Oireachtas Joint and Select Committees
Wednesday, 3 December 2014
Joint Oireachtas Committee on Transport and Communications
Fuel Fraud: Revenue Commissioners
The purpose of this afternoon's meeting is to engage with the officials from the Office of the Revenue Commissioners in order to establish how the scourge of fuel fraud, and in particular petrol stretching, might be satisfactorily addressed. Unfortunately, while we have invited both the Consumers' Association of Ireland and Insurance Ireland, due to previous commitments their representatives were unable to attend today and we will meet with them at a future date.
On behalf of the committee, I welcome Mr. Gerard Moran and Mr. Niall Butler from the Revenue Commissioners. I wish to draw their attention to the fact that by virtue of section 17(2)(i) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by the Chairman to cease giving evidence on a particular matter and they continue to do so, they will be entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. I also wish to advise them that any submission or opening statements they have made to the committee will be published on the committee website after the meeting.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person or persons outside the Houses or an official, either by name or in such a way as to make him or her identifiable.
I now call on Mr. Gerard Moran to make his opening remarks.
Mr. Gerard Moran:
I thank the Chairman. As the members will see, my opening statement is a little broader in focus than simply petrol stretching. I hope this might be helpful in providing a little context for the main focus.
Firstly, I want to thank the members of the committee for the opportunity to contribute to this discussion. Fuel fraud has been a very significant challenge for Revenue over the past three to four years and we have worked very hard to tackle the problem. To start the discussion, it might be helpful if I outline briefly the steps we have taken to tackle fuel fraud, and to brief the committee on our response to the recent reports of damage to petrol engines.
In recent years diesel laundering has been the principal, if not exclusive, focus of the organised crime groups involved in fuel fraud. The price differential between road diesel and marked diesel - at well over €0.50 per litre - and the low cost of removing the marker from marked diesel, made laundering a very profitable crime. From 2011, Revenue responded very aggressively and has re-engineered the regulatory regime for the fuel sector. Our aim has been to put in place a number of supply chain control measures designed to make it much more difficult to source marked fuel for laundering and to get laundered fuel onto the market. On the back of this strategy, Revenue has closed over 130 filling stations and seized 3 million litres of fuel since 2011, and all the available indicators point to a very positive impact on behaviour in the sector. Industry sources indicate a much-reduced incidence of laundered fuel on the market, and road diesel consumption and tax revenues are up by about 13% compared with a couple of years ago.
Obviously, other economic factors have contributed to this growth, but reduced fraud is also an important factor. However, there is no room for complacency or slippage; diesel laundering has not been eliminated, so we need to continue to police the supply chain and tackle the criminal elements involved in this activity. The introduction of a new more effective marker here and in the UK from the end of March next will be a further important step in eliminating this fraud.
Turning to the recent cases of damage to petrol engines and the suggestions of a petrol stretching problem, Revenue’s stance is to investigate fully to establish if there is any evidence of tax fraud. With the progress that has been made in squeezing diesel laundering operations, we are very alert to the possibility that organised crime groups may diversify their operations further into other types of fraud in the fuel sector and elsewhere. Petrol stretching is a risk, but the potential revenues for criminals are very modest compared to diesel laundering. Petrol stretching would normally involve the illegal addition of methanol, but it can only be added in relatively small quantities, typically less than 10%, before problems arise and the fraud becomes self-defeating. Assuming that methanol costs 59 cent per litre and could be added up to a threshold of 10%, the potential return from the fraud is less than 9 cent per litre and adding 5% methanol would generate a return of little more than 4 cent per litre. While the incentive for petrol stretching is relatively modest, there is always some level of risk.
Where contamination or adulteration of petrol or any other fuel takes place, the explanation may be fraud or it may be a handling accident. Accidental cross-contamination occurs occasionally, for example, where diesel is delivered into the wrong storage tank. Where this occurs, the contaminated fuel is recovered and taken off the market and the duty on the recovered fuel is repaid. In this case, no trader has come forward and claimed or admitted accidental contamination, so Revenue is continuing to investigate to establish if there is evidence of fraud. So far we have not reached any conclusions, but we are pursuing our inquiries back through the supply chain from the retailers involved.
From the complaints received to date, the problem seems to be concentrated largely in the west, predominantly in Mayo and Roscommon, with another concentration centred on Meath. It also seems to relate to fuel supplied in July or earlier; ongoing sampling has not found evidence that current petrol supplies are contaminated, and it seems that more recently reported cases of damage to engines may be attributable to a time lag between getting contaminated fuel and subsequent engine damage.
Petrol samples have been taken from each retailer identified by complainants as the source of contaminated fuel and samples have also been obtained from some of the damaged cars. Analysis of the samples by the State Laboratory is still ongoing but, to date, they do not point conclusively to the source of the problem. However, it may be the case that the time lag between the cause of the problem and the taking of samples meant that the contaminated fuel had already been "washed" through the system before the samples were taken. Kerosene was detected in petrol samples taken from one filling station and that petrol was seized and a prosecution case is being prepared. We also found very small traces of diesel in a number of samples and we are trying to establish if this is due to the way the two products are handled by some distributors or if it is a residue of an earlier more significant cross-contamination.
Given that we have not arrived at a satisfactory explanation of what has happened, we are continuing our investigations, and in particular we want to establish if there is any evidence of tax fraud. This matter will not be closed until we have completed a thorough investigation of the supply chain for evidence of fraud or breaches of excise law or licensing conditions. I hope this brief outline of our approach to tackling fuel fraud is helpful for the committee. I am happy to clarify or elaborate on any points and of course I am happy to answer any questions.
I thank Mr. Moran. In his statement he said that, to date, the Revenue Commissioners have not reached any conclusions. That is frustrating for people who have been affected. Mr. Moran indicated the problem is regional in the sense that Mayo and Roscommon are significantly affected, as are the midlands, Meath and Westmeath. I am sure many members could supply the witnesses with details of individual devastation where people have had to buy cheap second-hand cars to get to work. We are being told the investigations have run into the sand, or that nothing is happening, as such. Mr. Moran outlined what is going on, which is important.
Is it the case that the number of complaints is tapering off? Has the problem occurred in other jurisdictions and how has it been addressed? Have fuel stations been closed down following prosecutions? Is there evidence of petrol stretching or is it the case that other substances are being mixed in with petrol?
Anecdotally, the suggestion is that the incidents of petrol stretching occurred in June or July 2014. What tests were carried out between January and May 2013 on forecourts for petrol stretching or fuel contamination? Were tests carried out in advance of when the incidents were alleged to have started happening? How long does it take the State Laboratory to test samples sent to it? What is the average time the Revenue Commissioners must wait for results?
