UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 78-ii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

NORTHERN IRELAND AFFAIRS COMMITTEE

CROSS BORDER CO-OPERATION

Wednesday 17 December 2008

MR WILLIAM HUGHES, MR DAVID ARMOND and MR BOB LAUDER

Evidence heard in Public Questions 146 - 191

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Northern Ireland Affairs Committee

on Wednesday 17 December 2008

Members present

Mr David Anderson

Mr John Grogan

Kate Hoey

Mr Denis Murphy

Stephen Pound

David Simpson

In the absence of the Chairman, Stephen Pound was called to the Chair

________________

Examination of Witnesses

Witnesses: Mr William Hughes QPM, Director General, Mr David Armond, Deputy Director, and Mr Bob Lauder, Regional Deputy Director, Enforcement Scotland and Northern Ireland, Serious Organised Crime Agency (SOCA), gave evidence.

Q146 Stephen Pound: Gentlemen, welcome, it is a pleasure to meet you again. Can I just firstly state on the record that the Chairman of the Northern Ireland Affairs Select Committee, Sir Patrick Cormack, is not well; I am standing in for him, inadequately I am sure, but he certainly would have been here had it been at all possible. He would have wanted me to ask if at the end of the public evidence session there was anything you wished to say in private we would be more than happy as a Committee to accommodate that; we would be quite happy to do so. You might want to indicate either during the course of the evidence or at the beginning whether you wish to do so but we stand willing to co-operate there.

Mr Hughes: Thank you Chairman.

Q147 Stephen Pound: I do not need to introduce my colleagues, you have met most of us before, so we will start with the questions to you. Did you wish to make any introductory statement?

Mr Hughes: Probably the best way to do this Chairman is thank you for the points you made about if we want to give any evidence later in private. We have nothing planned at the moment so we will wait to see how the questions develop. The best way probably is for me to introduce my two colleagues to you and to tell you what they do and why they are here. If I start on my left with Bob Lauder, he is our Deputy Director who is responsible for Scotland and Northern Ireland and, as you are aware, SOCA is a United Kingdom-wide law enforcement agency but obviously crime is a devolved matter to the Scottish Parliament and obviously we are waiting to see what happens within Northern Ireland. What that means is that we have to adopt and look at and adapt the way we operate in both Scotland and Northern Ireland; Bob has great experience there and that is his role, to make sure that we fit in with the political structure and the operational structure in both those areas. David Armond is my deputy Director who looks after our proceeds of crime side of the business. This is about 12% of the people in SOCA who work within this area and are responsible for dealing with asset recovery, money laundering, suspicious activity reports et cetera. The reason for that is we adopt a very different approach within SOCA as a law enforcement agency and we believe that a long-lasting impression of harm caused to serious organised crime can be effected through going after their money, taking their assets off them and continually making sure that they cannot use cash flow to further their business needs. That is why that is a very important part of our business.

Q148 Stephen Pound: Thanks very much indeed. Before we come on to questions from the members of the Committee can I just refer to the Annual Business Plan for 2007/08 in which you prioritise particular areas and I think you use the expression "principal threats". Those are armed robbery, drugs, excise and tax fraud, extortion, organised immigration crime, intellectual property crime and criminal finances. I appreciate it is early days, you have not really had a full year of operation yet, it is only the first year, but how do you see the principal threats in the following year, 2008/09?

Mr Hughes: Just to correct you on that, Chairman, actually we have been up and running since 1 April 2006. With the new structure that we have now in terms of the merger with the Asset Recovery Agency, that started this year, you are right. If you look at the annual plan that you refer to what we do there is we take those principal threats from the United Kingdom threat assessment, which is a document that is produced by our intelligence side of the business, and from that what we do is brigade that into five main areas of business programmes of activity, of which there are 20, which vary from drugs, organised immigration crime, cross-cutting issues, the majority of which you mentioned there - those are other issues apart from drugs and organised immigration crime because those are the two main priorities set for us by the Home Secretary. Then there is the matter around fiscal fraud which is dealt with primarily and led by HMRC, and then criminals and their business which includes proceeds of crime and money laundering aspects. All of those threats that you talk about, we therefore brigade into a control strategy and then various multiagency groups take on board those aspects and deal with them. In terms of where we think we are going for the future, at the moment my executive director intelligence is putting the finishing touches to the next United Kingdom Threat Assessment for the forthcoming year, so it would be a little premature on my part now to jump ahead. What we are concerned about for the future of course is the effects that may occur due to the current financial situation where frauds and other types of money-raising scams may start to surface, but obviously that is something that we are keeping a very close eye on. In terms of robberies and other matters, those are areas where we support local police forces particularly, both in England and Wales and in Scotland and in Northern Ireland and we are always ready to support our colleagues in counter terrorism, although we do not have counter terrorism as a remit per se for the Serious Organised Crime Agency but we do a lot to support.

