Private Members’ Business – in the Northern Ireland Assembly at 3:30 pm on 3rd October 2011.
Debate resumed on amendment to motion:
That this Assembly notes with concern the statistics which reveal that only four custodial sentences have been handed down to people involved in fuel smuggling or laundering in the past 10 years; further notes that the estimated annual cost of these practices to the Exchequer is in excess of £200 million; and calls on the Minister of Justice to ensure that the next justice Bill incorporates tougher sentences and penalties to deal with illegal operators. — [Mr Irwin.]
Which amendment was:
At end insert:
“; and urges the Minister to examine opportunities for further cross-border and interagency co-operation to identify and prosecute a greater number of offenders.” — [Mr D Bradley.]
I support my colleagues and congratulate them on bringing forward the motion today. The facts and figures presented to the Assembly today speak for themselves. The loss to the Treasury from the sale of illegal and smuggled fuel is truly staggering, without considering the damage to the environment from waste products or the criminal activity involved in fuel smuggling. I support heavier punishments and, indeed, I was shocked to discover that only four custodial sentences have been given in respect of fuel laundering and smuggling in the past 10 years. That is even more surprising when it seems that almost every other week there is another news story telling us about the discovery of illegal fuel laundering plants. However, it has to be acknowledged that that is down to criminal gangs.
I recently had a meeting with the head of the organised crime unit from the PSNI. To be fair, I was there to discuss the impact of illegal tobacco, as it has more of an impact on my North Antrim constituency, given that it is the home of JTI Gallagher. From that meeting, it became apparent that illegal tobacco is surrounded by criminality and criminal gangs and that many dark, sinister individuals are profiteering from the racket.
One of the Member’s party colleagues stated earlier that illicit fuel smuggling and laundering is multilayered, from the criminal gangs to the retail petrol site to the end user, and that something needs to be done at all of those levels. Does the Member agree that the same approach needs to be taken with illicit tobacco smuggling?
Thank you very much, Mr Deputy Speaker. I agree with the Member entirely, and I will deal with that in a moment.
We have to look at changing the mindset of consumers and get them to realise that it is not only about getting one over the taxman and that there is a much deeper problem than that. There is the obvious loss to the Treasury. Fuel smuggling brings about an estimated loss to the economy of £0·5 million a day, and tobacco smuggling brings a loss of £8·2 million a day. The loss of revenue coming into Her Majesty’s Revenue and Customs is, therefore, phenomenal. There is also a negative impact on small businesses, from local legitimate retailers to the haulage companies that distribute legally obtained fuel. Finally, of course, the toxic chemicals that are found in illicit fuel are very dangerous to the users. Vehicles can become damaged beyond repair as a result of illegal fuel, and that is not counting the environmental impact that has also been mentioned today.
Furthermore, the consequence of this is that once the floodgates of a crime route are opened, it can be very difficult to close them. Once crime routes are established, drugs, arms and even people can be trafficked through them. That should be of particular concern, given that a recent report described Northern Ireland as a gateway for trafficking. The proceeds of these so-called victimless crimes are used to fund organised crime and criminal activity. That is why the proceeds of crime legislation is such a valuable tool in combating all forms of organised crime.
The Minister of Justice has made much in the past of the £4·4 million seized through the proceeds of crime legislation. However, we must accept that that £4·4 million is a drop in the ocean compared to the huge amount of revenue that is being lost. Those illegal activities must be more seriously and proactively cracked down on to bring the criminal gangs to account.
The motion is to be highly commended, and increasing the punishment for offences should begin to change criminals’ perception towards fuel smuggling and laundering. Returning to the point that Mr Swann made, everyone has a part to play. However, just as important, we have an enormous task in changing the attitude of the general public towards these so-called soft-touch crimes. Those crimes are seen as getting one over on the taxman; in reality, however, they fund serious and often violent organised crime.