Do the Revenue Commissioners have sufficient resources to deal with the problem or are more resources required? I acknowledge fuel laundering has been reduced as a result of the actions taken by the Revenue Commissioners. If the Revenue Commissioners go to a fuel station, there is an obligation on it to supply them with information on the source of its diesel. The same is the case with suppliers of fuel. Does the same requirement not apply to petrol? If that is the case, could Mr. Moran explain why that is so?
Mr. Gerard Moran:
I have made a note of the questions and I will do my best to respond to them. I trust you will come back to me, Chairman, if you require more information on any of the questions. We understand the frustration on the issue and we are eager to get to the bottom of it. When an issue arises about petrol quality, the alarm bells go for us and we are concerned. There may be another explanation but it is certainly an indicator that there is potentially a fraud being perpetrated in terms of petrol. We are eager to get to the bottom of it.
As soon as we receive complaints, we visit every filling station that has been complained about and take samples. To date, over 180 samples have been taken and referred to the State Laboratory since the inception of this problem. The testing conducted by the State Laboratory is time consuming and quite complex because it tests for the presence of a whole range of different potential stretching agents or fuel abnormalities. That means testing takes time plus there is a great deal of samples and I am afraid I cannot give an average or fixed time. We are dealing with a spike in the volume of samples submitted and the nature of questions that must be asked.
Let me give a little background. We tend not to encounter petrol stretching very frequently. I have checked the situation in the past couple of days and the only case of petrol stretching anyone could recall was in Donegal, four or five years ago, where methanol was used. Petrol stretching is a rare enough occurrence and, as far as I am aware, it is not a prevalent practice in other jurisdictions. I am aware of newspaper reports of a particular incident in Bournemouth. It was discovered that a Tesco filling station had contaminated fuel but I do not know what type and up to 100 cars were damaged. I am unaware of a similar phenomenon to ours happening recently in another jurisdiction.
Mr. Gerard Moran:
The owners of the filling station shut it down, pumped out the fuel and are carrying out repair work or whatever on the fuel tanks. There is speculation that the problem was caused by a water leak but the owners have never said what the problem was and the cause remains unclear. The issue cropped up in only one filling station.
Let me respond to the other questions. I was asked how many samples were taken and the answer is 180 samples. I was asked how many tests were undertaken before June. I do not have the figure but I guess it would be exceptionally low if any samples were taken. With all of our work we operate on the basis of risk. Therefore, interventions and checks are undertaken in proportion to the level of risk. As the committee will be aware, most of the risk has been in other areas of fuel fraud and not petrol stretching.
Mr. Gerard Moran:
The Chairman asked whether we had adequate resources. We operate within a framework where the resources available to Revenue are determined as part of a wider fiscal policy adopted by the Government. We understand and accept the constraints that we, as an organisation, must operate within and believe we have adequate resources to tackle this problem. The progress we have made in tackling the diesel laundering problem is an indication of our capacity, when we encounter such a serious problem, to mobilise the necessary resources and to deploy them effectively.
I thank Mr. Moran and Mr. Butler for attending and for their presentations. I accept that the remit of the Revenue Commissioners is to collect taxes on behalf of the State. As Mr. Moran has said, resources are deployed based on potential risk and, in particular, the scale of that risk.
Petrol stretching is different from other fraudulent activities because it has two victims. In the first instance, the State is a victim due to a loss of revenue. In many cases of other fraud activity the State is the only victim. In petrol stretching, the consumer is a significant victim. I have spoken to many people and families who have been destroyed by the effects of petrol stretching. Sometimes two or three cars belonging to a household are affected because of loyalty to a particular petrol station where they purchase fuel. I am aware of a myriad of cases. In one case both cars were destroyed by petrol stretching, the husband and wife must repay car loans for both cars but the bank will not provide finance to repair the cars. That means the couple must avail of public transport to get to work, yet pay for cars parked on the forecourt of a garage that require between €10,000 and €12,000 for repairs. That couple do not have the money for the repairs.
I am concerned by what was said about the risk involved. Effectively, there is no arm of State looking to protect such consumers or to resolve their issues. In the case I mentioned the insurance company has turned its back on the couple and has refused to provide support. In some cases insurance companies have paid compensation because they deemed petrol stretching as an insurable risk.
The Government has not made a coherent response to petrol stretching. I do not want to be overly critical of the Revenue Commissioners but they are just part of the arm of the State. Over the next couple of weeks the committee will bring together all the stakeholders involved to see if we can design a mechanism for redress. Is there legislation that the Revenue Commissioners do not have in their toolbox? Is there anything additional that we can provide through legislative support that would assist them to better address this matter? Is there a method by which we can make petrol stations more responsible for the fuel they sell?
I have dealt with some cases where only one filling station was involved. The people concerned purchased their fuel from the same location for the previous five years so there is no other potential supplier. Should we increase the fines and prison terms for the crime? Is there anything we can do that will make it easier for Revenue and the Garda to do their job?
Mr. Gerard Moran:
I wish to assure the members of the committee that we focus on diesel laundering fraud because of the sheer quantum involved. When this issue emerged it took a short time for the scale of it to become apparent. We are not blind to the situation and have been very exercised about the problem. We have responded quickly to every complaint. We test and are continuing to test filling stations. We are examining the supply chain returns made by all of the filling stations and are working our way back through the supply chain. We are working intensively on the problem. We are not blind to the pain that has been inflicted on the public by petrol stretching. Obviously the individuals affected must pursue other remedies.
Insurance companies are paying out but compensation needs to become more widespread. Just like the Deputy, I am aware that some insurance companies are paying out for some claims.
The Deputy asked whether we need further legislation. As I pointed out, our overall strategy to deal with fuel fraud is to drive a much tighter and sounder supply chain. A key element, when we identify traders in the supply chain, is our ability to withdraw their licence if we cannot force them to become compliant. We have encountered some push-back on the matter but have pursued it very aggressively.
We have closed down a very large number of filling stations during the past several years. We have encountered some difficulty on that front in the past year and in the current Finance Bill, which I understand is before the Seanad, we are strengthening the legislative provisions in primary law that will clarify explicitly the grounds we may consider when examining an application for a licence or considering whether it is appropriate to revoke it.
The Deputy and the Chairman mentioned the issue of traceability and whether there is a difference in how we trace petrol and diesel through the supply chain. I apologise to the Chairman for not responding to that point earlier. As it creates a much greater risk and the issue in terms of diesel is of a completely different order, particularly the diversion of marked diesel into the raw diesel supply chain, we have much tighter reporting requirements in regard to those commodities in our monthly supply chain returns that traders make. For those commodities, they must return each single transaction when they make their monthly return. In regard to petrol, to date we have allowed traders to make an aggregate return where they produce the aggregate of their transactions with each trading partner during that month. That was driven by our perception of where the greater risk lay and where the risk was of a lower order. We are always conscious of the administrative burden we put on the trade when we introduce reporting requirements like this. However, in light of what has happened, we gave an undertaking during discussions on the Finance Bill that we will certainly review whether the differential we have at present is appropriate.