Q149 Stephen Pound: Every police force in Great Britain will have terrorism as its first priority, as its principal threat - certainly the Met does and most of the big cities. The co-operation we have noted in the past, do you think that there will be an increased call upon yourselves as we now see more of a terrorist threat which is cross border?

Mr Hughes: The way that we are structured is that we are not a police agency or a police force, we are a law enforcement agency.

Q150 Stephen Pound: They would call upon you, surely.

Mr Hughes: Okay, yes. What we do is we have no remit for counter terrorism, so we do not get in the way of that action being led by the Metropolitan Police and the security service and the other intelligence and security agencies. What we do have though are areas, for example, within David's area of business. We have work that we do on suspicious activity reports around financing; particularly if there are matters relating to what looks as if it could be terrorist financing then we will deal with those, collate them, analyse and assess them and pass them on to the security agencies to deal with that. In terms of other types of action on the ground, operational activity, we have already given a commitment to the police service that if they require our expertise in areas such as surveillance or technical surveillance, or in other areas, then we stand ready to assist whenever we are called upon and that actually is built into the Serious Organised Crime and Police Act which set us up, where a chief constable can call upon me for assistance.

Stephen Pound: Thank you. Mr Simpson.

Q151 David Simpson: Thank you, Chairman. It is good to see you again, gentlemen, especially Bob who looks after us in Northern Ireland. In relation to cross border activity within Northern Ireland with the two jurisdictions that we have, we have two or three organisations - we have the CAB in the south of Ireland and then we have yourselves; how do you draw the lines of demarcation, how do you sort out the practicalities of who takes the lead in different areas when it comes to that? Also, in relation to the Assets Recovery Agency itself there were some concerns during the amalgamation of the two organisations that the Assets Recovery Agency in general public terms would be looked upon as the poor cousin of SOCA. Could you explain if there have been any difficulties in the amalgamation and if there have been, have they been sorted?

Mr Hughes: I will start it off and then hand over to my two colleagues to answer the detail. If I could just start with your second point first and that is the Assets Recovery Agency merger, there was a lot of talk about how this would operate and how it would be absorbed and merged with the Serious Organised Crime Agency; in fact, quite a few people put comments to me "Well, of course you are the Serious Organised Crime Agency therefore you will have some lower threshold and you will not bother below that."

Q152 David Simpson: Yes, that is right.

Mr Hughes: To which all three of us were quite adamant in our response. The point around the Serious Organised Crime Agency is that we were set up to do something about the harm caused to communities in the United Kingdom. There is no definition of serious or organised crime in the way we were set up, deliberately, so that we are free to be able to deal with issues. With the Assets Recovery Agency what we wanted there was this would give us enormously wider powers to deal with the criminals and their finances and take on board the Assets Recovery Agency. My personal view is that it was the right thing to do because the Assets Recovery Agency was a passive agency, it waited for referrals, whereas of course we have the investigative side of our business as well as the civil and criminal tax powers that we use. In terms of the merger I am sure David and Bob will be able to tell you there, yes, of course with merging any agencies, any public sectors, there will always be a few issues around terms and conditions and other things, but the morale of the people involved now from what I have seen and from what they tell me is very good because they are doing what they wanted to do in the first place, which was to really attack serious organised criminals. In terms of cross border, probably Bob is in the best position to discuss that and go through that.

Mr Lauder: There are particular arrangements which probably David would be best to rehearse with you as to the co-operation that existed between ARA and CAB and which has been extended now into SOCA. The mechanisms for that, David, are your particular area of business and you may wish to deal with that.

Mr Armond: Okay, the ball is with me then. If I could answer your question first around arrangements with CAB and then I will turn on to how we are doing after the merger and what it means to the staff. As you are well aware the Criminal Asset Bureau deals primarily with assets rather than individuals as did ARA, so there are a number of cases where we are working jointly together but the actions that are taken using civil recovery or taxation powers are not necessarily similar to a criminal investigation. There is quite a good fit, we meet regularly and routinely to maintain liaison and there was a significant conference arranged prior to the merger to ensure that we could continue the good co-operation. There has also been participation in terms of cross-secondees to understand how each agency works and how we can work together. There is a very good fit between CAB's mission and SOCA/ARA's mission and I am pleased to report that that co-operation has continued and in fact I would argue has been enhanced, and we are talking about quite a substantial new piece of work that we are going to do together jointly. Although you might argue that technically it is not a joint investigation in the true sense because targets across the border will be identified and dealt with by CAB and the assets identified will be dealt with CAB and similarly those in Northern Ireland or in the rest of the UK will be dealt with by us, there is very good sharing of intelligence and information, we co-ordinate our activity and we ensure that basically if we are going after an enterprise or an organisation we identify where the assets are and we ensure that they are all taken away.