The Northern Ireland Organised Crime Task Force’s 2011 annual report and threat assessment shows that organised crime is a dynamic and quickly evolving industry. The gangs involved participate in a range of activities to make maximum profits, ranging from selling pirated DVDs to trafficking drugs and from armed robbery to smuggling fuel. In fact, those methods have all been used by paramilitary groups in the past to raise funds. Somehow we must help people to realise that when they buy a pirated DVD at the market or fill up with laundered fuel they are very likely funding even more serious and sinister organised criminal activities.
Getting one over on the taxman and saving a bit of money may seem like an achievement at the time, especially during the current difficult economic times when the cost of living and fuel is so high; however, it must be fully appreciated that it is funding criminal lifestyles. Ultimately, criminals operate for financial gain; they are not concerned about the effect that their activities have on the rest of the community. If they find smuggling drugs to be more profitable than smuggling fuel, they will do so.
Fuel smuggling and laundering is one of a raft of activities that fall under the definition of organised crime. It is vital that we change the perception of the public to avert catastrophe. I support the motion and the amendment.
I welcome the Assembly’s interest in this matter. I begin by congratulating the Members who secured this useful debate.
Fuel fraud must be of concern to us all. Given its impact on the environment and the end user, and the loss of revenue to legitimate trade and to the Exchequer, it is of interest to Members. It is also of interest to Westminster, where the Northern Ireland Affairs Committee has an inquiry under way, a point that Mr Irwin highlighted at the beginning of the debate. I expect to give evidence to that inquiry in the near future. Debates such as this and that inquiry will serve as useful assessments of our response to fuel fraud and will help to identify where that response can be enhanced.
Fuel fraud, which covers both smuggling and laundering, is organised criminal activity, and the gangs involved in it show complete disregard for anything other than their profits. As a number of Members, notably Jim Wells, highlighted, it is certainly not a victimless crime. Those who carry it out ignore the damage that their by-products cause to the environment and the cost of the clean-up and disposal of waste that is borne by the people of Northern Ireland. It is also clear that those who engage in fuel fraud operate across the region; a recent case in east Antrim shows that not all cases fit the political stereotype that has been suggested.
Those criminals also ignore the risk that they pose to other road users when transporting illegal products in hazardous conditions, and they ignore the fact that legitimate traders and the public purse are losing money. Indeed, we sometimes forget the loss of business to legitimate traders, both from the profit from the fuel that they sell and the other business that they would normally get from people going into their petrol stations. Unfortunately, as highlighted by Mr McIlveen, some people seem to be prepared to buy suspicious fuels, just as they buy other counterfeit goods and services, without recognising the effect that that has.
Tackling fuel fraud is principally a reserved matter that is led by HMRC. However, others are involved, including the police, the Serious Organised Crime Agency, the Northern Ireland Environment Agency and the Department of Justice, as well as our cross-border partners an Garda Síochána, the Office of the Revenue Commissioners, and the Criminal Assets Bureau. In the context of HMRC taking the lead on this issue, I have seen no evidence of the suggestion that Mr Swann made of its adopting an attitude of passing on inquiries. Indeed, it publicises, quite frequently, its hotline through which people can report their concerns. I refer Mr Swann and his colleagues to this phone number: 0800 595000. Anyone who has concerns about those issues will find a robust response from HMRC.
The honourable Member’s understanding of the situation is very different from what is happening on the ground. Several constituents have come to me complaining that they inadvertently bought laundered fuel, but, when they approached the police, the police were not interested at all and deflected them to HMRC. However, HMRC seems to be interested only in the lost revenue, rather than in pursuing a criminal conviction. I hope that somewhere in his speech the Minister will explain to the House why, after 10 years and £2 billion worth of fraud, only four of those prosecuted have ended up behind bars. That is the question that everyone in the Chamber wants the Minister to answer.
I am sure that Jim Wells, with his lengthy experience of this place, does not expect a Member of the legislature to go into the details of the judiciary’s work. However, I will endeavour to cover some of the points raised.
