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Wednesday 18 January 2017

Smuggling rise robs Revenue of €500m

Published 07/08/2011 | 05:00

Lost revenue from diesel laundering and cigarette smuggling is growing and could well be costing the State over a billion euro annually, according to senior customs and garda sources.

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A document, due to be published shortly by the Irish Tobacco Manufacturers Advisory Committee, estimates revenue losses due to smuggling are now costing the State €500m a year. Despite this the average fine for cigarette smuggling is €519 and there are still only two container scanners to cover all Irish ports.

According to customs and garda sources, diesel laundering is netting profits at least on a par with the tobacco.

This year has been a record one for seizing laundering operations on both sides of the Border. Seven major laundering plants were uncovered by customs and gardai, while 15 were found by customs and the PSNI in Northern Ireland.

The plants in the Republic were capable of producing 60 million litres of fuel and robbing the Revenue of €30m a year. The operators were also making close to the same amount of profit as the revenue losses.

The diesel laundering is now operating on proper industrial lines with huge amounts of bleaching earth being brought into the country from non-EU states including Turkey, Russia and even Malaysia.

The launderers -- the main organisation controlled by ex-IRA men from south Armagh -- have also been importing industrial filtration tanks and have long left behind the old home-made operations, which used acid and cat litter to filter the dye out of agricultural diesel and home heating oil.

However, people buying the cheap diesel are being warned that the it will badly damage their engines. The bleaching earth removes the lubricant from the diesel and also leaves a fine residue which seriously damages modern diesel engines.

The "washed" diesel destroys the highly sensitive electronic injectors, which are very costly to replace. One motor industry source yesterday told of a recent incident in which a Dublin woman bought diesel from a station near the Border and her engine stopped working by the time she had reached home. The repairs cost over €3,000. It is understood that dealers around the country are advising drivers that they will not honour warranties for damage caused by "washed" diesel.

The launderers are still leaving hundreds of tonnes of toxic sludge around the country, and at one plant seized earlier this year, they were allowing the sludge to run off into an irrigation ditch.

The launderers have moved up their operations to the actual purchase and running of filling stations, with the Irish Petrol Retailers Association saying they own at least 120 stations around the country.

A customs source said: "It is a growing phenomenon. You can understand in economic times like these it is very stressful for people and they are turning to making money from this and on the other side from saving a bit by buying the cheaper fuel at €1.34 compared with €1.39 to €1.45.

"But people should be aware that the chemicals that are being used (to wash the dye from the diesel) removes the lubricant out of the oil and actually leaves particles behind. When they heat up the engine can't cope as it blocks the filters and injectors. You could drive five miles or you could drive for four months but it will go eventually."

Former IRA and dissident republicans also dominate the illicit tobacco trade. Last Tuesday's seizure by customs of three tonnes of loose tobacco, shipped here from China, is seen as further proof that the smugglers have now moved up to manufacturing their own cigarettes. They are believed to have bought machinery from China and are running a factory somewhere in the Border area.

A report entitled How to Stop the Illegal Tobacco Trade, to be issued by the Irish Tobacco Manufacturers in coming days, is calling for a proper garda task force to target the smugglers and an inter-departmental group to examine the impact of smuggling.

Ireland has the highest cigarette prices in Europe and has become a hub for international smuggling.

One customs source said last week that the amount of tobacco and cigarettes being seized indicates that there is far too much for the Irish market and much is being re-shipped to Britain and other EU countries. One container of cigarettes nets a profit of €1.3m.

It says the State's response is failing to stem the growth of the industry, with ports like Cork not covered with any container scanner at all. The two in use are in Dublin Port and along the east coast. It points out that although the maximum fine for cigarette smuggling is €126,950, the average fine is just over €500.

In addition, the report states profits are going towards other crime and includes an old black and white news picture of IRA men in combat uniforms. Gardai concur with the report's claim that the dissident republicans, who dominate the smuggling, are also involved in terrorism and, along with eastern European gangs, the sex trade.

Sunday Independent

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