Q153 David Simpson: What you are really saying, David, is that whilst there is good co-operation between all the assets recovery agencies, the lead agency in the jurisdiction would take control of the investigation, is that right?

Mr Hughes: Yes, the Assets Recovery Agency is now fully merged so it is actually part of SOCA and the people who were ARA now sit within David's area of work primarily, except for those who went to the National Policing Improvement Agency on the training side for financial investigators. In terms of the relationship there, the operational side of the business is an important issue. Bob and I met recently with Fachtna Murphy, the Commissioner of the Guards, and we have a very good working relationship; that we hope will continue and get better. The issue that we have to deal with of course is that this is the only land border with an EU country for the United Kingdom and the border is regularly exploited by those who would see this as an opportunity to circumvent law enforcement's capabilities, so what we are looking at and we want to talk about seriously with the Guards for the future is how we can operate throughout Ireland when we need to in operational matters. That is obviously going to be quite sensitive but it is an area where we have to move if we are to really progress the capability to be able to take on serious organised criminals who are impacting on both the north and south of Ireland.

Stephen Pound: We will be coming on in a minute to the question of the leadership of investigations, particularly when you are dealing with PSNI, SOCA and HMRC. Mr Murphy.

Q154 Mr Murphy: That actually brings us on to my next question and that is to deal with the Schengen arrangements. You yourself, sir, were quite positive in saying that the adoption of the Schengen arrangements in particular with hot pursuit would actually be of great benefit to your organisation. Is that the view generally of SOCA?

Mr Hughes: As the DG it tends to be the view of SOCA, of course, if you will pardon my expression but it is an area which is very complex, obviously. When I first made comments around Schengen it was in relation to the Schengen information system which we desperately need because that is a very important piece of information sharing. In terms of Schengen there are other ways of dealing with it and if you go to the Benelux countries you will find parts of the Netherlands, Belgium, Luxembourg and France where - this predates Schengen - they have agreements where they can operate now. I am not suggesting those as ways forward; this would be a matter for a political debate and discussion, but what we find though is the reality of the situation is that people will go across the border either way to shake off surveillance and operational teams operating from the respective countries. They know that and it is very easy to do; it is no border to the criminal but it is a border to law enforcement and we need to deal effectively with that because this impacts on both the North and the South, it impacts on all of Ireland, there is no border in that regard in terms of organised crime. That is an area that I would like to see looked at very carefully and seriously for the future, and it is probably out of my hands as to how we actually physically do it. I have some options and thoughts but it is still a political matter.

Q155 Mr Murphy: Sir Hugh Orde when giving evidence to this Committee actually said that he was not really convinced that the adoption of Schengen will actually make that much difference to them operationally and he did say perhaps that is because of the difficulties of them being an armed force and the Guards being an unarmed force; have you had discussions with Sir Hugh Orde with a view to trying to get a common view on this?

Mr Hughes: Not specifically on that. Hugh and I meet quite regularly and we go back a long way, but of course the issue about what Hugh is dealing with in primarily a marked police force carrying firearms may be different to what we are operating. If I give you an example, we have had operational instances where there has been a tie-up between Glasgow, the north-west of England in the Merseyside and Lancashire areas and into Dublin with people trafficking heroin, and they will use all different routes in and out of those countries and areas. If we are dealing with serious organised criminals who are operating in that sort of environment it is different to hot pursuit after someone who has committed a burglary or a robbery, it is a different issue altogether, and this is often around looking at their lifestyle, where they live, where they operate from, how they will seek to launder their funds and all that, so we are looking at it from a different perspective from where Hugh is talking about. If we are restricted in the way that we can operate in other areas that impact upon the United Kingdom - in other parts of the world we operate in around 40 countries already at the moment but we do that in conjunction with the law enforcement agencies in those countries. We can do that probably in the south of Ireland but it would be better if we could find some better arrangement for what tends to be very quick notice of issues that we need to do deal with.

Q156 Mr Murphy: Do you operate a personnel exchange with the Republic?

Mr Hughes: It is an area that Fachtna and I discussed and it would be, I think, a sensible move forward. In fact we have looked at this, particularly around financial investigators from our side and from the Guards and with our operational side that would be a sensible way forward for the future for us.

Q157 Stephen Pound: Could you possibly flesh out a little bit one of your earlier comments? You talked about the Benelux situation which in fact preceded the convention, but you intimated that you would be interested in seeing some sort of a local solution to the difficulty while we wait for Schengen as it were. Are you talking about a memorandum of understanding or could you, for the Committee's sake, flesh out a little bit how you would see that mechanism working.