Sydney Anderson talked about the importance of co-operation, and Dominic Bradley asked whether the agencies ever met. From my chairing of the Organised Crime Task Force, it is clear to me that the agencies are tackling the issue in partnership, with co-operation both in Northern Ireland and on a cross-border basis. The cross-border fuel fraud enforcement group constantly reviews the approaches taken to this crime. Indeed, it will shortly host a conference, where people from across Europe will come to Northern Ireland to see the work being done, including that on a cross-border basis, to tackle issues such as the most appropriate form of dye to use as a marker in agricultural fuel. Therefore, we have examples here. Members may raise concern about individual issues, but we should recognise the good work that is being done. It is largely being done on a cross-border basis, with meetings alternating North/South, information sharing and frequent joint operations. Cross-border co-operation in tackling fuel fraud is generally excellent, but we are open to suggestions as to how we can enhance our response to the crime.
Not only is the work excellent, it is having significant success. Members may be aware that, during 2010, HMRC closed down and dismantled 15 large-scale fuel-laundering plants. They had the capacity to produce nearly 90 million litres of illicit fuel, which would have cost the taxpayer £60 million in lost revenue.
Mr McCartney asked specifically about the number of cases that await prosecution. I cannot give the details on the exact number of cases and where they are. I know that he, as Deputy Chair of the Justice Committee, shares my frustration at times about the delays between the police, the Public Prosecution Service and the courts. I am certainly aware that there are a number of cases being processed with a view to prosecution.
To give a more recent example: in two operations in June, HMRC, supported by others, raided premises in Crossmaglen and Derrynoose and found laundering plants capable of producing over 18 million litres of illicit fuel a year, which would have cost nearly £12 million in fuel duty. Success is also evidenced by the joint operation last month, when co-ordinated searches were carried out in Counties Tyrone and Armagh, as well as Galway, Monaghan, Offaly, Roscommon, Westmeath and Dublin. A laundering plant capable of producing 18 million litres of illicit fuel a year was dismantled in County Monaghan as part of that operation. That demonstrates very strong and real cross-border co-operation.
Calculating the value of lost revenue is difficult. The motion cites an annual loss of £200 million. As I understand it, the most recent estimates from HMRC are that the losses are in the region of £150 million in 2008-09 and £70 million in 2009-2010, which is the most recent full year for which it has figures. Those estimates vary at times, but it is clear that significant work is being done to reduce the level of fuel fraud.
As Mr Irwin highlighted, there is work to be done on a cross-departmental basis, with DETI having a role in petrol licensing. DETI is considering our request that diesel be included in that licensing regime, which would enable more robust action to be taken. We have to recognise, although there were suggestions to the contrary in the debate, that the loss is to the Exchequer or the Treasury, not to DFP. Although I am sure that Sammy Wilson would be delighted to get his hands on all the available money, I doubt very much whether he could extract it from George Osborne that easily. However, we need to recognise that it is a loss to the overall Exchequer and is, therefore, a loss to anyone who pays taxes in the United Kingdom.
Stripping those criminals of their assets and, hopefully, securing convictions has been shown to disrupt their ability to carry on the illegal trade. They consequently fear attacks on those profits arguably as much as they fear any other law enforcement intervention. Therefore, attacking criminal finances as a method of fighting serious organised crime is a key objective of the Organised Crime Task Force, which is using asset recovery powers to good effect.
In 2010-11, HMRC recovered £1·29 million of criminal assets in Northern Ireland, including assets from fuel fraudsters, although that figure is not available individually. Collectively, as Dominic Bradley highlighted, law enforcement agencies recovered £4·42 million of criminal and civil assets. A dividend of the devolution of justice is that we can now put those criminal assets to use by investing them back into the fight against organised crime and by targeting schemes to reduce crime and the fear of crime. My officials addressed the Justice Committee on that topic on 15 September.
A clear factor in this debate has been the way in which virtually every Member noted with concern the statistics regarding the small number of custodial sentences that have been handed down in the past 10 years. The motion calls for a higher sentence. The maximum in the Crown Court is seven years and an unlimited fine. I suspect that the real concern, which most Members expressed, is the relatively low number of sentences — four cases out of 47 — from 2001 to date of immediate custody with a conviction. However, 32 of the 47 involved either a sentence or a suspended sentence, and a suspended sentence is also a serious matter. Of course, sentences may well have been given with other orders or fines.
