Mr. Tony Hickey:

We know the history of this country, with the Border, the attitude towards smugglers and everything else. It has reached a different level at the moment. The most recent Europol organised crime threat assessment, in May 2011, highlighted that Ireland is a "preferred destination" within the EU for cigarette smuggling because we have the second highest retail price for cigarettes in Europe. As the price charged here is four times higher than that charged in many other member states, Ireland is seen as a lucrative market for the illegal trade. I believe that 10,000 cigarettes can be bought in Dubai for as little as €30. By selling 200 of them for €60 in this country, one can make a profit of €3,000 on a small shipment. Apparently, a container of cigarettes can be bought and shipped from China for €300,000 and generate potential resales of €5 million. Some 120 million cigarettes, valued at €500 million, were seized at Greenore Port in County Louth in 2009. This haul has been traced to the Philippines. It was the largest seizure of its kind in Europe. A criminal syndicate of former subversives and smugglers who are active in the Border region was reported to be behind the haul. Officers from the customs division of the Revenue Commissioners, assisted by gardaí, uncovered two oil-laundering plants in County Louth three weeks ago. One of the plants, which was near Hackballscross, had the capacity to launder 18 million litres of fuel per annum, with a potential loss to the Exchequer of €9 million per annum. Officers also discovered 36 tonnes of toxic waste and a shebeen on the premises. They seized spirits on which no duty had been paid. Two men from Northern Ireland and a man with an address in County Louth were arrested at the scene. RMI provided critical information to the law enforcement personnel involved in this instance.

Having spoken to law enforcement officers internationally over quite a while, I understand that some traffickers throughout Europe who had started to use existing cigarette routes for the transit of drugs have reverted to cigarettes because the global economic downturn has meant there is a lesser market for substances such as cocaine. There is less risk involved because a different attitude is taken in the case of cigarette smuggling. If smugglers are arrested, the penalties are lax. In Ireland, the mandatory sentencing threshold for drug traffickers is ten years. We will speak later about the penalties and sanctions that are in use for cigarette smugglers. There is anecdotal evidence in this regard. When we were investigating the Gilligan gang, we discovered that the truckers and couriers used in the early stages started life as smugglers and couriers of truckloads of cigarettes. Some of the people who were working for the gang as bagmen handling money convinced themselves and their families that they were smuggling cigarettes, even though they knew deep down that cannabis and cocaine were the actual substances being transported. For the past 20 years, people in other countries who have been involved in shipments of drugs, including cannabis, have thrown in sweeteners such as a few automatic pistols and, in some cases, sub-machine guns. I have no evidence that this has happened in the case of cigarette smugglers. I mention it to illustrate the type of thing we are dealing with. Having interviewed smugglers, I know that the rationale they use is "If we did not do it, somebody else would".

A cannabis trafficker will say that cannabis is less harmful than cigarettes. This is about mindset and trying to change attitudes and behaviour. Another issue is the market, namely, the people who buy the counterfeit or illegal cigarettes and, as in the case of those who use cocaine recreationally, do not make the link with the gangland killings and assassinations. It is through education that we can change mindset, attitudes and behaviour. It is not easy to change mindset. If it was, the problem would have been already solved somewhere in the world.

It is no surprise, given the profits and sanctions, that criminals are moving from the risky operation of cocaine smuggling to cigarette smuggling. Anecdotally, it was reported that flyers with a contact number which people could ring if they wished to buy particular brands of cigarettes were being distributed in housing estates and apartment complexes in Sligo. In April this year, customs officials discovered 38 million cigarettes in a container coming through Dublin Port. This had a retail value of €15 million and was the third largest seizure in the history of the State. The value of seizures in 2001 was €70 million and in 2009 was €120 million. Subversives, predominantly from the Border region, are believed to have been behind the seizure at Dublin Port last April. According to Revenue Commissioners' reports, they are becoming European leaders in illicit fuel laundering. The UK customs have been in contact with Irish counterparts during the past year as part of investigations into the spread of fuel laundering in England, the Czech Republic and Spain.

To tackle the fuel laundering and illicit tobacco trades it is necessary to reduce the current incentives to criminals who engage in such black market activities. Fines and prison sentences should be brought into line with the enormous profits available to criminals. The average fine in 2011 for cigarette smuggling was €1,349. This makes a mockery of the efforts of Revenue and the Garda to shut down black market operations. This type of fine is not likely to act as a deterrent for the criminal gangs who, as already mentioned, are making an estimated €3 million per week in profits. The penalties imposed by the courts for smuggling and selling illegal cigarettes are inconsistent and generally weak. Figures from Revenue for the second quarter of 2012 show that the average fine for selling illegal cigarettes is €2,500, a decrease of just over 20% since the first quarter and the average fine for smuggling cigarettes is down by 37% from €1,875. According to Revenue figures in 2011, the Revenue Commissioners obtained 101 convictions relating to cigarette smuggling and 30 custodial sentences, of which 20 were suspended. In 2012 to date the Revenue Commissioners has obtained 33 convictions relating to cigarette smuggling and 13 custodial sentences, of which four were suspended.

There are obvious public health reasons it may be impractical to remove the current price differential between legitimate tobacco products in Ireland and smuggled or counterfeit foreign tobacco products. The Government should think long and hard before increasing this price differential through further tax increases as this will only serve to encourage more criminals into the lucrative business. There is a potential significant public policy conflict in this area where public health objectives clash with national security and crime policy issues because of the people involved and their activities.

In 2011, nine oil laundries and 327,000 litres of laundered fuel were seized, together with nine tankers and 29 other vehicles. Some 16 people were arrested in the course of these operations, with files being sent to the Director of Public Prosecutions who has to date issued directions to prosecute on indictment in respect of five of these cases and on summary disposal in a further case.