We need to bear in mind that we may not be looking at a petrol stretching problem here. We have not concluded that is the case. It may have been an accidental contamination at some point and that could be the problem but we will review it. We also need to review it because methanol will be introduced in the UK, including in Northern Ireland, at some stage from next year as a motor fuel and, therefore, there will be potentially greater availability potentially of methanol on the market on the island. In that context, we will review the differential. We will consult the industry on this and we will take a view on it. It is a question that has been raised and it is fair one. We will consider whether we need to have more detailed reporting for petrol in light of this and other risks that are emerging.
I wish to explain the order in which I will call speakers. Deputy Dooley has spoken. The next speaker will be on the Government side, Deputy Carthy, who will be followed by Deputy Ellis, Deputy Fitzmaurice and the Independents. I will call all the Members and then I will call Deputy Mulherin.
I will be brief. I have questions written out and I will ask them without including any additions. How often is there collaboration between An Garda Síochána and the Revenue Commissioners in regard to detecting and subsequently prosecuting issues of petrol stretching and the wider issues around that, for example, fuel laundering? Are there any subversive groups involved in petrol stretching? Is there a commonality of criminality between those who are involved in fuel laundering and petrol stretching? How resourced is Revenue to deal with the issue? That is a vague way of asking Mr. Moran if Revenue has sufficient resources to deal with that. Are there any cross-links with the fuel launderers and the petrol stretchers? What is the estimated loss to the Exchequer?
In terms of aggrieved motorists, when one's finances are stretched and one has a car loan and finds one's car is no longer operable because of this criminality, is the only recourse one has through the Sale of Goods and Supply of Services Act? If the answer is "No", which I suspect it is, is there a role here for the insurance companies to consider providing cover to those misfortunates who are trapped in this very regrettable situation?
Mr. Gerard Moran:
In terms of co-operation to tackle fuel fraud, we have extensive co-operation. There is a cross-Border fuel fraud group on which the Revenue Commissioners, the Garda, the Criminal Assets Bureau, the Police Service of Northern Ireland and HM Revenue & Customs, HMRC, are represented. That group works very effectively and has been very effective in helping us and HMRC in Northern Ireland to identify fuel laundries. There is excellent co-operation involving all the law enforcement agencies. At a local level, I am aware that in Mayo and possibly in Roscommon also there is very close co-operation on the ground involving local Revenue officials and the Garda. I understand that is working very effectively.
The Deputy asked if subversive groups are involved. There are organised crime groups and it is my understanding that some of them have their roots in long-standing criminality with a political character to it. There is always a suggestion of dissident involvement. Much of the fuel fraud seems to be centred in the north east of the island in an area spanning the Border. Much of the sludge that has been dumped has tended to be in counties Louth and Monaghan and across the Border in Armagh and County Down.
On the involvement of the fuel fraud groups in petrol stretching, I cannot comment on that yet. As I said earlier, we have not established in fact that this has been a deliberate tax fraud rather than some other kind of contamination, so I would not say it but that is always the risk. As I said at the outset, there is an incentive to engage in some petrol stretching here. What I was pointing out is that it is of a different order to the kind of incentive that applied with regard to diesel laundering.
The Deputy asked about resources and I have touched on that already. We operate within the framework of the resources that are made available to us but we are satisfied that we are able to deal with the risks we face. I gave the example earlier that with the fuel laundering problem we were able to deploy the resources to tackle that and on this occasion we have engaged intensively with this investigation and done a great deal of sampling, and are now investigating through the supply chain and following the paper trail on this.
In terms of a loss to the Exchequer, we do not have that information. Generally, it is very difficult to establish a tax gap in any particular sector because by its nature there is no data. It is all happening in the shadows. Those things are fraught with difficulty so we do not have an estimated cost of petrol stretching, if petrol stretching is occurring
The Deputy mentioned the remedies available to motorists. As regards consumers and citizens, I would have thought of assistance through the Consumers' Association of Ireland or through some civil remedy. I know that groups of motorists affected by this problem have joined together. That might be a helpful way for them to finance this and take a test case or whatever. I am a Revenue official so this is way beyond my sphere of competence, but I understand that is probably what is happening.
Groups like this, of people who have been affected, probably understand the huge impact this has on the individuals and families concerned. By acting collectively, they will have a great deal more power, whether it is in relation to suppliers or insurance companies or whatever. I do not think there is much more I can say on the remedies that are available to them.
I thank Mr. Moran and Mr. Butler for their presentation. Most of this activity seems to be concentrated in specific areas in the west, and counties Roscommon and Meath. It does not seem to occur so much in the south. Is there a particular reason those areas are mainly targeted? There might be a bit in Dublin but it does not seem to hit the radar as much. There is obviously co-operation from certain people in those areas that is aiding and abetting the activity. Is it also a phenomenon that, where there are borders, whether in Europe or otherwise, there tends to be a lot of smuggling operations? I have read in the past about other borders in Europe where there tends to be activities relating to various kinds of smuggling. Could the witnesses elaborate on that?
Mr. Moran also said fuel fraud was not a new phenomenon. Is he referring to petrol stretching or the doctoring of diesel? Now that petrol prices have dropped so much, would that have an effect? Mr. Moran said that the revenues seem to be coming up and this is probably related to the drop in fuel prices. I am not too sure but maybe he could tell me.
The witness said there was a new diesel marker coming on-stream in March. We have been talking about combating the whole diesel issue for years. Is the new marker to apply across Europe or between the UK and here? I know there are different standards in different areas. I do not know whether we can get a cost to the Exchequer as to how much this is but the witnesses are saying revenues seem to be going up so there is obviously an impact in terms of how much of it is taking place at the moment.
Does Revenue have a role if a person is making a claim against an insurance company? Is Revenue asked for information regarding a particular station in terms of a case where someone is looking for insurance? I am curious about whether that happens.
Is there any way stretched fuel can show up or be detected in an NCT test? They seem to look at fumes and such. Is stretched fuel even listed on the tests? Is there a manual test? I know it is very dangerous to tell someone to check their fuel tank, and there is some prohibition on accessing the tank or getting into it. I would not be advising anyone to do it, but is there such a thing as a manual test?
There are also other ways in which petrol could be used, such as in machinery of various sorts. Is there any evidence of problems in that area? Besides cars, are there other areas that could be affected?
Mr. Moran mentioned that 130 filling stations have been dealt with since 2011. Have any of them been closed down, have they been reopened, or is it a case that penalties have been imposed on them by way of either closure or serious fines?