That having been said, I am sure that Members will have noted and welcomed the recent decision by the Lord Chief Justice to include duty evasion and smuggling as areas where sentencing guidance will be developed. Those areas will be included in the Lord Chief Justice’s programme of action on sentencing, which contains a number of measures to enhance the structures by which the judiciary will ensure consistent, transparent and fair sentences. Indeed, he has also stated his intention to include environmental crime in Crown Court consideration as part of that sentencing guidelines work.
Alongside that, I have been considering ways in which public confidence in sentencing can be improved, and my officials discussed the way forward on draft proposals with the Justice Committee last week.
It is absolutely clear that there was a unanimous view around the House today that we need to ensure that the most robust action possible is taken to deal with those who engage in fuel fraud, whether it is smuggling or laundering. There was also clear concern that the issue is not being addressed as seriously as it might be. However, I believe that we have a package of work that is being carried through in the robust work being done by the various agencies, including that on a cross-border basis, and the work that is being done by the Lord Chief Justice in developing sentencing guidelines. It is an important area, and it was appropriate for debate. I think that I have been able to show that there has been a clear focus on tackling the perpetrators. We will also see the indirect attacks, which will be carried forward to deal with assets.
Minister, I am far from convinced. You have told us that the assets that have been recovered represent perhaps 2% or 3% of the estimated fraud that is undertaken per annum in Northern Ireland. That will not deter any criminal if he is going to pocket 97% of his ill-gotten gains.
Secondly, all you are promising is some vague indication that the sentencing guidelines will include a tariff. None of this sends out the very clear message that this House wants to see you go to jail if you are caught defrauding the Exchequer of vast amounts of money. That is what we need, not vague recommendations or 3% of ill-gotten gains. We want to see action as a result of the motion today.
The Member says that we want to see action, but the practical reality is that the action that he wants to see is being taken by the Lord Chief Justice, which he wants the judiciary to step up on. It is also the case that this issue is a reserved matter. If we were to see action on changing the level of sentences, it would be a matter for the Westminster Parliament, and it is a matter on which I suspect the Treasury would have a strong view where the UK as a whole is concerned. The will of Members of this House is clear, but I doubt very much whether we would be given permission by the Treasury to legislate in Northern Ireland alone on this particular issue. That is the practical reality that we have to deal with. It is fine to say that that is what we want, but, in practical terms, it may be that we cannot get what we want.
The amendment calls for enhanced cross-border working. I am certainly prepared to accept the spirit of the amendment by committing the Department of Justice and its agencies to continuing to work on a cross-border basis, in the partnerships that I outlined earlier, and to improving on that work. I am certainly prepared to work with the Lord Chief Justice on sentencing guidelines and to make clear the House’s view on how issues should be dealt with seriously. I am afraid that it is outwith my powers to make provision for increased sentences in the next justice Bill, unless Treasury permission is forthcoming, but I suspect that that is unlikely. On that basis, I regret that I cannot formally support the motion or the amendment, even though I agree entirely with the sentiments of those who spoke for both.
I commend the proposers of the motion and the amendment. The issue is a very serious one for people not only in border counties but right across the North. I agree with Mr Wells and other Members that it is important that we send a clear and united message from the House that we will not stand for it any longer. As was said by many Members, including Mr Swann and Mr Wells, who, as usual, provided some very helpful anecdotes, it is not a victimless crime. Mr Maginness pointed to the fact that it corrupts society as a whole. It also puts a serious hole in the Exchequer’s budget, regardless of whether it costs £200 million, £150 million or £70 million per annum.
Many Members referred to the environmental damage caused. Mr Anderson and Mr Bradley spoke about the cost to councils of the clean-up, and, of course, the funding of paramilitaries past and present was also mentioned. Mr McCartney and Mr Swann raised the issue of tobacco smuggling, which is another serious issue for the House and one that I think that we can deal with in a similar way. Mr Bradley pointed out that, if you cannot catch them, you cannot punish them, and I think that that issue needs to be dealt with urgently.
