Fuel laundering, tobacco smuggling costing €1bn annually

It's hard to get your head around how big the problem of fuel laundering and tobacco smuggling in Ireland is – much of it concentrated along the Border.

It certainly could be up to €1 billion annually.

It also seems difficult to comprehend why so few people have been charged and convicted for it. However, there is one explanation.

Accountants Grant Thornton reckon the Irish exchequer loses €140 million to €260 million from fuel fraud each year.

They estimate that, in 2013, the tax loss in Ireland from tobacco fraud was between €240 million to €575 million.

The wide range of the estimates is itself an indicator of how challenging it is for the authorities to get a grip on these rackets.

Laundering diesel in Northern Ireland is believed to cost about £80 million (€109 million) each year in lost tax. Additionally, it has cost the Northern authorities almost £1 million since 2012 to clean up the toxic sludge from laundering. It's reasonable to assume there are similar, if not higher, disposal costs accruing here.

Her Majesty’s Revenue and Customs (HMRC) believes UK tobacco smuggling amounted to £2 billion in 2012- 2013, up from £1.6 billion in 2011-2012. It hasn’t separated out the cost for Northern Ireland, but let’s take a guesstimate of €56 million for the North, which isn’t unreasonable and probably is an underestimate.

Add up those estimates and the cost of fuel fraud and tobacco smuggling on the island of Ireland comes to €1 billion each year. Even if it is just half that figure, it’s still huge.

Public imagination

Criminal gangs operating along the Border, therefore, are making staggering fortunes while they pollute land and the water supplies by illegally disposing of the diesel sludge. It’s an issue that hasn’t grabbed the public imagination, although there is now an attempt to convey to people that here is a level of crime that would impress most mafia dons.

“You can see where some of the money is going with some of the diesel mansions along the Border and with their driveways choked with four-wheel drives,” said one local source.

The Garda, PSNI, the Revenue Commissioners, HMRC, the Criminal Assets Bureau and the new British National Crime Agency have been having some successes. But it is relative – there is absolutely no sense of the diesel godfathers being brought to book.

South of the Border, 35 diesel fuel-laundering operations have been shut since 2010, with more than three million litres of fuel seized. Sixteen of these plants were in Co Monaghan, 11 in Louth, two in Meath and one each in counties Cavan, Donegal, Dublin Laois, Offaly and Waterford. In the Republic, 137 petrol stations have been closed for breaches of licensing conditions, including fuel laundering, since 2011.

More than 200 fuel-laundering plants have been raided in Northern Ireland over the past 10 years. According to HMRC, there were nine fuel fraud convictions in 2012-2013 and nine in 2013-2014. Here the conviction rate also seems low.

But there is one explanation.

"It's a difficult area in which to maintain evidential integrity and it's also a difficult area in which to protect officers," as one senior PSNI officer recently told The Irish Times with a degree of understatement.

In other words, it may be feasible for the revenue investigators supported by Garda and PSNI officers to pounce on fuel- laundering plants, but along the Border and particularly in south Armagh it is plain dangerous to engage in time-consuming, painstaking investigations. That is a fact of life. The dissidents are a serious threat.

Remember too this is the land of omerta, hard to breach, notwithstanding the British- Irish Parliamentary Assembly’s call for a multidisciplinary attack on this crime.

Recent weeks have seen some allegations and plenty of suspicions that the Provisional IRA is implicated. This is vehemently rejected by Sinn Féin. Moreover, the Garda and the PSNI are making no such claims.

Anecdotal

You will hear some local comment that the “dissidents run the tobacco and the old

Provos

hang on to the diesel”, but so far, officially, you won’t hear anything that goes much beyond such anecdotal remarks.

Certainly, there is strong structure and organisation behind this crime – a form of organisation that it is probably safe to say has its origins in how the Provisional IRA ran its operations along the Border.

But throughout the peace process it was always a given that the Provisional IRA going out of business didn’t mean an end to Border criminality.

It’s a simple truth that as long as the Border can make profits for criminals there will be criminals, whatever their origins, to make those mind-boggling profits.