland Affairs Committee inquiry that he would travel anywhere in the world to find a solution for fuel fraud, when he personally turned down an invitation a year earlier by the same British science company that saved the Brazilian Government billions of US dollars and reduced fuel fraud to less than 1% by 2012? Why would any Government allow billion-pound fraud to continue, when a British science forensic solution already exists? Even more troubling to me, however, is that I am told that a Treasury Minister wrote to the NIAC Chairman asking him to keep the Dow launderability confidential. We must do all within our power to stop illegally traded fuel raking in massive profits for the criminal gangs mentioned today.

[Sammy Wilson (East Antrim) (DUP)]

Does my hon. Friend agree that, apart from the loss of revenue to the Exchequer and the financing of criminal gangs, immense problems are being caused to the environment as a result of toxic chemicals being poured into water courses?

[Dr McCrea]

Concern for the environment was also mentioned by a Minister of the Irish Republic recently. The House should be taking this matter very seriously, because damage is being done and we cannot turn a blind eye. The concern that many of us have is that the Government could do more. I cannot understand why those involved in this activity have not been brought before the courts. That is totally unacceptable. The last time anyone was brought before the courts was 2002, even though there are those who are known to have committed this crime.

[Nigel Mills (Amber Valley) (Con)]

Does the hon. Gentleman think the problem might be that HMRC has the lead duty to investigate fuel laundering? Perhaps, given that this involves serious organised crimes, the Police Service of Northern Ireland ought to have lead responsibility in Northern Ireland. Perhaps it would be more effective at bringing prosecutions.

[Dr McCrea]

I believe there are many agencies—when I am winding up I shall draw attention to this—that could work together to resolve this situation. I also accept what my right hon. Friend the Member for Lagan Valley (Mr Donaldson) said. We must turn our attention to the cross-border drugs and alcohol problem.

I turn now to another serious organised criminal cross-border activity: the counterfeiting of consumer goods. Although smokers have been warned of the serious health threats posed by illicit tobacco, the current price of duty-paid tobacco makes cheaper tobacco more readily available to the young and the vulnerable. For example, a notorious black market cigarette brand, Jin Ling, which is known to contain asbestos, was recently found on sale in Belfast. Smuggling black market cigarettes is extremely lucrative for organised gangs, which can make huge profits and which cost the UK £2 billion a year in lost taxes.

Last month, almost 1 tonne of raw leaf tobacco and 10,000 suspected illicit cigarettes were seized in raids by customs officers at a farm in south Armagh. HMRC said they were worth an estimated £236,000 in lost duty and taxes. In separate searches on the same day, 10,000 illegal cigarettes were recovered. A number of private and business addresses in County Down were inspected. A vehicle and the cigarettes were removed, worth an estimated £2,800 in lost duty and taxes. It is truly remarkable that no arrests have yet been made in relation to either operation. The question we have to ask is: why?

It is believed by many in the Province that the authorities are turning a blind eye, because this is a way to keep some paramilitary groupings sweet. Those groupings are able to fill the coffers of their organisations and even stand in elections against those who seek to do things in a legal and proper fashion. Although earlier this month five people from County Tyrone and County Down were arrested as part of an investigation into a suspected tobacco fraud worth £110 million, the situation highlights Northern Ireland as an attractive region for international crime gangs owing to the inertia in past months of parties failing to support the National Crime Agency in Northern Ireland. It is through these statistics that we are now clearly seeing the out-workings of not having the NCA in operation over the past year-and-a-half. It is no accident that these quantities of illegal substances are being smuggled across the border into Northern Ireland. These gangs know only too well that at present if the gang leaders are caught, some of their assets cannot be taken from them. For the past 18 months, we have been a soft touch for smugglers and criminal gangs. Although the NCA is now expected to be operational in Northern Ireland by May, it is largely a case of shutting the stable door after the horse has bolted.

