Derek Keating (Dublin Mid West, Fine Gael)
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I thank the Ceann Comhairle for giving me the opportunity to raise this issue and the Minister for Finance for attending the Chamber to respond to it. It involves a serious criminal matter. The Garda in Waterford was tipped off about the theft of a trailer and, as a result, obtained a search warrant which was executed last Friday. It resulted in the seizure of several large tanks and equipment which had the hallmarks of fuel laundering on a large scale. To date, the information available from the Customs service shows this plant for laundering diesel was fully operational up until recently. It was sophisticated, involving bleaching, namely, the removal of green dye from legitimate diesel.

This is a new development as the majority of laundering operations have been found in the Border counties, operated by subversive groups. These operations defraud the State of millions of euro in revenue every year. They also damage cars and industrial equipment because of the substandard product that is circulated. Revenue has shut down over 100 fuel outlets and over 20 fuel laundries with sophisticated equipment.

A major side effect for the State is the clean-up operations after these criminals dump the sludge, in many cases on the side of the road. Louth County Council has received extra funding to address the crisis of sludge being improperly disposed of, causing not only a toxic threat but also a highly expensive recycling process.

For the first time in the most southern part of the country, a serious development of criminality has occurred, a massive shock to the local community in Waterford. Does the Minister believe a specialised Garda-Customs service unit needs to be established, particularly since that if it were not for the finding of a stolen trailer, there was every possibility the Waterford operation would not have been discovered?

Michael Noonan (Limerick City, Fine Gael)
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The Revenue Commissioners inform me that they are acutely aware of the threat posed by fuel laundering to remove the marker added to rebated fuel for off-road use. Fuel laundering to remove the marker from rebated fuel has been a persistent problem during the years. However, it remained a marginal activity because the sulphur content of marked fuel was higher than that of road fuel. Accordingly, the sulphur content continued to distinguish laundered fuel from genuine road fuel. Environmental standards for the sulphur content of fuel changed from the beginning of 2011 which resulted in marked fuel with the same sulphur content as road fuel coming onto the market. With this change, fuel laundering became more viable and criminal gangs intensified their laundering and distribution activities dramatically from the first half of 2011.

Revenue collects some €1.1 billion annually in excise duty on road diesel. Therefore, the potential for loss of tax revenue from this fraud is significant. This type of criminality also undermines the competitiveness of legitimate businesses, damages the environment, can damage consumers' vehicles and sustains organised criminal gangs which are the prime movers in this illegality.

Recognising the threat this illegal activity poses to the Exchequer and legitimate business, the Revenue Commissioners have made action against illegal fuel-related activities one of their top corporate priorities, adopting a comprehensive strategy to tackle the problem with several elements. The licensing regime for auto fuel traders was strengthened with effect from September 2011 to limit the ability of the fuel criminals to get laundered fuel onto the market. A new licensing regime was introduced for marked fuel traders in October 2012, which is designed to limit the ability of criminals to source marked fuel for laundering. New supply chain controls were introduced from January 2013 that required all licensed fuel traders to make monthly electronic returns to Revenue of their fuel transactions. The first returns were received by Revenue in February. It is using the data to identify suspicious activity and is investigating several traders.

Enforcement action, involving close co-operation with other law enforcement agencies on both sides of the Border, has been intensified with the aim of closing down fuel laundries and dismantling criminal networks involved in the activity. Revenue and HM Revenue and Customs are co-operating closely to ensure both agencies pursue an effective and joined-up approach to tackling the problem. In particular, Revenue and HM Revenue and Customs are working together to identify a more effective marker for use in both jurisdictions. A joint invitation to make submissions process is close to conclusion and a decision on the new marker is expected shortly.

Revenue regularly reminds motorists and the public generally that, in addition to its impact on the Exchequer and legitimate trade, they should be aware of the risks posed to their vehicles by using laundered fuel, as well as the fact that sourcing fuel in this way is funding criminal activity. Retailers who suspect or have evidence that laundered diesel is being sold in their area can help by reporting their suspicions to Revenue either directly or through their representative associations. Such reports are treated as confidential and fully investigated by Revenue.

Revenue's enforcement strategy in the fuel sector continues to yield results. In the past two years 107 filling stations across the State were closed for breaches of licensing conditions. Including the most recent detection in Waterford, over 2.9 million litres of fuel have been seized and 28 oil laundries closed down since 2011, including eight oil laundries to date in 2013.

The illegal laundry detected in Waterford had the capacity to launder approximately 10 million litres of fuel per annum, with a potential loss to the Exchequer of approximately €5 million per annum. A number of large tanks and ancillary equipment were seized and the laundering plant was dismantled. Investigations into the laundry operation are continuing.

I am satisfied that the strategy being implemented by Revenue is proving successful. Legitimate traders have welcomed the new supply chain controls and provided anecdotal evidence of reduced competition from rogue traders and reduced availability of laundered fuel. Consumption of auto diesel has increased by some 5% in the 12 month period to October 2013, in comparison to previous years when consumption was largely unchanged. I strongly support the current strategy being implemented by Revenue and I am confident that it will succeed with the co-operation and support of the legitimate trade. I am informed by the Revenue Commissioners that the industry has worked very closely with them in developing and implementing their strategy. We are grateful to Revenue, the Customs service and the Garda Síochána for their ongoing work in this area.

Derek Keating (Dublin Mid West, Fine Gael)
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I thank the Minister for his comprehensive report which reflects his awareness and appreciation of the seriousness of this crime and the effect it has in terms of the loss of revenue, as well as on local businesses, the environment and the morale of the local community. The report will help to reassure the local community, particularly in Waterford. That is one of the reasons it is so important we have had this discussion in the Dáil to assure everybody that the Government and the authorities are very serious about this matter. We want to raise awareness of it. As always, as the Minister would agree, we appreciate the co-operation of everybody in the local community in our efforts to deal with this growing crime threat.

Michael Noonan (Limerick City, Fine Gael)
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The initiatives taken in the last two Finance Bills are working, especially the one on traceability. In one case, thousands of litres of fuel were being delivered to the equivalent of a corner shop where, obviously, there was no outlet to sell it. Traceability is the key. Previously there was no traceability of the identities of the customers of the big fuel farms which supplied central heating oil. Since the initiative on traceability was taken it has been possible to identify, all the way from the port of import or point of refinery to the end user, if huge amounts of fuel are being delivered to locations that cannot legitimately include them in the retail trade. Investigations usually end up with the discovery of a fuel laundry. The legitimate trade takes the view that this initiative is working and that the sale of diesel has increased by 5% in 12 months, partly due to a little growth in the economy but mostly because the illegitimate traders have been taken out.