Mr Hughes: There are several areas. One is that we could use the European framework around joint investigation teams, for example, and we have looked at that - we already have done those types of operations with our Dutch colleagues, for example.

Mr Lauder: Primarily the need is for a legal framework to allow the collection of evidence on both sides so that we do not have a grey area where we are pursuing something which may be okay for a joint investigation team circumstance, but if it goes beyond that again, as Mr Hughes said, it is about the quickness and the speed of travel, the dynamics that are involved in it. The bilateral arrangements that some of the Benelux countries have allow for that cross border interaction between the two and there is no loss of evidence because things were moving very, very quickly. That is the type of arrangement that would be very helpful, to allow the continuation of the investigation without any danger of loss of evidence or continuity of that evidence whilst our colleagues in An Garda Siochana manage to get people on our notification up into that area of business. So it is about having a framework that allows the evidence that will be available to be heard in courts on both sides of that border, whether that be in Northern Ireland or in the Republic of Ireland. It is that arrangement that can better serve how we do that and of course through Articles 40 and 41 of Schengen that is a principle, but the Republic have not to date taken on board either of those two issues. From my area of business it is to avoid frustration of evidence that would be very important, that may or may not be admitted by the courts should they see the test of fairness to come into that.

Q158 Stephen Pound: That is very interesting. When we have discussed this in the past we have tended to talk about issues such as hot pursuit and compatibility of telecommunication systems; are you saying that one of the principal issues for you is the admissibility, it is the legal status of the evidence seized or discovered, and that is the issue?

Mr Lauder: That is the issue. If we work on parallels we have to introduce international letters of request to recover evidence but if we have an agreement which has got a legal footing then we can deal with some of those issues as they continue into one jurisdiction from another without having trespassed into another Member State without authority. If there is executive action that needs to be taken in pursuit of the crime or in pursuit of the protection of members of the public then we need to be confident that our actions would not be seen or challenged as unlawful or inappropriate.

Stephen Pound: That is very helpful. Mr Hughes, in your memorandum to the Committee when you actually drew attention to this you almost underplayed it - and I am in no way implying that you are a natural underplayer - but additional evidence has just been given by Bob Lauder that we quite clearly do need to consider as a Committee. This is something that we need to revisit.

Kate Hoey: Just to add to that, that was very helpful and I was going to ask them too, then the Chairman in his usual way managed to get the question in first which was very good.

Stephen Pound: It was not intentional.

Q159 Kate Hoey: I wanted also to get a little bit more detail and it would be useful to have that in writing. Can I just ask, when you are dealing with the people that you deal with and you work with very closely on the other side of the border, do you get the feeling they would like this too but it is purely political?

Mr Lauder: From the conversations that we have had and certainly Mr Hughes has had with the commissioner and the conversations I have had with the deputy commissioners and the practitioners, the people who actually get engaged in the operation, I think they would see that as helpful. SOCA is the new kid on the block and arrangements between PSNI and An Garda Siochana are there, they exist and have done for a long number of years so quite clearly the area of business that we deal with sometimes is somewhat different and, as I say, we have yet to fully establish the business lines between the two organisations, but the conversations we have had have been very positive from their point of view.

Mr Hughes: If I could just support and help, Chairman, we have produced an assessment which I cannot give to you at the moment because it is a very sensitive document, but what we will do is we will try and desensitise the issues to pull out why we think this is very important and why the commissioner in An Garda Siochana thinks it is important. What you are seeing - and it goes back to your very first question about how things are developing in serious organised crime, we are seeing this land border between the EU and the United Kingdom as being exploited for many reasons - and we all know about oil and other types of smuggling for VAT and tax evasion, but there are other ways: for example, people can be brought into the Irish Republic, they cross the border and can be trafficked into the UK because there are no controls once that happens. There are areas where things are going the other way from the UK into Northern Ireland and across into the Irish Republic, and that was the point I was making. There is a commonality here of impact of serious organised crime on both the United Kingdom and the Republic and that is why they want to work effectively because they are committed, as we are, to preventing harm being caused in their communities.

Q160 Mr Grogan: How do you decide how to apportion the assets if you have a joint operation south of the border; who would get what so to speak?

Mr Hughes: We have done this in other areas - I can feel this is one of your questions, David.

Mr Armond: At every stage where there is a joint investigation or an investigation against assets that cross jurisdictions we agree at the start what the split might be. There is an example of where we have repatriated funds that were actually seized in Manchester back to the Republic to meet a tax bill, so it is a bilateral arrangement on a case by case basis.

Q161 Stephen Pound: It is quite remarkable to think that the crooks will be sitting around before they commit a crime working out the division of spoils and you are pretty much pals with everybody, except on the side of the angels.