Mr. Gerard Moran:
To answer the Deputy's first question about why it is so regionally concentrated, and whether borders are a problem, we do not know at the moment why it is concentrated in a couple of regions. It is clearly to do with the supply chain and distribution system. This was not just one or two filling stations, it was a much larger number and it was obvious they were being supplied. That is what we are examining at the moment. We have not found evidence of any systemic problem outside of the areas of significant concentration. There have been some but it has tended to be in the car-hire sector or similar, where the driver may have bought contaminated petrol in one of the focus areas. Borders can be a problem in that they provide arbitrage possibilities for criminal gangs if they can move goods from one place to another. That often provides an economic base for them to get up and running and provides the resources on the back of which they can develop wider and more extensive criminal activities. It is always very important to look at price differentials here versus the North to try to minimise the possibilities for that kind of arbitrage as much as we can.
The Deputy asked about petrol stretching not being a new phenomenon. It is not, but what I want to make clear is that it is actually relatively rare and we do not encounter it much. We had to go back quite some time to find the last occurrence of it when we were looking for an example for the committee. I am not aware that it is a common occurrence at all, but it is always on the radar and occasionally there will be reports of it happening somewhere to a small degree and probably at a very low point in a distribution chain. I am not aware of anything of a similarly systemic nature occurring elsewhere any time recently.
The new marker will apply in Ireland and the UK only and it follows a joint initiative we undertook with Her Majesty's Revenue & Customs to get a more effective marker given the vulnerability of the existing one. There is a Europe-wide marker and the new one is a further marker the authorities in Ireland and the UK will apply, and it will come into place from the end of March next year.
We would not really have a role in respect of individual claims except where we have tested somebody's car. If we have the results of tests, we would be able to provide them to the owner of the car. We would not be able to advise them about filling stations. As a tax administration, we have to operate on the basis of taxpayer confidentiality so we are not in a position to provide information about any taxpayer, whether it is a filling station or anybody else, to a third party. In the context of litigation, if we were asked for evidence we would have to get legal advice in circumstances like that as to what we could or could not provide as evidence.
On testing of engines and petrol, I have seen suggestions on some blogs and boards advising people to take samples of petrol. I must say that people should be careful of the risks of messing around with petrol. It is a highly flammable commodity so I would think nobody would want to encourage people to do that. I do not know whether it is possible for the NCT to test for stretched fuel but I suspect not.
My understanding is that a person who wants to see whether damage has been done to an engine basically has to go to a garage to have it disassembled. It is at that point that one can see whether corrosive material has built up where it should not be. This would be evidence of the problem.
I was also asked about other areas where this might have an impact. We are not aware of such areas. The only instances we have heard of relate to cars. There seems to be some variability in how it affects different types of cars, such as newer or older cars or those with different engine sizes. That is why some people experienced fairly catastrophic problems with their cars very quickly after filling them with contaminated petrol, whereas in other instances these problems did not manifest themselves for quite some time. It depends on people's driving patterns and on how much fuel was in the tank when the adulterated petrol was put in. Many such variables mean that the pattern in which these problems are manifesting themselves is not uniform.
I will conclude by returning to an earlier question that I might not have answered. All the indicators suggest that these problems are related to fuel that was bought at a point in time during the summer. That is why problems which had not manifested themselves before now are still manifesting themselves occasionally. It is probably for reasons like that.
I will be brief. I think Mr. Moran has answered many of the questions I asked. I thank him for making his presentation to the joint committee. It has been mentioned that County Meath has had problems with fuel laundering in the past. It appears that we currently have problems with fuel stretching as well. Mr. Moran mentioned counties Cavan and Monaghan. I would extend that to County Meath, to be honest. As I have said, we have had a problem.
It is often felt that people on the ground seem to know what is going on before anybody else is aware of it. I spoke to a gentleman not too long ago who said he would be able to bet his house on a particular petrol tank pulling up in a particular village on a particular day, only for someone to follow it five minutes later as it goes off to a particular area. Mr. Moran has said that Revenue has quite good contact with the Garda Síochána. Does it work directly with the public? Is there a direct line that people can use to contact Revenue to say they have a feeling that something is going on? Many people who know something is going on want to know why nothing is being done.
I would like to ask another question. Maybe Mr. Moran will not be able to answer it. He mentioned that Revenue has a couple of cases coming up. When it is looking at a prosecution, what exactly does it need in order to be able to prosecute? It seems the petrol stations are being prosecuted. I feel the criminal gangs that are adulterating this fuel need to be chased. We sometimes meet owners who say they did not feel they had a choice other than to take what was brought to them. That does not happen in all instances. Where exactly is the focus? Is it on the petrol station or on the criminal gangs?
The Irish Petrol Retailers Association, which is an industry body representing over 500 independent petrol stations, is holding a series of events throughout Ireland to promote petrol stations that adhere to Government specifications. I intend to attend one of its events next Monday. The association has suggested that independent sampling or testing should be carried out. Has Revenue been working with the association? Is its suggestion something that Revenue would look at? How often is testing carried out at the moment?
Mr. Gerard Moran:
I note what the Deputy has said about the geographical distribution of this problem. We are tracking it. I mentioned that it is centred on, or concentrated in, counties Mayo and Roscommon. Obviously, it spreads out a bit further than that. The other sort of geographical concentration seems to be centred on the Meath area. That extends beyond Meath as well. We are tracking every instance of a complaint being made about a filling station, and the number of complaints made about it.
The Deputy also asked about reporting to us. We are always eager to get any information about any irregular activity. People can access us through our website or by contacting their local Revenue office. We are really eager to get reports of odd-looking deliveries like that alluded to by the Deputy. If an unmarked or odd-looking vehicle pulls into a filling station, we can cross-check that kind of activity against the supply chain returns that traders are required to make on a monthly basis. We are eager to receive any reports like that. If such reports are made at public meetings attended by Deputy McEntee or any other member of the committee, we would be grateful if they could encourage people to contact us. We have a freefone number that people can contact us on.
The Deputy asked what we need to take prosecutions. If a forecourt retailer is selling stretched petrol, or green diesel in road diesel, it is an offence. When we are looking for sufficient evidence on which to prosecute them, our initial efforts focus on testing the samples. We will seek to prosecute any retailer who has adulterated fuel. It is a cut and dried prosecution as far as we are concerned. We will seek to do that. I think that really puts an onus on retailers to exercise care about where they source their fuel from. We examine these cases on a case-by case basis. If we find a supplier with contaminated fuel as we work our way back up the supply chain, our policy is to prosecute him or her. That is what we will do. If we do not find what we are looking for at that stage - part of the difficulty of investigating this is that the fuel might have disappeared - we look for evidence of how the supplier has conducted his or her business. If we can establish evidence of fraudulent activity on the basis of documentation - the bank records and all the other records of the business - we can prosecute on that basis. As the committee will appreciate, we have to come up with evidence before we can do that. Ultimately, the Director of Public Prosecutions will determine whether our investigation has produced sufficient evidence to sustain a prosecution.