Our view, as set out in the amendment, is that given that the problem is a direct result of the border, it seems illogical to suggest that it can be tackled in any other way. We accept the Minister’s assertion that there has been increased co-operation across the border. Obviously, however, there has not been enough. I reiterate the questions put by Mr Bradley: how many times have those bodies met, and how much work have they done? That area needs to be improved.
It is clear that custodial sentences should increase. Four such sentences in the past however many years is not exactly something that we can be proud of. The gaps between taxation and the differences in regulatory requirements on each side of the border should be bridged to create a more harmonised system. I welcome Mr McCrea’s conviction that we should have more tax-varying powers in the North. We should also disincentivise acts of smuggling, which would contribute to the fundamental logic of an all-Ireland economy as well.
I regret to say that smuggling has, unfortunately, become culturally and socially accepted by many people in certain border areas and has been passed on from generation to generation. It is our role as legislators, however, to ensure the transformation of that culture through a combination of judicial and political interventions. Illegal smuggling is harming the island economy that we wish to build and limiting our capacity to help those most vulnerable and in need.
I would like to thank everyone who contributed to today’s debate. I listened intently to what they said, and, with the exception of Minister Ford and Mr Dickson, most Members were enthusiastic enough about the motion. However, I know that Mr Dickson and Mr Ford were at pains to distance themselves from what the motion was saying. However, I hope that that elusion will be brief and that, one day, they will, in fact, see the necessity of the motion and importance of taking those issues forward with some cut and thrust.
I hope that the oil that is being fired to heat the Building has not come from illicit fuel. It is certainly casting up the heat, and there appears to be no shortage of it. The heat is quite stifling at the moment.
I have pursued this issue for some time. My colleague Mr Irwin has, too. His constituency is right in the middle of the problem. I am currently awaiting important answers on the matter from a number of Departments and agencies, including the Department of Justice, the PSNI and the Public Prosecution Service, which focus specifically on the number of arrests, prosecutions and convictions. As yet, I have not been furnished with those answers. Tomorrow, I am due to receive an oral answer from the Minister of the Environment on the clean-up costs to the taxpayer and whether they can be recouped from those who are responsible.
The overriding issue surrounding this criminal behaviour — and that is exactly what it is — is the shortfall in the number of custodial sentences for fuel laundering. I intend to follow that up carefully upon receiving answers to my questions. The vexed question is, of course, why so few people are brought before the courts with regard to those criminal activities. That question is on the lips of the general public. Public confidence is now becoming an issue.
Although fuel laundering is by no means restricted to border areas, statistics show that it is certainly much more prevalent in those areas, whether that is because laundered fuel originates in those areas; people who are responsible for it can skip to and fro between one jurisdiction and the other; or criminals can make use of the fact that two legal jurisdictions are in close proximity in order to dodge apprehension. Are we are back to the bad old days of police no-go areas? Many of us suspect that that plays a significant role.
That leads me, therefore, to query the rationale for closing border police stations, particularly in areas where fuel laundering is rife. A raft of border stations has been closed. We have learned that a number of garda stations on the other side of the border are also earmarked for closure, which leaves routes wide open for gangsters to travel backwards and forwards with considerable ease. I welcome enhanced co-operation from police in the Republic of Ireland. I am aware that, recently, there have been some joint actions. However, there have been instances when landowners whose property traverses the border have kept fuel-laundering equipment at one end of the shed, which is in the Republic of Ireland, and is, therefore, immune to raids from Her Majesty’s Revenue and Customs and, indeed, the PSNI. When police and customs officials from the Republic of Ireland arrive, the machinery magically moves to the Northern Ireland end of the shed, and vice versa. We hear continual calls for cross-border co-operation in the House. I cannot think of anything more appropriate than such co-operation to strike at a criminal enterprise.
That said, the Organised Crime Task Force has recorded some very good results, among which has been to dismantle 15 fuel laundering plants with the capacity to produce 90 million litres of illicit fuel, and the recovery of £4·4 million of criminal assets. Drugs with a street value of £9 million have also been seized. Twenty-three victims of human trafficking have been rescued. The number of recorded tiger kidnappings has been reduced by 50%. I want to acknowledge that some things have been done. However, at this stage, I am asking why there has been a lack of arrests.