Mr Armond: It is fair to say that from our perspective we see the removal of criminal funds as essential to our fight against organised crime, to remove operating capital and to ensure that crime does not pay. Whether the assets are taken away by ourselves or by another jurisdiction really is irrelevant as long it is out of their hands and out of their pockets.

Stephen Pound: We would agree with that, it is absolutely correct. Mr Anderson.

Q162 Mr Anderson: You have brought together three public sector groups, Mr Hughes, and you are also dealing with two public sector groups in the Republic. How do you decide who is going to take the lead, is there a criterion or do you sit and talk about it or what?

Mr Hughes: This will be an area where with all multi-agency work it is decided in a gold, silver, bronze structure, so at the gold level, the strategic level, you would decide who is going to take the lead, who is going to take primacy, in relation to a particular matter. The reasons for that can be many; one agency may be further ahead with the intelligence gathering, who have been dealing with it for some time, it may be a geographical issue that they are better placed to deal with where the main protagonists will be operating, it may be because - for example with SOCA now - where there is a money laundering or financial aspect to it then people may allow us to take the lead because we are further advanced and have a bigger set-up in relation to financial investigation as well. In every one of our investigations in SOCA, not only when we are looking operationally to put people before the courts, we are also running a parallel financial investigation at the same time. This is not an add-on or a bolt-on, it is done at the same time. To answer your question, there can be multi-criteria but we are not precious about who does it.

Q163 Mr Anderson: How does it work in practice? Have there been any conflicts?

Mr Hughes: No. One of the issues that I was pleased to see, and I am sorry it may sound as if I am digressing, in the recent Green Paper the Home Office has recognised that the setting of targets does not always help. The danger that we have had in the past in law enforcement is that different areas of law enforcement have been set competing targets; this is not a recipe for collaborative working. In the absence of those now we are finding it much easier to work in collaboration. Measures of effectiveness, yes, we are all signed up to that, but setting targets does not always help, so that has taken away some of that issue.

Q164 Mr Anderson: Mr Lauder, I believe you are responsible for Scotland and Northern Ireland.

Mr Lauder: Yes.

Q165 Mr Anderson: Does that give you problems in terms of the skills and resources you have in Northern Ireland actually doing the job you want to do? If that is the case do you therefore rely on the other bodies to support you?

Mr Lauder: I do not think it presents a particular problem because we do make great play on working in partnership and working together and where there are strengths and weaknesses we would look to get support from, if it was in Ireland, from PSNI or HMRC so it is a mutual benefit. There are some areas where we may have more developed technology than others and on the other side there will be areas where we really need to work in partnership to get the support we need from police forces both in Scotland and in Northern Ireland. The legislation in Scotland is fairly defined in terms of how we operate there and during the three years we have been in existence we have benefited greatly from that partnership working. It is about realisation of common goals; we are all there to do the same things, we are not in competition. If the objective is achieved in terms of harming those criminals who are active then that satisfies our need, so it is about mutual support and using the assets we have in terms of the skill base for our staff or technical skills or whatever, and it is to use them to the best effect in the area that we need to deploy them.

Mr Hughes: It is an important question because of course SOCA being a UK-wide law enforcement agency means that all the resources are available wherever they are required and we do not operate necessarily on a geographical basis. Yes, we are based in geographical offices purely because we have to be somewhere, but that means we can operate everywhere within the United Kingdom and indeed we have back-up teams for our liaison officers overseas: if they run into issues then we can send officers out to them, and we did that recently in a case in Sierra Leone where we had a fast reaction team that were able to go to their support as well. The answer to your question is we will put the resources in. The second point is - and I do not know whether this is where you are going but it may be important in the context of Northern Ireland - that we would not operate without letting the PSNI control know where we were and what we were doing. It is a very strong working bond between ourselves and PSNI in that regard.

Q166 Stephen Pound: One of the difficulties we have as a Committee is that you are the people who are actually doing the work on the ground, you are looking the enemy in the eye as it were, and we tend to be looking at flow charts, plans and diagrams. We are talking about five different organisations in two different countries, working together with a certain element of co-ordination such as the Organised Crime Task Force and the co-ordination on the basis that you have personal knowledge of your opposite numbers. The nobility of the sentiments expressed by Mr Lauder are appreciated, I am sure, by the whole Committee but in practical terms how does it work? Is the system robust enough to cope with a system that does not enjoy the cross border amity that exists at the moment and how do you decide on the leadership of the organisation in the three bodies in Northern Ireland?