The Deputy's question about Revenue's relationship with the Irish Petrol Retailers Association gives me an opportunity to emphasise that we have had great co-operation from the industry, including the association in question, throughout the process of tackling the broader problem of fuel fraud we have been experiencing over several years. We would be delighted to meet representatives of the association to discuss its plans for further measures to assure the integrity of its members' operations and the quality of the supply chain in general.
I thank Mr. Moran for coming in. It is widely known by those who have attended petrol-stretching meetings around the country that contaminated fuel was delivered to 14 or 15 filling stations in England a few months ago. All of it had to be taken out again. I know Revenue is aware of this. Has that fuel been traced to see where it went? Is there a risk that any of it came to Ireland? Perhaps it was basically dumped on this country.
I know a small bit about the nuts and bolts of this issue. When one gets fuel - petrol or diesel - at the ports in Dublin, dye or bioethanol is added to it. Is the calibration of those machines checked regularly? I understand that Revenue does not sample each lorry going out to make sure things are done properly. If each lorry going out was sampled to make sure the mix was right, and if there was an obligation for a similar sample to be taken where the fuel is delivered to, I suggest that much of what is going on at the moment could be cut down. When kerosene was allegedly mixed with green diesel, those of us involved in the machinery business had to put in a pint of engine oil to make sure it did not damage the pump. That was the only way to solve the problem. Has any investigation been done to save someone who has not yet had this problem but is in danger of it developing? Maybe something could be put into the fuel to prevent this from happening.
There has been a lot of confusion about this around the country. Revenue is good at putting out plenty of advertisements on the television and in newspapers when it is looking for money. Procedures need to be implemented. The situation needs to be explained to people throughout the country. The figures were totally wrong on what was being delivered. The figure of eight was given for Roscommon at one stage. People need to be informed to go to the Garda to make a complaint and to go to Revenue also. An advertising campaign on this is required.
Let us call a spade a spade. The Department of Finance gets most of the money out of a litre of petrol. There is, therefore, an obligation on Revenue and suppliers to resolve this problem. There is an obligation on insurance companies also. There are many people who cannot afford to fix their cars. The Department of Finance can tell insurance companies what they can and cannot do. Joined-up thinking is required because many families face decimation over this.
It was mentioned earlier that this issue does not concern cars alone. There are several ride-on lawn mowers throughout the country which have been damaged as a result of this. It may affect other things such as consaws, although a two stroke mix is used in them. However, this is a widespread problem.
Mr. Gerard Moran:
On the issue of contaminated fuel in the UK, we have occurrences of this in Ireland also. There would be a handful of cases every year where the fuel is put into the wrong tank. As soon as this is identified, it is recovered and taken back for reprocessing. I said in my opening statement that we repay the duty on it. Such an occurrence is a normal feature of the industry. If diesel is contaminated with marked diesel, it cannot be sold as road diesel from a filling station. It will be recovered, brought back in, marked and recycled out as marked diesel. The duty paid on it will be adjusted as appropriate. If petrol is contaminated by the addition of diesel, the contaminated petrol will be recovered. It will have to be brought back in for refining and it will go back onto the market after it has been refined. Those are the procedures and protocols that the companies involved have in place. The Revenue authorities are familiar with these issues and cater for them here, and in the UK.
In terms of checks at ports, in major distribution centres we have staff control officers permanently assigned to carry out appropriate checks to ensure fuel is being correctly classified, volumes are correct and that we are getting the correct tax on it. We are very satisfied with the controls we have in place.
Mr. Gerard Moran:
Most of the mixing would happen in the warehouse, before the point where it leaves. I need to check it but I do not believe we take a sample. We are interested in the volume. Another agency is responsible for the biofuel content. The companies do this in the warehouses. The Deputy asked if we could sample every truck leaving the warehouse. We could but it would cost a great deal to do so. However, that would not prevent someone from contaminating the fuel at a later point in the supply chain. For example, with diesel laundering, it was not being laundered in the warehouse, it was happening further down the distribution chain.
Everyone is being tarnished with the one brush at the moment. We need to start a process of elimination on who is being tarnished. I spoke with a person who works on the docks in Dublin. This person has been working on this for years. He leads me to believe that when the mix is done, it is a machine that comes out over the lorry and puts in the dye, and that there is no sampling from thereon, out of the docks. That is fine. I am not saying they are doing anything wrong. However, let us start the elimination where the problem lies. Does Mr. Moran agree?
Mr. Gerard Moran:
My understanding is that we undertake extensive checking of fuel at various points. However, I will bear in mind the point raised by the Deputy and I will inquire into the precise nature of the checks we do at that point. There is no real incentive for the distributors, at that point, not to comply with the regulations. We have control staff checking the right proportions of dye are used. I am guessing that does not extend to checking every single truck going out but they are there to ensure marked fuel is marked and that all the fuels that go out are accounted for and the tax is paid on them. We undertake a programme of checks to ensure that happens.
On the issue of an advertising campaign, I hope the message is sufficiently out there now. We have had over 500 complaints. Some of them were received directly, while others were received via the Garda Síochána with which we have liaised in order to get a handle on all of the complaints. This is a well-established problem. There have been public meetings, and people are contacting us. I wish to repeat something. To provide some assurance to the Deputy and other members of the committee, we have done a great deal of testing, with numbers running at about 100 samples of petrol a month. From our current testing and the testing we have been carrying out for some time now, we have not been finding any evidence of any contamination.
I thank Mr. Moran and Mr. Butler for their presentations and their forthright answering of questions. We are talking about fuel fraud. The emphasis is on petrol stretching because engines breakdown. However, diesel fraud and diesel laundering is a much bigger problem. The biggest victim in all of this is the taxpayer, given the amount of lost revenue. Has any figure been put on the estimated loss of revenue arising from fuel fraud in general, for last year or the year before? It was also stated that 3,000,000 gallons of laundered fuel was seized. Were there successful prosecutions arising from this and, if so, what penalties were imposed? Was it imprisonment or fines?
It was also mentioned that a criminal network is involved in the fuel fraud and fuel laundering business, that it is a cross-Border fraud and that the agencies on both sides of the Border are trying to tackle it. It was said that some of the criminal elements involved were people with a political involvement. There have been some high profile cases involving the discovery of laundered fuel. I have a question on the role of the Garda and Revenue's co-operation with the Garda on how to deal with the issue, given the nature of some of the criminal elements involved, which may have a paramilitary background. I also wish to know if the Criminal Assets Bureau is involved.
Some journalists who have investigated fuel laundering give figures such as €40 million worth of fraud. Has the Criminal Assets Bureau been involved and has it made any seizures as a result of work done by the Revenue Commissioners?
I thank the witnesses for coming here today. Diesel laundering is a crime because it is the same as taking money out of someone’s pocket because the revenue does not go to the State. It goes to crooks. Petrol stretching has caught the public imagination because it is a particularly nasty crime. We learned this morning that the profit margin is small but it puts considerable cost and inconvenience onto the public. It is quite obvious that these people do not care about that.
