EU border fraud costs taxpayer €100 billion a year

CROSS-BORDER fraud costs the European taxpayer an estimated minimum of €100 billion a year, a European conference on the subject…

CROSS-BORDER fraud costs the European taxpayer an estimated minimum of €100 billion a year, a European conference on the subject was told yesterday.

The Director of Public Prosecutions, James Hamilton, who co-hosted the conference with his Northern Ireland counterpart, Sir Alisdair Fraser, said that in Ireland organised crime gangs have a long tradition in exploiting tax differentials and currency fluctuations, especially in Border areas.

The most common forms of cross-border fraud are cigarette smuggling and the sale of contraband cigarettes, mineral oil fraud, alcohol fraud and VAT fraud, he said.

Over 120 people from 26 different countries are attending the conference, which is jointly funded by the European Commission anti-fraud office, Olaf. This combats crime against EU finances. The delegates represent organisations involved in the investigation and prosecution of cross-border fraud and asset-seizing agencies.

Mr Hamilton said that the UK and Ireland had the highest cigarette taxes in the EU, and are therefore a primary target for smugglers. The cigarettes are usually sourced in third countries including the Far and Middle East by gangs located near the Border.

“It has been estimated that tobacco fraud and smuggling cost the UK exchequer between €2 and €4 billion annually. In the Republic of Ireland cigarette smuggling is thought by some to cost more than €500 million in lost revenue within a year,” he said, adding that it was estimated that one in four of the cigarettes smoked here was smuggled or counterfeit.

Counterfeit cigarettes posed additional problems as they did not conform to any manufacturing standards, and the same problem arose with counterfeit alcohol products.

Last year, as a result of inter-national operations, a total of 25,879,800 illegal cigarettes were seized, he said. The cigarettes had arrived from Singapore via Le Havre and the potential loss of revenue totalled €6.17 million.

Speaking to journalists, he stressed the need for more cross-border co-operation, saying: “If we don’t know where the case will be prosecuted there will be difficulties gathering evidence.”

Sir Alisdair stressed the excellent working relationships that exists between the Republic and Northern Ireland, and said there had been a number of significant prosecutions. One concerned fuel smuggling, and resulted in the confiscation of £1.2 million.

“These crimes are not victimless,” he said. “They lead to the loss of funding for schools, hos-pitals, etc. The Revenue man is not raising money for himself.”

Ian Walton George, head of investigations and operations in Olaf, told journalists: “I would like to see more co-operation on VAT fraud. We need to get better at using our strengths, and not be too hung up on the competencies of the member states. Our weaknesses will be exposed ruthlessly. We must exchange information and intelligence. No single member state can tackle cross-border fraud on its own.”

The conference continues in Dublin Castle today.

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