Brian Hayes (Dublin South West, Fine Gael)

I thank the Senator for rightly raising this very important issue. He has raised it in the past, as have others. It is particularly poignant that he has raised it on a day when information has come through Revenue about the illegal operation in County Cavan. We owe the enforcement agencies, North and South, a huge debt of gratitude for their own work in this area. From information I have received, I am also aware of the intimidation of local authority officials, Revenue Commissioners staff and enforcement officers by these gangs of criminals, many of them connected to paramilitaries.

We take this issue very seriously and I have today spoken to the Minister for Finance. I am informed by the Revenue Commissioners who have responsibility for the collection of mineral oil tax and for tackling the illicit trade in mineral oil products that they are acutely aware of the threat posed by illegal activity and tax evasion in this area. The most serious risk is the large-scale laundering of markers from diesel, which is subject to a reduced rate of mineral oil tax on condition it is not used in road vehicles.

Currently the Revenue Commissioners collect €1.1 billion annually in excise from road diesel so the scope for loss of tax revenue from this fraud is very significant. It is also important to note other costs are associated with this criminality. Apart from undermining the competitiveness of legitimate businesses, it damages the environment, can damage consumers' vehicles and sustains organised criminal gangs. For these reasons the Revenue Commissioners have made action against illegal fuel related activities one of their top priorities. They are tackling the problem on a number of fronts, including robust and sustained enforcement action, implementing more effective controls in oil distribution and pursuing a more effective marker in conjunction with the Her Majesty's Revenue and Customs in the UK.

On the enforcement front, action is taken at all stages of the fuel supply chain, tackling both those involved in laundering and the sellers of laundered fuel. The Revenue Commissioners are supported in this work by well-established structures to ensure very close co-operation between all relevant agencies north and south of the Border. The cross-Border fuel fraud group brings together representatives from a number of agencies, including An Garda Síochána and the PSNI, as well as the UK and Irish revenue authorities. There has been excellent co-operation between all agencies in sharing intelligence and identifying and investigating criminals involved in this fraud. Since 2010 the Revenue Commissioners have detected and closed 14 oil laundries and seized 574,300 litres of oil, together with nine oil tankers and 29 other vehicles. This important work continues to be pursued vigorously. Just last night, as I said earlier, another oil laundry plant was uncovered in County Cavan and two vans, bleaching earth, laundering equipment and a large quantity of laundered product were seized.

While there has been considerable success, therefore, in detecting and closing oil laundries, it is recognised that this approach alone will not solve the problem. Oil launderers must be denied access to marked oil for the purposes of laundering and they need to be denied access to the market for their laundered product. Since last July, the licensing regime for road fuels has been tightened up to make it more difficult for launderers to get their product onto the market. The Revenue Commissioners are engaged in a vigorous campaign targeting specific locations nationwide, with the intention of immediate closure of unlicensed outlets and challenging instances of non-compliance. As a result, 38 filling stations have been shut by the Revenue Commissioners because they did not have a licence or were in breach of licensing conditions.

The key issue here is licensing. Under the new rules one must obtain a licence to import oil into the country and a licence to obtain that product from the significant ports in the country. If one does not have the licence, one is turned down. There is also a computerised system that did not exist in the past. In recent months, there have been a number of detections of the "stretching" of petrol using methanol. The Revenue Commissioners are monitoring this situation carefully and will take all necessary action to counteract this form of fuel crime.

In addition to the ongoing enforcement action, legislative changes that will enable more effective controls in this sector have been put forward in this year's Finance Bill. These will lead to the introduction of new licensing requirements for marked fuel traders. The new arrangements will, for the first time, require any person dealing in marked fuel to hold a licence for the purpose. The granting of a licence will be subject to tax clearance requirements, and the applicant will have to show to the Revenue Commissioners that any conditions subject to which the licence may be granted will be complied with. The Revenue Commissioners will be empowered to revoke a licence if any of the licence conditions is breached.

In parallel with the introduction of this new licensing system, the regulations that lay down the detailed rules and requirements on mineral oil matters are being reviewed. It is intended that the requirements for record keeping will be strengthened and that a new requirement to make periodic returns to the Revenue Commissioners will be introduced. All mineral oil traders, including traders in marked fuels, will have to make regular returns - electronically - detailing their fuel transactions. The advantage is that if we see, for example, in a small area of the country an enormous amount of oil being purchased by one of the larger traders, the question will be posed as to why the trader needs this oil and what he or she is doing with it, given the sale of product in other parts of the garage. This gives us the power to do that for the first time.

Steps are also being taken, in close co-operation with the UK authorities, to acquire a more effective fuel marker. The Revenue Commissioners are planning to go to the market shortly, with the UK authorities, to seek a new marker. A good deal of preparatory research has been undertaken here and in the UK and we expect to proceed with this project shortly.

Stringent penalties are prescribed for offences relating to mineral oil smuggling and laundering. For example, a person convicted on indictment of an offence of evading or attempting to evade excise duty can be sentenced to imprisonment for up to five years or a fine, or both. Following a substantial increase introduced by the Finance Act 2010, the fine is an amount not exceeding €126,970 or, where the value of the goods is more than €250,000, an amount not exceeding three times the value of those goods. I believe these penalty provisions permit the courts to impose sentences that would act as a deterrent to involvement in this form of crime.

The problem of fuel laundering and smuggling is a serious one, and the extensive enforcement action that is being carried out on an ongoing basis highlights the Revenue Commissioners' commitment to combating it. The new legislative steps that are being taken, together with the work on development of a more effective fuel marker, will serve to enhance the effectiveness of this action. I assure the Senator that there will be no let-up in the work against those involved in this criminal activity.