The only way I can put myself into the shoes of a forecourt manager is when I think about the central heating oil at home. I deal with one supplier, one distributor with the same driver for the past several years and I trust that chain. It has never let me down. Something in the chain has broken until the customer puts the hose into the tank. Do we need to consider registration, licensing conditions, the checks and balances from supplier to distributor to the forecourt? Are they tight enough? There seem to be weaknesses there.
I was surprised to hear that 130 stations have closed. How many of those closed because of diesel or petrol contamination? Does that figure include people who could not pay their taxes because they did not have enough income? What is the breakdown of those numbers? If some were people who were proved to have contaminated diesel or petrol were they convicted? Did any of them go to jail? Can they open up another filling station or the same one again? What are the sanctions for those people?
There was a programme about this on radio two or three weeks ago. A spokesperson for the Revenue Commissioners gave the impression that their job is to ensure the income for the State and engine damage is not their business. It was not a well thought out message. That made people very angry. Whenever a spokesperson for the Revenue Commissioners speaks on this he or she should also speak about the avenues open to the people whose engines are damaged.
Does the committee need to talk to an insurance regulator or financial services ombudsman?
I welcome the officials from the Revenue Commissioners. This issue is plaguing my constituency, Mayo. By virtue of that I am aware of other cases around the country. Most citizens think of the Revenue Commissioners as a State organisation that knows how to get a job done, is effective, does an excellent job but their investigation of contaminated petrol has been a disaster.
Investigations and complaints have been received since last June. The forecourt filling stations give monthly returns of oil movements showing where they get petrol and so on. We can assume that the Revenue Commissioners have tracked down the chain of supply. Mr. Moran has told us that the State Laboratory carries out 100 tests a month but that for the most part this is inconclusive. Hundreds of people’s vehicles have been damaged or written off and some cannot afford to have them fixed. The vigorous and proactive approach taken to dealing with diesel laundering needs to be taken in this case. There is evidence that it was not.
I know from replies to parliamentary questions that I have tabled since the end of September, the Garda was investigating 86 cases of petrol stretching in County Mayo but the Revenue Commissioners were dealing with eleven or 12. That clearly indicated that they were not working together but I believe that they are now. Is the State Laboratory not predominantly looking for markers in fuel and is it unable to identify some contaminants if they exist? A feature of petrol stretching is that carbon is left on the pistons which causes the car to break down and is evidence that there was something wrong with the fuel but the Revenue Commissioners cannot attribute the source of the carbon. No test has been developed to identify it. Mr. Moran has said that as an official of the Revenue Commissioners consumer rights are not his area. Consumers would like to hear after this meeting that a test case would be taken and there might be a breakthrough. Would Mr. Moran comment on the serious problem in the chain of evidence? There are time-lags as he has said in finding the contaminated fuel. The individual has to show that he or she bought it and when, and prove that it was the problem fuel not a later fill. When these cases come to court they will not have any success, apart from a small minority.
The Revenue Commissioners’ system is wrong. They talk about a risk-based approach and has tackled guys involved in diesel laundering. They might look to the area that is not so well scrutinised. They will not have any success because what they are doing is historic. They deal with it only after the problem has happened. There is a big gap between the problem and the evidence when the cars break down. They will go nowhere. The truth needs to be told, if people’s expectations are raised about this.
There are suggestions that insurance companies ought to do this that and the other. Insurance companies are bound by contracts. If they are not obliged to cover this they will not do so. I am not saying there are not exceptional cases but there are some exclusion clauses in insurance contracts for petrol stretching. The people who have gone through enough do not want to hear any sort of vagueness. I have tabled numerous parliamentary questions on this and that is why I am delighted to be able to speak to Mr. Moran.
Deputy Fitzmaurice spoke about contaminated petrol that was supposed to go to Bournemouth but was withdrawn from the UK market and sent over here. We are wide open here because the Revenue Commissioners’ system does not test tankers or filling stations before now.
Mr. Moran cannot and did not confirm that any petrol tanks in filling stations or any fuel tanks of trucks were tested prior to June of this year. What he said in that respect was that he did not know. I understand that it was not done and I have formed that view from talking to people in business and those in petrol forecourts. A proactive approach is not being taken to tackle this problem but such an approach is needed. In terms of what is alleged to have happened in regard to Bournemouth, we are not testing fuel that is coming into this country. I imagine the people engaged in this activity will not be operating under the nose of Revenue. There is less likely to be a mixing of fuel and the putting in place of bad fuel. However, such fuel will be brought in but Revenue is not testing fuel here. Anybody with a batch of bad fuel they want to get rid of could move it to Ireland.
What we need, and I ask that this be explored, is for consideration to be given to the introduction of a system of quality control to be funded by the distributors. Those are the people making money out of it. There should also be a mobile laboratory. Mr. Moran mentioned there was a case in the east coast where it was suspected that kerosene has been blended with petrol which has caused a problem. Revenue had to go through the process of taking a sample, sending it to a laboratory and how many weeks elapsed before it got a certificate of analysis? I ask Mr. Moran and Mr. Butler how many vehicles will have been destroyed in the meantime? That is too long to wait. Those people's operations should be shut down. I ask the delegates that a quality control system be introduced where petrol is tested to ensure that we know that quality petrol is for sale on the market. There is a crisis of consumer confidence in this market. I do not believe that Revenue will have any problem in getting co-operation from legitimate forecourt traders. I ask that such a system be implemented in order that consumers purchasing petrol and paying tax on it know that what they are getting is the real McCoy.
On the cross-Border element, Mr. Moran spoke about shutting down 130 filling stations and mentioned a prosecution. Has the Criminal Assets Bureau been involved or what confiscations have taken place? Is such action being taken in the North? Are they viewing the problem with the same severity that it is being viewed with here? How many filling stations, fuel laundering and petrol stretching operations have been shut down? Is intimidation a factor there? All the evidence, and anecdotal evidence, is that subversive paramilitary style operations are in operation here. Is it a case that they are too much trouble to tackle? We can talk about the Border, but the petrol that has been stretched did not come from Mayo up to north of the Border. It is not happening in that way and I wonder how much of the contaminated fuel is going from the South to the North as opposed from the North to the South? What confiscations are taking place? What action is being taken by the Assets Recovery Agency in the North of Ireland?
The Chairman is aware how this problem is being viewed by people in our constituency and the answers given have been very unsatisfactory. There is a problem with the system and if that is not going to be addressed, motorists will be lame ducks and the people whose vehicles have been damaged will be lame ducks again. Something needs to be done. The idea that we will get a lot of convictions in the future as a result of all the serious work Revenue is doing, which is based on looking at an historical situation, is not going to happen. What will be done to stop incidents such as that of the contaminated fuel from Bournemouth from being brought into this country? What tests will be conducted in filling stations? How will such operations be stamped out? They need to be stamped out in the same way as Revenue succeeded in stamping out diesel laundering.
