FORMER IRA chief of staff Thomas 'Slab' Murphy was tipped off four hours before he was to be targeted in a major cross-Border police swoop.
The Irish Independent has learned that detectives discovered evidence that the notorious oil smuggler and his associates knew about the operation and destroyed computers and documents just before the raids took place last Wednesday morning.
Senior security officials are now seriously concerned that the Republican leader has an informant in one of the state agencies investigating him either in the North or the south.
PSNI and garda surveillance officers reported seeing a number of large fires close to the home of Murphy in south Armagh around 2am. The charred remains of laptops, computer disks and documentation were later found in the course of searches by police. Operation Loft swung into action at 6am when specialist SWAT teams from the PSNI and the Garda Emergency Response Unit surrounded the millionaire's property.
They were part of a 300-strong force, including police and customs on both sides of the Border, who carried out searches across 11 counties.
A large amount of documentation and over €100,000 in cash was seized in the raids at 22 private homes and business premises.
Officers also discovered one of the largest diesel-laundering plants ever found along the Border. Sources have revealed that it had the capacity to produce over €5m of illegal fuel a year. And 40,000 litres of fuel was seized at the same site.
The investigation was spearheaded by the Criminal Assets Bureau in Dublin. Investigators uncovered a complex web of bank accounts in fictitious names, which have been used to launder an estimated €100m in the past 18 months alone. Over €1.6m has so far been frozen in bank accounts in the Republic, Northern Ireland, the UK and mainland Europe.
But sources say that the figure is expected to rise dramatically over the coming months as they continue to track down more of the accounts across Europe and further afield.
However, the Irish Independent understands that senior security sources are "very concerned" that their operation appeared to have been compromised.
A security source said: "Fires were suddenly lit at a number of locations at around the same time, at 2am, and they were still smouldering when the raid took place.
"Laptops, computer disks and a large amount of documentation had been destroyed in the fires. They seemed to know that a raid was imminent but they now have to explain why this burning took place."
Detectives arrested Murphy shortly after he drove off from his home as the helicopters arrived.
Murphy (60) is currently charged before the Special Criminal Court with nine counts of failing to file income tax returns. He is taking a Supreme Court case to have his trial heard before a judge and jury. He and his family members are also fighting a €5m tax demand from CAB.
The demand was issued following a similar raid on Murphy's operation in 2006 when CAB, Customs and the former Assets Recovery Agency in the North uncovered evidence of a hidden economy worth hundreds of millions of euro.
Also discovered in the search was a large, purpose-built torture chamber, close to Murphy's home, that had been used by the Provos to interrogate and torture their victims.
However, the investigation did not stop the huge laundering operation. Security sources say it has become much more sophisticated and scientific.
"Murphy and his group have a number of chemists working for them producing a much higher quality fuel than before," a security source revealed.
"They have also gone hi-tech with the younger generation and have one guy who is a computer expert."