The massive and widespread practice of illegally converting agricultural and home heating oil to vehicle diesel is creating major environmental risks as well as making millions for the criminals responsible, writes Jim Cusack, Security Editor
The raid on the largest diesel "washing" operation ever encountered by Customs or police on either side of the Border illustrates the extent of the threat posed by the illegal trade to both the environment and the Exchequer.
Large quantities of highly toxic, acid-based waste are being produced by the secret washing plants based along the Border, mostly in the north Louth/Monaghan area. Garda sources yesterday said there is no doubt the waste is being dumped illegally.
It was the first time Customs officers had encountered this particular type of illicit operation.
The smugglers were bulk buying agricultural and central heating oil in both Northern Ireland (where it is dyed red) and the Republic (where it is dyed green). Both types of fuel are effectively subsidised by having lower excise rates than vehicle diesel. In the respective jurisdictions domestic heating oil and agricultural oil are about half the price of the diesel used in vehicles.
The dyed oil is treated by first adding acid to bleach out the colouring. It is then distilled to separate the fuel from the acid-colouring residue. This process also removes the lubricant from the fuel so, at the end of the bleaching and distilling process a new lubricant has to be added.
Gardaí and Customs officers are now trying to trace the suppliers of both the dyed oil and the chemicals which are used in the process. It is known that the criminals involved in the enterprise have been helped by an industrial chemist and an engineer.
The end product is smuggled back into Northern Ireland and it is believed some is then smuggled on into Britain. Profits from the Carrickedmund operation alone are put by some sources at up to €100,000 per week.
The scale of the operation came as a surprise to the officers involved. They were also alarmed to find so much toxic waste at the site. Gardaí are now attempting to discover where the criminals were dumping this waste. It is believed they were simply tipping the black, toxic sludge into secret dumps and there are concerns that if it seeps into water supplies it could be highly harmful.
The huge scale of the fuel smuggling and washing operations, combined with more traditional smuggling and criminal activity along the Border is such that they have created a need for their own financial infrastructure.
Last month the Criminal Assets Bureau (CAB) secured a five-year prison sentence for a Co Louth man who was running an unofficial bank from a bureau de change next door to the Garda station on the Dundalk to Newry Road at Drumadd. In three years, it was estimated the "bank" had helped launder some €75 million.
Last November gardaí and the Police Service of Northern Ireland (PSNI) arrested 10 people in another attempt to crack down on the multi-million pound fuel smuggling and money laundering operations along the Border. More than 31 premises were also searched in south Armagh, Co Tyrone, and north Co Louth.
The exercise, known as Operation Spendthrift was the biggest of its type ever mounted. Dozens of detectives are sifting through financial documents seized.
In October, the Northern Ireland Assembly heard that up to £200 million in revenue is being lost to the UK Exchequer because of paramilitary gangs smuggling fuel into Northern Ireland.
The Northern Economy Minister, Sir Reg Empey, said the illicit trade in fuel was forcing legitimate petrol retailers out of business and financing a whole structure of paramilitary organisations. It is estimated that petrol imports into Northern Ireland have reduced by 55 per cent over the last few years while vehicle numbers have increased by 22 per cent.