Mr Hughes: We have clear memoranda of understanding with our colleagues in the other agencies and that is what we are developing with our colleagues in the Irish Republic. There are protocols which we follow and, you are right, in most instances this is one of those areas where you cannot solve it by a formula, you do need to have personal relationships, and that is why it is important that Bob has that role in Scotland and Northern Ireland to do with any particular issues that may emerge. There is enough work out there, no one needs to fight for it, so we are not in competition for grabbing jobs, but it is around who is best placed to deal with it and over a period of years it has become quite apparent to everybody that you only succeed by working together. We have taken a deliberate stance in SOCA - and I know others do the same - which is that we are not intending to operate in competition. We try and fill particular niches where others cannot operate or it would be prohibitively expensive for them to do so, or it is not within their remit to do so, so we bring partnership and leverage from that rather than getting in the way of each other. I can only give you that answer; at the end of the day you pay people like me to make sure it works operationally and that is what we are doing.

Q167 Stephen Pound: I am certainly not being critical. We took evidence from then Assistant Chief Constable McQuillan and we realised very quickly that a great deal of the efficacy of his department was based on the fact that he knew the people, and whereas that was marvellous while Mr McQuillan was in post we had to think to the future. You are saying that you have sufficiently robust protocols and memoranda of understanding that could survive a change in personnel.

Mr Hughes: Yes.

Stephen Pound: That is reassuring - personnel transition is the expression I was looking for. Mr Anderson.

Q168 Mr Anderson: Most of us probably agree that if you talk about targets they have probably been given more emphasis than they probably should have but at the other end of the scale is results. Can you assure us that what you have put together in quite short timescales is performing better than previously and, if it is, where is the evidence?

Mr Hughes: The simple answer to that is yes, it is performing better than it did before. That is no criticism of what went before, it is because we have a bigger agency in order to do that, and I am talking about particularly about asset recovery in Northern Ireland, that is what we are primarily dealing with here. The results we publish every year in our annual report which we lay before Parliament and we gave an undertaking that we would show aggregated results and also where we have been working in Scotland and Northern Ireland also, and those figures will be put together and reported upon at the end of the year. All of the agencies through the Organised Crime Task Force in Northern Ireland aggregate all the figures together, so they are not split between various agencies in that regard. We will demonstrate what we have done across the United Kingdom and where it is possible - because obviously we operate as a complete unit now rather than separate entities - we will try and break it down but in the main the report will be the sum of SOCA's work on asset recovery across the United Kingdom.

Q169 Kate Hoey: The Chief Constable suggested, when he was talking to us, the need for a change in the law dealing with something you have already mentioned, the human trafficking. What sort of changes do you think would be effective?

Mr Hughes: This may be an area where we might want to talk to you privately at the end because obviously telling you where there are problems now just gives the game away.

Q170 Kate Hoey: Is it a growing problem?

Mr Hughes: It is a growing problem, and again this assessment that we have produced will be of use to you as well in giving a bit of colour to the discussion.

Q171 Kate Hoey: Could I just turn to looking at dissident republican groups? Again, Hugh Orde told us that it was at its highest level in something like six years, both the Continuity IRA and the Real IRA - whatever that is. Clearly a lot of this organised crime is directly linked to paramilitaries and to the funding of organisations whose interest is, long term, to probably cause all sorts of mayhem and whatever. How difficult is it for you to get information still in certain parts, particularly along the border, from people who are actually in fear of giving information because the kind of people that you are after are still active in their communities, still beating up people? Indeed, we had the case just last week of William Frazer who was practically abducted - an attempt was made to abduct him in broad daylight in County Armagh. Some people's attitude is that people get away with this sometimes because there is a fear, and there is also a fear at political level of actually not wanting to rock the boat and upset some of these godfathers who may be at the moment not doing the things that they have done in the past, and it is almost a kind of look, let them get a little bit of this because if we give them so much on one side then perhaps we will be able to keep the peace for a bit longer.

Mr Hughes: I will start if I may and then let Bob join in, I am sure he has got plenty that he can add to this. We are dealing with serious organised criminals and however they dress themselves that is what it is about, and we are seeing more and more the money-making which is what serious organised crime is about, and they will move into all those areas of business where that can happen - drugs, trafficking of people, tax evasion, all those areas. So we will work with other agencies, HMRC, as we have done successfully with the oil scams that have been perpetrated recently, and with PSNI, and we are clearly working all the time very closely with PSNI to keep track on where they are and what is going on. We operate against serious organised criminals elsewhere and, like all of those, it is a hostile environment within which to operate so we use many different techniques including intrusive surveillance, right across to Crimestoppers, the use of informants and all the other paraphernalia that we can draw upon. We have the advantage now as I say because we are also the only UK law enforcement agency that can operate overseas as well as internally in the UK, and that is particularly important when you think about drugs and the trafficking of human beings because they do not originate within the United Kingdom, by definition. Also, if you are looking at money laundering and assets and proceeds of crime then we need to go overseas and because we are the UK FIU, the Financial Intelligence Unit, we have MRUs around the world with other FIUs so if people seek to move their ill-gotten gains elsewhere in the world then we will take it and go with it as well and we can operate operationally overseas and work with other law enforcement agencies to arrest them and bring them back. We also administer the European arrest warrants on behalf of the UK as well, so we have a pretty powerful arsenal there to deal with it. You are right though, it is not easy, and in areas as you have described we have to look at ways, pretty well developed ways now, that we can start to determine and get information on which to base our operations. That is why it is so vitally important - you made the point several times - that we need to work in co-operation with the agencies both in Northern Ireland and in the Republic, and that is what we seek to do. I do not know if you want to add some flesh to that, Bob.