Nothing surprises us about the intransigence of Sinn Fein and their hostility to the introduction of the NCA. They have a vested interest in seeking to hinder investigations into the skulduggery of their republican mates. However, others have dithered in their support for the NCA and have denied the Exchequer millions of pounds in lost revenue that could have ultimately benefited the people of Northern Ireland and the Northern Ireland Executive. The difficulties of policing the area along the border are well documented. As recently as last month, a south Armagh man was injured in an explosion while taking down a poster, put up by republican criminal gangs, which claimed that a second individual was a security forces informer or “tout”. However, while it is clear that there are tensions within republicanism, there remains a prevalence of fear in the community about co-operating with the police to bring those behind such threats and attacks to justice.

In conclusion, the motion calls on the Government to ensure greater co-operation between HMRC, the National Crime Agency and the PSNI in combining their investigative prowess to eradicate the scourge of criminal activity from our society.

--- Later in debate ---

[Dr Murrison]

There have been prosecutions and perhaps I can enlighten the right hon. Gentleman about them later in my speech. Clearly, we all want to see prosecutions for criminal activity and the hon. Member for South Antrim rightly highlighted the introduction of the NCA into Northern Ireland, which everybody in this House would welcome, I hope. We are doing that to drive down further organised criminal activity in Northern Ireland and to get the convictions that the right hon. Gentleman seeks.

[Dr McCrea]

Does the Minister not realise that the community finds it absolutely abhorrent that filling stations that sell illegal fuel are not only not prosecuted but open the following week to sell fuel again? In many cases, the community has seen such filling stations closed down on a number of occasions without any court case following.

[Dr Murrison]

I would certainly share the hon. Gentleman’s frustration if there has been criminality without prosecution. Of course, these matters do not rest with me but when crime exists we want it to be expunged and dealt with. I would start to part company with the hon. Gentleman, however, on the suggestion that there has been some complicity or a deal done. I have seen no evidence to suggest that that is the case. I can understand his suspicion, of course, but I would like to downplay some of his suggestions that in some way agencies have been allowing things to go on or have not been prosecuting or pursuing cases when, of course, the law would require them to do so. That is a very serious charge and were there to be substance in it I would expect it to be reported to the appropriate authorities and investigated.

--- Later in debate ---

[David Simpson (Upper Bann) (DUP)]

It is a great privilege to speak in this timely debate. We have debated this subject before. The Northern Ireland Affairs Committee has done a report on it, and it has been ongoing for some time. My hon. Friend the Member for East Londonderry (Mr Campbell) used the word “Horlicks”—and that is exactly what this is. It is costing the Exchequer hundreds of millions of pounds. I predict that the Government will introduce this Dow marker, and it will not reduce the problem. That is my prediction, because the tests we have witnessed and those that have been carried out show that it does not work.

I will be brief as I know other Members wish to speak, but I need to put a number of questions to the Minister. Can the Minister or his officials tell us why Dow Chemical Company was not thrown out of the IMS—invitation to make submissions—tendering process for the marker under European law, when in 2013 it was fined $1.1 billion for fraud? It was fined $1.1 billion, yet it is part of the tendering process, and we are about to introduce a dye that comes from that company.

The Minister was asked a question earlier to which we did not get an answer, but perhaps his officials or the representation from Her Majesty’s Revenue and Customs today can provide the answer: why was this technology awarded to Dow with no roadside test when the other, British recommended company had a roadside test?

A number of years ago—maybe 10—I was asked to pay a visit to South Armagh by a political activist who lives there. He rang me and said, “David, you have raised issues of fuel smuggling. Would you like to see some of them?” I spent the day going around 15 distilleries and seeing their fuel laundering equipment—or whatever the terminology is—and got within 100 metres of Slab Murphy’s house and his laundering facilities. We moved back up the road a mile, on a hill, and the lorries were freely going in and out of Slab Murphy’s facilities, with nothing being done about it—absolutely nothing.

