Diesel laundering plant raided in Monaghan

A welcome victory but AA fear State’s measures still not enough to put fuel-gangs out of business

The incidence of diesel laundering may have reduced somewhat this year but as today’s raid in Monaghan shows it is still a very active criminal enterprise.

Criminal gangs are enjoying a bonanza by buying marked diesel oil, laundering it and selling on to consumers. This is well known but not enough is being done to stop it.

Diesel for use on the road carries an excise duty rate of 47.9 cent per litre, something that you regularly hear the AA complain about. The exact same diesel also runs farm machinery, diggers, air-conditioning plants and generators. For these uses it carries the much lower tax rate of 7.653 cent per litre.

If you buy low-tax fuel and wash the marker-dye from it you can pass it off as road fuel and make an extra  40 cent per litre. However the Irish government, along with their counter-parts in the UK, has introduced a more modern version of the marker-dye which is somewhat more difficult to remove. This has proved helpful although in the AA’s view it will not keep the authorities ahead of the criminals for very long.

It is hard to know how much the state is losing. I have read industry estimates of €150 million a year which may be a little high but there is no doubt that the scale is enormous.

Those behind it are some of the worst people on the island. They are gangsters who are well known to the authorities on both sides of the border. The dark-green stink of their methods is familiar and very nasty.

Set yourself up in a farmyard, force your stuff onto forecourts using bribes and threats, dump the toxic sludge anywhere you like and away you go. Easy money.

It is not just the exchequer that is losing out. The process of washing out the dye also washes out the carefully engineered lubricants and additives that need to be there. The fuel is damaging car engines. The AA breakdown service and our engineers are finding evidence of this regularly.

The authorities north and south have been trying to make life tougher for the gangs. Licencing rules around the sale of marked diesel were tightened in 2012 and again last year. There is now a requirement for electronic returns to Revenue which in theory makes it easier to track and trace fuel.

Quite a number of fuel outlets have also been shut down using environmental standards regulations. These ‘pop-up’ garages were a feature in Dublin a couple of years ago, selling fuel so cheaply that it had to be laundered.

They have become more subtle. They are now selling through respectable looking outlets at prices that are good but not conspicuously so. Even so the measures may have worked to an extent. Legitimate diesel sales rose slightly last year while petrol fell.

The next step is the Irish and UK authority’s great hope for a permanent solution. They are about to introduce a more advanced version of the dye which will supposedly be much harder to remove.

I think that is deluded. With so much money at stake it is only a matter of time before the gangs find a way around it.

The AA would rather do away with marked diesel altogether. It would be far easier in our view just have everybody pay the same price and then pay back the legitimate farmers, fishermen and others by way of a rebate.

It is a neat solution that would pull the carpet out from underneath the criminal industry but for now it does not look as if that is going to happen.  I have heard a number of reasons why it cannot be done but none of them are good ones.

It may present cash-flow problems for honest farmers in the short term. It may also cause a rise in low-level ‘domestic’ evasion, whereby naughty individuals fill the family car with low-tax diesel or sell a few litres to their neighbours. With no dye to stain their guilty engines this becomes harder to detect.

So be it. The shape of enforcement would have to change a bit but at least it would undermine the criminals.

If we are to take a step like this it would be far better to do so in tandem with the UK. The problem is that UK fuel policy and taxation is set by Westminster, not Stormont. The extent of the problem is just not appreciated on the other island.

That may change as our enterprising crooks are actually starting to export their expertise and their business model. Fuel laundering is a growing problem in England, even if they do not know it yet.

The AA supports any and all measures designed to bring an end to diesel laundering. I wish them all the best with the measures that are being tried but I believe that as long as this artificial price difference makes it so lucrative, the trade will continue.

We will eventually have to get rid of marked diesel. We should get on with it and do it now.