Mr Lauder: You are right, it is very difficult and it is very, very sensitive. We have got very good legislative gateways that allow for information-sharing.

Q172 Kate Hoey: What do you mean by very sensitive?

Mr Lauder: Sensitive to the communities and to the harm that is caused in the communities. The instance that you raise about the individual you mentioned, he is particularly vocal and brings himself to the attention of the communities.

Q173 Kate Hoey: That does not mean you should attempt his abduction.

Mr Lauder: Not at all, but it is about being effective and being capable of dealing with that without creating further trauma for the communities we work in, and we have to take very, very great care on how we gather that information or intelligence. Mr Hughes has described some of the areas we do it in; we will share intelligence with other organisations and it may well be that there will be intelligence that can be used in the North that will be garnered from the South, from the Republic of Ireland, from the An Garda Siochana. These people do not operate in isolation; they have to operate in connection with other people to further their own objectives, especially in terms of gaining assets, so we will put together a collection plan for the intelligence and we will take care that we do not miss opportunities to harvest that from elsewhere. Practically deploying people to gather intelligence in some of those areas is something that we would not contemplate because of the sensitivities and dangers involved, not just for our own staff but for others.

Q174 Kate Hoey: Is that why there is a perception that people who are well-known in the community have been reported perhaps informally many, many times but still seem to get away with it?

Mr Lauder: That is historic and there is probably some reason for that, but the baseline that I would seek to achieve is that criminality is not excusable and there is no benefit to any civilised society to allow criminality to expand and prosper because there is no rule of law extending towards it. We have to take great care in how we do that because what we are here to protect are the communities, but as far as having a carte blanche to do what they want because law enforcement is restrained to doing something about it is something which I would not seek to support. We do need to be sensitive but we need to be seen to have the rectitude to stand up and do what we must do.

Q175 Stephen Pound: That is very helpful. Could I just possibly mop up on a couple of earlier points that we raised? You mentioned, Mr Hughes, the issue of thresholds earlier on. How do you work on local priority targets because there has been a suggestion that maybe the thresholds are lower in your area than they are in the rest of GB? Do you have a priority target system which has a threshold or a trigger?

Mr Hughes: I am sorry, I do not quite understand. I am the DG of the UK-wide SOCA.

Q176 Stephen Pound: The comment has been made that the thresholds are lower in Northern Ireland than they are in GB partly because of local prioritisation so do you, for example, use the anticipated value of seizure of property as a threshold?

Mr Hughes: I see where you are going. David is probably the best person to answer.

Mr Armond: There was some concern expressed at the time of the merger over what we might do with potential referrals and if I could give you some reassurance, obviously one of the reasons that there was some difficulty for the Assets Recovery Agency was as a result of the NAO report and the subsequent Committee of Public Accounts hearing. The use of civil action as a tool is extremely expensive and there had to be, perhaps, some more robust decision-making about when it was right to deploy those particular tools because it is a very expensive process. Now that ARA is part of SOCA we have a much wider toolkit which includes criminal investigation and using criminal tools under the Proceeds of Crime Act to prosecute and then get confiscation orders in a criminal court, but we still use civil recovery powers. However, because of the PAC recommendations clearly we have to take a view about whether or not this is going to be a cost-effective manner in dealing with issues, but it is correct to say that the threshold that we use in Northern Ireland is slightly different because we concentrate more. If we feel that the harm reduction value and the community confidence value of taking action in a particular way, say to use civil recovery powers, is worth it then we will run the case at a loss. That is particularly relevant when we consider the kind of targets that we have just been talking about; if there is an opportunity to take them and take their assets then we might be looking at a much lower threshold.

Q177 Stephen Pound: With respect, Mr Armond, when you are talking about things that are almost intangible you are actually talking about a local perception. You are talking about crime reduction having a benefit in community terms that is beyond plain old-fashioned policing - not that you are plain or old-fashioned or policemen.

Mr Armond: Thank you.

Q178 Stephen Pound: But who makes that decision?