Mr. Gerard Moran:
Deputy Kenny raised the question about the estimated loss of revenue from diesel fraud. As I said earlier, with any illegal activity, there is a huge difficulty in estimating the cost to the Exchequer. We are able to make a stab at it in regard to illegal tobacco on the basis of surveys conducted on the packets people have and from where they got them. Therefore, we are able to come up with a notional loss to the Exchequer in regard to tobacco. With regard to most other areas where there is a degree of non-compliance or tax fraud, there are not very solid ways of coming up with satisfactory estimates. I am afraid that I am not able to say that we have got one of what it has cost us over the years. We are doing some work currently on the basis of the increased legitimate consumption we are seeing and the increased revenues that have flowed from diesel consumption in the past few years. If that amounts to something, we will publish it, but as things stand we are not able to put an estimate on what the cost is.
The Deputy mentioned the organised crime groups with paramilitary connections. They exist and they are a big part of the problem. It is for that reason that we have very well developed and solid working relationships with the Garda, Criminal Assets Bureau, CAB, the Police Service of Northern Ireland and HM Revenue & Customs in Northern Ireland. As I mentioned earlier, there is a cross-Border fuel fraud group and a cross-Border tobacco fraud group. Those activities are being tackled. There are forums for sharing of intelligence in regard to individual targets and all of that work proceeds. The CAB is very much a key player in targeting the organised crime groups and that happens as a matter of course. The CAB publishes its annual report every year and the assets it would seize, or the tax assessments it would raise, on figures in organised crime groups will not be attributable to particular areas of activity that they have got. It pursues them across the spectrum of their activities and goes after whatever assets or income it can find. To reassure the Deputy, the CAB is a crucial part of the machinery of the State in tackling organised crime groups and it is very successful in doing that.
The question of penalties was raised by a number of Deputies. In terms of the penalties in place, on a summary conviction, the maximum fine is €5,000 and or a term of imprisonment not exceeding 12 months and on conviction on indictment, the maximum fine is €126,970 and or a custodial sentence not exceeding five years. In practice we have been securing rather modest court fines because what seems to happen is that when we proceed with an indictable an indictable prosecution, we will either secure a custodial sentence, although it may be suspended in many cases. Looking at the total, we have had five people sentenced for fuel fraud crimes. We have had two custodial sentences and three suspended sentences and in those cases I understand there have not been any fines imposed. What happens if they are giving a custodial sentence, regardless of whether it is suspended, there is not a fine. The other fines we have got are where there is a summary prosecution. The average fine they were getting in those cases is about €2,500.
In terms of how we proceed, if there is evidence for a prosecution, we will take a prosecution, but much of our activity proceeds on the basis of their compliance first, with the law and second, with the requirement to keep records and comply with licensing conditions. As I said earlier that is where the business of dealing with the 130 filling stations and our ongoing challenges to traders, whether it is filling stations or suppliers, comes in.
Regarding the filling stations that we would close, it would not necessarily be because we have discovered that a prosecutable offence was committed or an offence as such. What we are discovering is that they are not satisfying the conditions of their licence and, therefore, we withdraw the licence. If they continue to trade, and that is where many of the seizures of fuel arose, we have gone in and pumped out that filling station or that trader. We seize the product.
As a tool for tackling problems in the sector, licensing is the key. A number of Deputies drew attention to the significance of that, and that has been our approach also. We want to have stringent conditions attaching to all the players in the sector.
We have to pursue them and where they are not meeting those conditions we are aggressive in seeking to have their licence revoked. That said, we have had some push-back on this and as a result of that we have had to strengthen the primary legislation. Where we have had push-back we are appealing to the Supreme Court, but in the meantime we are strengthening the primary legislation to clarify the grounds we have to take on operators that are not meeting the standards prescribed in excise law that are attached to their licences.
Mr. Gerard Moran:
In the main that is true, although in one or two cases there may have been an illegal product and they may be prosecuted. I cannot rule that out but in the main the Deputy can take it that the filling stations were closed for breaches of licensing conditions. Our strategy has been to put in place a system of controls so that we have integrity in the supply chain, and that is what we do. In order to have that, all the suppliers in the supply chain and everybody in the industry has to play by the rules.
We seek to identify where there is a failure to comply with the rules and where that is happening we withdraw the licence and revoke it. That is where the closures come from.
What about the people whose vehicles are damaged by this? Surely action should be taken as soon as a problem is identified with contaminated petrol. Mr. Moran is concerned with the Revenue side but we must also be concerned for people whose vehicles are being destroyed in this process. There should not be a time lag.
Would my suggestion of having a mobile laboratory not make sense? If somebody could go onto the forecourts to check petrol, one would have an immediate indication as to whether there is a contaminant in the petrol. One could then proceed accordingly to protect Revenue, the State and the individual citizen in that regard. Would that not be a sensible way to go? Mr. Moran would not then be spending many months trying to find evidence of contaminated fuel that he will not find. Is that not a waste of resources? One will never find a problem with most of the fuel that is being tested. That was my initial point. Mr. Moran needs to be proactive because of the logistics of identifying contaminated petrol.
Mr. Gerard Moran:
On that point, there must be due process. That has been clear from the judgments we have received concerning licences that have been revoked. We simply cannot close down a filling station there and then on the basis of a sample that we would draw at a mobile laboratory. That is not the kind of legal framework that Revenue operates within. Due process has to be followed in withdrawing a licence. The Deputy will appreciate that in doing so, one is potentially effectively closing down an operator's livelihood.
I am talking about the public interest in this regard. Where Mr. Moran has identified that it is contaminated fuel, I believe in due process as well. However, no more than with other licences - such a liquor licences - where people operate outside the parameters of their business, things can be done quickly to shut down a pub or nightclub that is not operating correctly. I dare say that it should also be done for a filling station that is not operating correctly. A lot of time has elapsed between finding evidence of petrol stretching and anything being done about it. In view of the historical basis of Mr. Moran's investigation, we now know that in most cases nothing will show up whatsoever. We complain about a lack of resources in the State Laboratory but surely there is also a waste of resources. We know that Mr. Moran will not find anything because of the way the system is designed. It is very frustrating to have to explain this to the public.
Mr. Gerard Moran:
With regard to the example the Deputy is talking about, we did in fact find something. An offence crystalises at the point when the person is convicted. That is the legal framework within which organisations like the Revenue, and all other organisations and citizens, operate. An offence crystalises at the point when there is a conviction.
What would be fair to the people whose vehicles have been damaged in the interim when a person is trading, from the point when Revenue identifies a contaminated sample to the point of getting a prosecution? They have no recourse and will probably still run into a problem with the chain of evidence. They are being left high and dry, is that not the truth?