Right up to the present day, no one has been imprisoned for this. The Minister corrected one of my colleagues on the subject of prosecutions, but this is costing the Government and the taxpayer hundreds of millions of pounds. We spoke earlier about the budgets. There is no money in the budgets, and I understand that there are to be further cuts after the general election to try to clear the deficit. There will be issues if that is the case, because we are suffering and the amount being lost to the Revenue every year could be used to build several hospitals.

[Dr McCrea]

Is my hon. Friend talking about the same Slab Murphy whom Gerry Adams described as a decent businessman?

[David Simpson]

Yes, absolutely.

After we had seen the activity I have just described, we reported it to what was then the RUC, and several moves were made to close some of the laundering facilities. These activities are unfair to the ordinary everyday workers and businessmen in Northern Ireland who are doing their best to pay their taxes and keep their businesses going. They are completely above board, yet other individuals are profiting from their activities. That is totally wrong, and it has been going on for far too long.

Whether the Minister has been furnished with all the information or not, the information I am giving him is factual, and my hon. Friend the Member for North Antrim (Ian Paisley) will certainly be able to give him a lot more when he winds up the debate. This issue needs to be got right. It has gone on for far too long and it has become a laughing stock. At the beginning of the debate, it was suggested that this arrangement might have been a pay-off for the republicans. When we were talking about the National Crime Agency earlier today, someone in the House remembered that the deal involved 2p to the pound. I would hate to think that any Government had done any kind of deal with republicans and criminals or given them 2p to the pound to keep their mouths shut. It would be a travesty if that were the case. There is something rotten about this whole process and system. There is something wrong and we need to get to the bottom of it.

[Dr McCrea]

This might be a laughing stock, but it is certainly no joke. This is a very serious matter. Did my hon. Friend hear the hon. Member for Birmingham, Erdington (Jack Dromey) say that the British-Irish grouping went out on a fact-finding mission and saw 12 of these facilities in operation? If they could see 12 of them operating on that one day, where was HMRC and where were the authorities at the time?

[David Simpson]

My hon. Friend is absolutely right to ask that question. Someone was sleeping on their watch, if indeed they were watching at all.

I have another question for the Minister. Why would the Government not support their own world-leading British science company when its fuel markers are the only IMS-proven indelible markers that are recommended? I want to ask him a further question. Given that the IMS is a joint UK-Republic of Ireland process, why was a single Dow marker IMS awarded when the Government knew that they needed a minimum of two indelible markers? I have asked a series of questions. I do not expect to get the answers today, but it is important that we try to get to the bottom of this.

--- Later in debate ---

[David Simpson]

As I have said, time will tell. I think this is going to be an expensive exercise that will be proven in time to be not as effective as the Minister has been led to believe.

[Dr McCrea]

If we are introducing something, surely it must work—millions of pounds will otherwise be lost to the Exchequer. If those millions of pounds are not needed here, I assure hon. Members that they would be very welcome in the coffers of the Northern Ireland Executive, given the deficit we face. Surely this has to work and we have to be sure that it works. We are not doing this on a trial-and-error basis; we have to be sure that we have something that works.

[David Simpson]

I thank my hon. Friend for his intervention, because he is correct about that. The matter is too serious for the marker not to work. This situation has been ongoing, and the amount of money that has been lost and wasted over the past 10 to 15 years—or longer—is just horrific. It could have done a lot to help many vulnerable people, not only in Northern Ireland, but on the mainland. We are where we are and time will tell, but I know my colleague will have a few other statistics and figures to give in his winding-up speech.

[Naomi Long (Belfast East) (Alliance)]

I pay tribute to the hon. Member for South Antrim (Dr McCrea) for bringing this motion to the House today. This important issue is often overlooked because in many ways it is a hidden crime, and, as the hon. Member for Amber Valley (Nigel Mills) said, it is often viewed as a victimless crime. It is anything but. It is important that as well as trying to combat it through the various agencies that have a role in addressing organised crime, we communicate carefully with the public about their role in combating it and about the risk it poses to them. People often simply see cheaper goods and that is the only aspect they see of organised crime; they do not see the risks to them, the other criminality that goes with it, the danger, or the money taken from revenue that would otherwise be invested in services.