Something is blindingly obvious —
I thank the Member for giving way. Like him, I am concerned about the small number of arrests. The Minister read out quite a long list of fuel plants that had been dismantled. I recall that, at the time when the dismantling of those plants featured on the news, there was no subsequent mention of any arrests. It begs the question as to whether many of the plants dismantled by HMRC had already been abandoned by the operators and whether the taxpayer is left to pay the cost of dismantling the plants and cleaning up the sites afterwards. More of those plants need to be discovered while they are in operation and while those who are operating them are on site and can be made amenable to the law, arrested and brought before the courts.
I thank the Member for his comments, which are self-explanatory.
Something is blindingly obvious. We hear reports claiming that police and customs officers have raided fuel-laundering plants and seized equipment. We also hear about the potential loss in revenue from tax or duty evasion, which we understand to be well in excess of £200 million. On rare occasions, we hear that arrests have been made, but that seems to be where it stops. It is worrying that a limited few are being put before the courts. We rarely hear of such criminals being charged, brought to court and made amenable for the crime.
The issue must be tackled. It is a case of a lack of resources restricting the fight against this type of organised crime. Is an informal arrangement entered into whereby a payment is made to cover a certain amount of lost revenue? If that is the case, the public should be made aware of it. When those who are charged are brought before the courts, the sentence must be severe enough to deter others from getting involved. Is prosecution not regarded as necessary? I do not know, because, as I said, I have tabled questions and am waiting for answers.
Did the honourable Member not find it shocking that the Minister said that there had been 47 prosecutions but that only four — less than 10% — had led to custodial sentences? Does he agree that that sends out no sense of the seriousness with which the community regards this crime? Does he also agree that it will not deter people in the criminal fraternity if they realise that they have only a 10% chance of custody, if they are caught at all?
Mr Wells is quite correct. It makes a mockery of all that is going on and is no deterrent.
It appears that the customs approach is to investigate fuel laundering for the purpose of collecting intelligence to identify laundering plants, disrupt operations and make seizures rather than to catch the criminals. Mr Wells made that point earlier, and I am trying to emphasise it. It strikes me that that is an ideal way to catch headlines, but it does not apprehend offenders, who will still be at large and able to direct and continue with their illegal activity from another location. Surely there is a case for police and customs pooling resources and carrying out joint investigations with the use of surveillance to monitor laundering plants, collect evidence and make the necessary raids when the offenders are present, or are we again being hindered by human rights legislation?
We often hear the owners of properties from which laundered plants operate claim that they are unaware that such activities are taking place. There is a legal loophole, and legislation should be amended to allow the person who owns the land on which equipment is seized to be held accountable unless and until he or she can prove otherwise.
It would be extremely remiss of me if I did not touch on the additional, more sinister criminal element that fuel laundering funds. For many years, it has been used to fund republican terrorism and a campaign of genocide and ethnic cleansing in the border areas. We recognise the fact that it is not purely a security matter, but the security forces must be at the cutting edge in the war against crime.
Other agencies have a major role to play on a cross-departmental basis, including the Department of the Environment, which is tasked with dealing with our rivers and our environment in general; the Department of Justice to ensure that those responsible are penalised; and HM Revenue and Customs to recover lost funds. Of course, as the Minister said, HMRC is not a devolved body, but I challenge the Minister to clarify whether in fact a directive —
Yes, I will.
Has a directive been sent from HMRC to the PSNI stating that, as it does not have the resources, the PSNI should not concentrate on motorists who may use illegal fuel?
Question, That the amendment be made, put and agreed to.
Main Question, as amended, put and agreed to.
That this Assembly notes with concern the statistics which reveal that only four custodial sentences have been handed down to people involved in fuel smuggling or laundering in the past 10 years; further notes that the estimated annual cost of these practices to the Exchequer is in excess of £200 million; and calls on the Minister of Justice to ensure that the next justice Bill incorporates tougher sentences and penalties to deal with illegal operators; and urges the Minister to examine opportunities for further cross-border and interagency co-operation to identify and prosecute a greater number of offenders.
Adjourned at 4.05 pm.