Examination of Witnesses (Questions 80-99)
MR RICHARD BROADBENT AND MR MIKE WELLS
MONDAY 25 FEBRUARY 2002
80. I am just trying to work out how many frauds you have to get away with in order to make it worthwhile. It still strikes me from what you say that you would not have to get away with many frauds. You could afford to get caught every second or third time and still make a profit.
(Mr Broadbent) I think you are right to say that we have to have regard to what the impact of our activity is, not whether we can catch them often enough just to deter them from doing it again. It is quite a considerable cost to lose all your equipment, all your plant, be assessed.
81. There is also quite a considerable value in getting away with it.
(Mr Broadbent) We have to measure our total impact, not just by the ability to catch individual smugglers. This is a land border which has defied attempts to police it for 1,000 years, to my knowledge from reading history books. Catching people at the border is one thing, but you also need to try to take activity upstream and downstream to make the whole activity uneconomic and in a sense looking at the smuggling figure is just looking at one point in that value chain which we are trying to attack. If we are also attacking his distributor, his launderer, his accountant, then we begin to see more impact and make it less worthwhile.
82. The best way of ending this would be to persuade the authorities in the other half of Ireland to raise their duties on diesel, then you would not have a problem.
(Mr Broadbent) It certainly does not help that they have reduced their duty on diesel. It is interesting that the first real signs of fraud taking off in Northern Ireland coincided with a reduction in duty rates in the Republic of Ireland. But there are two things we need to be careful of: one is that cross-border shopping is quite legal. Well over half the problem in Northern Ireland could be cross-border shopping.
83. Which would not happen if there were no value to it.
(Mr Broadbent) No, but it is not illegal. It is not my job to prevent people shopping across the border.
84. No, but if the rate of duty were raised in the Republic of Ireland ...
(Mr Broadbent) If the rate of duty were raised, you would not have smuggling, but you might then have very significant misuse of rebated fuels, which is the problem on the mainland. I suspect it would displace into a different fuel.
85. Diesel retailers do not have to be licensed. Is that right? They have to be licensed if they are petrol retailers but not diesel retailers.
(Mr Broadbent) Yes, that is correct.
86. Are there a lot of retailers who just retail diesel?
(Mr Broadbent) A few, we think. I have to say it is a slight anomaly. There used to be a diesel pump in a village for farmers and it did not have to be licensed.
87. Is that true only in Northern Ireland or is it true here?
(Mr Broadbent) I believe it is true for the UK.
88. Given the number of agencies involved, apart from yourselves there are also Trading Standards, Health and Safety, local authorities all involved in trying to manage this, what extra powers do you need to enable you to overcome this problem?
(Mr Broadbent) We have a fairly wide range of powers available. What I should really like to see, the one thing I should like to see more than anything else in Northern Ireland, is the ability to deliver joint visiting teams on the ground. I should like to be able to send my people into a filling station with all these other people, as a team, so that the illegal proprietor is then hit by us with an assessment on his fuel and a VAT assessment probably, we would do some proper audit work. I should like to see the Health and Safety people fining him, the local authority threatening to revoke his licence, the Trading Standards prosecuting him for selling red diesel as branded fuel and doing that demonstrably in some high profile sites in the urban conurbations.
89. What is stopping you doing that now?
(Mr Broadbent) We are working quite hard with these people; many people are trying to help. This is something you have to approach very carefully. I do not think it would be sensible to do this, unless one could deliver it and prevent it triggering some sort of conflagration.
90. What is stopping you is the political situation.
(Mr Broadbent) Like everyone else in Northern Ireland we have to do everything we possibly can to move the situation forward within the constraints of the situation. It is a slow process and Ministers and other politicians have to do a lot of work as well to build the local opinion for supporting this.
91. What, if anything, legally is stopping you going on these joint visits now?
(Mr Broadbent) There is no legal impediment.
92. It is simply that the other authorities are not prepared to do it with you.
(Mr Broadbent) There is a quite proper debate about whether it is the right step to take or whether it would simply drive the activity underground, whether it would lead to local unrest and disobedience.
93. Now we are coming onto a different point, it seems to me. You cannot both say that you are not doing it because you cannot go with the other authorities because they will not come with you and you do not actually want to go down that route and try to prosecute them, which is the opposite to what you were saying a moment ago, which was that it would simply drive it underground. Are you worried about driving it underground or are you worried because you cannot actually do it with the other authorities?
(Mr Broadbent) If I understood you, you asked me what stops other people doing it with us. My perception, but I cannot talk for them, is that they would properly want to debate whether or not the activity had the impact of stopping fraud as opposed to displacing it; that is a proper debate to have. My own judgement is that I would still do it. The second issue is that some of them, and I cannot speak for them, would have concerns about their ability to deliver those visits on the ground.
94. Can you go on a bit further?
(Mr Broadbent) This is a very difficult environment to work in. My staff are frequently assaulted. I have officers off sick the entire time. They are stoned, they have fireworks thrown at them in petrol stations, they have their windows broken, they are verbally threatened, they are physically assaulted and these are trained staff. Many of the people who are trading standards officers live in the community and it is not easy to command people to go into that situation.
95. Effectively what you are saying is that the situation in Northern Ireland is so lawless at present that the authorities simply cannot control this sort of fraud.
(Mr Broadbent) No, I am trying to draw a line between saying nothing can be done and that it is okay to fix it. We are trying to work quite carefully and quite painstakingly to put together something which does emerge in the light of day and does have this impact. It is not easy and I have to respect the difficulties that some of these organisations have in doing it.
96. You do not think that there is anything more we can do through the legal situation to help.
(Mr Broadbent) I do not think we are short of legal powers in Northern Ireland. There is clearly an issue in Northern Ireland about the society moving back to higher levels of compliance in practically every walk of life. Ours is not special in Northern Ireland: it is a major problem but there are many areas of non-compliance in life in Northern Ireland and it is a very important but painstaking political process to recover that. We need to push as hard as we can, but I do believe that if I step beyond that line I may damage the process rather than help it.
97. May I turn now to the question of intelligence? The intelligence concentrates presumably mainly on traders, trying to catch the big boys.
(Mr Broadbent) Yes, I think that is fair. In essence a lot of these intelligence pictures are built up really by starting at the refiner, because there are only eight or nine refiners, looking at where they are delivering and matching up patterns of deliveries to see whether the traders have patterns of activity which are commercial, taking it down to distributors, looking at their pattern of usage and sales, matching that up with other intelligence data, from hotlines, from members of the public, from our own other work, creating a picture for a region and then creating out of that 60, 70, 80, 90 packages and hitting these 90 people. That is how you get the hit rate up.
98. How often do you investigate an individual as a result of intelligence? How often are you rung up and told that the next-door neighbour, Mr Jones, was pouring red diesel into his car the other day?
(Mr Broadbent) All the information which comes into our hotlines and our command unit, our central co-ordinating unit, is all collated and all that information is fed through into these intelligence pictures. Whether that call results in that individual being visited or perhaps becomes part of a wider picture is something it is very hard to say on a case by case basis. We would not necessarily visit every individual who said they saw this person, but every bit of intelligence is fed into our intelligence filter.
99. Do you offer individuals any sort of absolution from prosecution if they give you good intelligence on some of the big boys further up the tree?
(Mr Broadbent) We do on occasion work with informants and informants have to have knowledge of a criminal activity. As a policy though, when we work with informants, they should not be engaged in criminal activity themselves.