Mr. Gerard Moran:
With respect, Deputy, I think that is a broader policy question for legislators. It is about a balance between the rights of various citizens and operators, as to whether on the basis of some sample a business is to be shut down or whether a legal process has to be completed. That is a much broader question for legislators.
However, Revenue is the lead operator in this aspect of fuel, as far as I am concerned. Revenue is the body we look to in order to understand about fuel, what we might expect from it and what the components should be.
In an effort to be helpful, I agree that it is a matter for legislators. Perhaps we should examine the whole area of food hygiene inspections, whereby if there is a risk to public health an inspector can go in and stop it.
Clearly the Revenue has to operate within existing legislation. If there is a need for further legislation this committee can suggest that. What we have identified, however, is that there may be a gap in the legislation in this instance. I suppose Mr. Moran is saying that people are innocent until proven guilty, so we have to operate on that basis. That is frustrating for the person whose car is effectively out of service, however. That is the difficulty we have here. The problem has been identified and needs to be addressed in some way.
In effect, we are saying that the system needs to be proactive, not reactive after damage is done. It is not teed up that way at the moment.
I wish to raise one other point of interest as both gentlemen are present. The cost of a barrel of crude oil is down by one third, yet we have only seen a drop of a few cent per litre at filling stations. Can Mr. Moran enlighten us why that is the case? Is there a cartel in fuel distribution? Part of the problem with people laundering fuel is the cost of fuel.
Mr. Gerard Moran:
I will answer the Chairman's question and will comment briefly. The excise duty remains constant regardless of the price. There is a specific tax in respect of the excise duty and the carbon tax. VAT is a function of the price and consequently as the price level goes down, so too does the VAT yield and, similarly, when the price rises so too does the VAT yield. I do not have a view on the relationship between prices in Ireland and world prices. I do not know whether there were some other points I have not picked up from earlier.
What kind of tests does Revenue do when it goes onto a forecourt? Is it a visual test or does it entail taking a sample to bring back to the State Laboratory? Are all these tests merely spot-checks? For instance, does Revenue operate at the weekend or in the evening when lots of deliveries can be made at a time away from normal working hours or whatever? Mr. Moran might provide an outline in this regard.
Mr. Gerard Moran:
As there just will be a tank-load of fuel in a filling station, that will not change dramatically unless there has been an delivery. If there was a risk, if one was worried about a particular delivery, if somebody tipped one off - as was suggested earlier - and if there seems to be an irregular delivery to a filling station, if we were alerted to something like that, we would go out very quickly to take a sample from that filling station. While one might look at that sample or whatever, we primarily would rely on the analysis of the State Laboratory and hence the sample would be for the State Laboratory.
Can the Revenue Commissioners stop a tanker along the roadside or do health and safety issues arise such that it is only possible for Revenue to take samples at forecourts? Can Revenue do this on the roadside for tankers?
Mr. Gerard Moran:
On the roadside, we can only check documentation and we do that. We cannot take samples on the roadside for health and safety reasons. It is a highly flammable product and there is a huge volume of it in a tanker. Consequently, we take samples at filling stations. To clarify, we take samples of diesel all right, just not of petrol. We certainly take roadside samples of diesel but not of petrol, which is what I had in mind.
May I repeat something I have stated previously? Much of our activity is not about physical sampling. It is about the supply chain and the paper trail right through the supply chain, namely, through the distributors and suppliers down to the forecourts. This therefore is a focus of our activity and is where our current investigations are focusing. It is focusing on participants in that supply chain coming back up from the retailers. We are investigating this intensively at present and that is what we must do. If we want to prosecute somebody, we must establish evidence that will support the prosecution. If we do not do that, we will seek evidence of players in the supply chain who are not complying with the standards or the rules that apply to that sector. Where that happens, one will not get a prosecution. However, if we have a sufficient basis to withdraw a licence from an operator and that will withstand a court challenge, then that is what we will do. We have been aggressive in doing this and have been highly successful in so doing. Suggestions that we have been relaxed or whatever in respect of pursuing fuel fraud in general or in responding to the current problem are unfair.
One question was not answered about which I was curious. Much play was made of the point that this sort of stuff can go on along borders both here and in other countries. Does Mr. Moran have an idea as to how much contaminated fuel or laundered fuel is sent from South to North and vice versa? Based on Mr. Moran's own experience, would it be fair to state that for the most part, the fuel is coming from the North to the South?
Mr. Gerard Moran:
The problem is an all-island problem and, therefore, we have tackled the problem in conjunction with Her Majesty's Revenue and Customs in order to have a joined-up approach in this regard and hence, both of us went to the market jointly to get a new marker. Obviously, the criminals are no respecters of borders at all. I would only be speculating about where is the source of fuel for laundering and where it is distributed but I will go back to a point I neglected to answer and which the Deputy raised earlier about the number of fuel stations that have been closed down north of the Border. They do not have the same licensing regime we have and I understand therefore that they have been unable to replicate in the North what we have been able to achieve here in terms of tackling the sector.
In respect of supply chain controls, they have a registered dealer and controlled oil system for marked fuel. It is a paper-based system and consequently, they do not really have a supply chain control system. They introduced that system perhaps ten years before we introduced our system and as a result have more limited supply chain controls. We have much more extensive supply chain controls here, as well as a tougher regulatory regime, which has allowed us to tackle traders that were not observing the standards we wished them to observe. I should tell the Deputy that this will be very much a feature of how we proceed with the investigation that is currently under way with regard to all that petrol and the damage to engines that has occurred.
I thank Mr. Moran and Mr. Butler for their attendance and for informing members of the issues as Revenue perceives them, as well as for answering members' questions. I hope the joint committee has conveyed to them the frustration of the public in this regard. Moreover, this frustration is increasing rather than decreasing because there do not appear to be solutions on the horizon. However, Mr. Moran has explained some of the reasons for that. Arising from the discussion today, it is obvious that this is a major issue. While the areas may be confined, the issues within those areas are significant and obviously, the joint committee will continue hearings on this matter. We were disappointed that for various reasons, the insurance federation and the consumer association did not appear before the joint committee today. However, they will appear before the joint committee in the future in an effort to get all the stakeholders involved to come to a solution. We wish Revenue well in getting to the bottom of its part of this problem and thank the witnesses.
Mr. Gerard Moran:
The problem certainly has tapered off. Certainly, the notifications of damage and the complaints we are hearing have dropped off and, as I stated, I believe they relate to instances in which people got fuel some time ago. If this was fraud rather than a contamination, it was a self-defeating fraud because people power will be one factor to drive this. The business of anybody who is associated with contaminated fuel will suffer and consequently, quite apart from our efforts, the reaction of consumers will be hugely influential.
While consumers have been mentioned as victims, the legitimate petrol stations are also victims and obviously we will also consider getting them involved in this regard. I thank the witnesses and reiterate that the joint committee will continue its hearings on this subject.