Obviously this is a complex area. Others have mentioned how difficult it has been to secure convictions, and I shall move on to discuss that. First, however, I pay tribute to the law-enforcement agencies for the work they are doing on both sides of the border. A complex collection of agencies has to deal with this complex area of crime. We have the Police Service of Northern Ireland, Garda Siochana and the National Crime Agency. We welcome the fact that we now have the additional resource of the NCA, because while we focus on one border, criminals operate across many borders, so having that national organisation involved is hugely important. Her Majesty’s Revenue and Customs, Revenue commissioners and Border Force work closely together in order to share intelligence, to disrupt those who try to perpetrate crimes and to ensure that they are eventually brought before the courts. When people are brought before the courts for participation in organised crime or for benefiting from taking goods that are clearly only available as a result of organised crime, the penalties should be a deterrent.

The impact of fuel laundering has been discussed at considerable length. The scale of the problem in Northern Ireland is undeniable. Fuel laundering is not just a cross-border issue: the uncollected revenue from fraudulent diesel in Northern Ireland was estimated by HMRC to be £80 million in 2012-13, which is 13% of the overall market share in Northern Ireland. That is a significant sum of money, especially when we compare it with the GB figure for illicit market share, which was about 2% in the same year. That gives us a clear indication of the scale of the problem, but it is not just a Northern Ireland issue, because that revenue is being denied to the UK as a whole. There is a genuine interest here in Parliament to address the issue robustly, because it is Great Britain’s schools and hospitals as well as our schools and hospitals that lose out as a result of the revenue not being collected.

The nature of fuel laundering means that sites themselves are not regularly attended, which can make it difficult to establish a clear link to the perpetrators. In Northern Ireland, we often say that everyone knows who does things, but knowing and proving are two different things when it comes to the law. Part of the strategy is to disrupt those who are involved in illegal activity, and part of it is to try to catch them. Trying to balance those two things can be very difficult. It is often hard to make that clear link to the perpetrators. It requires the seizure of records and the scene of crime work, which is complex and slow. Prosecutions in this field often do not come to court for many years after the breaking up of the illegal fuel laundering plant.

There has been an increase in the number of fuel laundering plants dismantled—the number has risen quite quickly over the past few years. There has also been an increase in the number of convictions, but the problem is that not one person has received a custodial sentence of more than 10 years, which seems ludicrous given the impact that the crime has on society.

The challenge in making arrests and obtaining the evidence is something of which the Department of Justice and my colleague David Ford are fully aware. As the Minister rightly said, the Department of Justice has introduced legislation adding the evasion of duty in relation to fuel and tobacco to the list of offences that can be referred by the Director of Public Prosecutions from the Crown court to the Court of Appeal when a sentence is considered to be unduly lenient. That does not resolve the issue entirely, but it does mean that there is a fall-back position when judges are seen not to have taken seriously enough someone who is brought before them in connection with these crimes.

[Dr McCrea]

Does the hon. Lady accept that there is another difficulty? In the instance I mentioned, laptops and documents were destroyed or burned before HMRC arrived at the scene. The concern was that there had been a tip-off.

[Naomi Long]

There is no doubt that that is a concern, and it has been a concern for some time. There is evidence that when HMRC or the PSNI has turned up on site, people have scattered and taken with them some of the critical evidence, which suggests that they were aware that those organisations were coming. Obviously, we can look at that in two ways. The first is that someone could be tipping off those launderers. The alternative is that these are complex organisations that have their own intelligence. They are observing the movements of the police, HMRC and others in the area and may well become aware that operations are moving against them. In some ways, we need the intelligence on the legal side of the fence to be much more robust than the intelligence on the other side. We should not rule out the possibility that the criminals themselves are gathering intelligence about what is happening in their neighbourhoods that helps them to evade capture.

I want to move on to the wider issue of the impact of this crime. I have referred to the fact that this is not a victimless crime, and it is worth talking now about some of the victims.