Mr Hughes: There are three old-fashioned policemen here as well. The point you are making - and this is what I tried to explain very early on - is that the role of SOCA is to reduce the harm caused to communities and we have gone away from this old business of how many people you arrest, how many drugs you seize, how much money you put in the tin box. The essence of all of this, and this is the point that David operates on, is, is this an individual who is causing serious harm in the community and, if so, that means they are a proper target for us to go after and in certain circumstances we accept that actually it may be very expensive to do so but it is worthwhile in terms of the harm caused to the community. Obviously we are dealing with taxpayers' money so we are not knights on white chargers who can go to the aid of anybody, we have to think carefully about how we spend that money. What we have been able to do though, and this is why we have the proceeds of crime operation that we have, is we have looked at widening the area because we now have both civil powers and criminal powers and I have inherited the powers that the director of the Assets Recovery Agency had in relation to being able to put a tax assessment on people. All of this means these are cost-effective ways of really hitting their money flows.

Q179 Stephen Pound: Before I ask Mr Simpson to come back in can I just for the record ask the question, the Home Secretary at the time of the merger said that there would not be any reduction in resources. Has that been your experience?

Mr Hughes: We have not reduced any resources, all of the Assets Recovery Agency staff who wanted to come to us ---

Q180 Stephen Pound: I was thinking of the central government payment in terms of your funding.

Mr Hughes: Funding for the Serious Organised Crime Agency.

Q181 Stephen Pound: Yes.

Mr Hughes: No.

Q182 Stephen Pound: We are reassured to hear it.

Mr Hughes: I am hoping that will continue as well.

Stephen Pound: It is one of the reasons why we are putting it on the record. Mr Simpson.

Q183 David Simpson: My last point is just to quote the First Minister recently when he said he was not convinced that we were getting the same response from SOCA and delivery as we were from the Assets Recovery Agency. If he was here today how would you convince him that is not the case? It is a hard job to do.

Mr Hughes: I would hope that he would ask us because that is the first I have heard of this I am afraid, it has not been brought to our attention formally. We work with the Organised Crime Task Force in Northern Ireland as you know and the minister, Paul Goggins, is chairing that group. He knows the results that we are achieving - in fact, when I was over there two or three weeks ago the first thing he said was to congratulate us on the work that we have done, which is a vast improvement in terms of the amount of money that we have seized from where we were before. Again, this is not a criticism, it is because we can operate with much wider and better resources than the Assets Recovery Agency were able to do before. We have the same people who were there before working now with SOCA officers in terms of how we can deal with that, so my answer to that would be come and have a look at what we are doing, come and see what we are doing. When we publish our results, as we are accountable to Parliament for those results, you will see the difference and if you want to talk to Paul Goggins then he will tell you, because he has access to the information that we give in confidence to the Organised Crime Task Force.

David Simpson: We will take up that offer, thank you very much.

Q184 Kate Hoey: I think he was referring to the different levels of crime in a small area like Northern Ireland and that that was different now than what it was under the old regime. This was an oral question.

Mr Hughes: All I would say is that we have actually brought another law enforcement agency into Northern Ireland that was not there before, because what we had before was the National Criminal Intelligence Service office there which was non-operational, and we have now supported HMRC and PSNI so we have an operational arm that was not there before as well.

Kate Hoey: Perhaps you could have a cup of tea with him; it is his birthday today.

David Simpson: Nothing stronger, but go and have a cup of tea.

Q185 Stephen Pound: It is worth saying that HMRC were rather more complimentary when they gave evidence and certainly we heard from John Whiting who talked about an excellent level of co-operation. You mentioned the Organised Crime Task Force, do you think that is providing a useful forum for co-ordination within Northern Ireland and with your counterparts in the Republic?

Mr Hughes: It is a very good model and in fact we are talking over here with the Home Office about establishing a ministerial approach from different government departments to how we take our work forward, because of course when you are dealing with serious organised crime this is not just a Home Office or a law enforcement aspect, we need the support of the FCO when we operate overseas, with Treasury, with DWP with all the other machinery of government in order that we can (a) gather the information and intelligence that we require and also because it is in all their interests to look at how serious organised crime are penetrating their information and perpetrating frauds. For example, some of the work that we have already done has been on tax credit fraud and being able to assist HMRC with bringing serious organised criminals to book who were exploiting those systems. So all government departments are under attack from serious organised crime as well but they all have various things that they can bring to the party in terms of being able to deal with the impact that serious organised criminals can have, so I see it as a good model.

Q186 Stephen Pound: Mr Simpson has got to catch his plane and has asked me to apologise for the fact that he is leaving. One of the questions he wanted to ask was about the cross border criminal activities of dissident republican groups which clearly means a great deal in his constituency - Continuity IRA, the Real IRA and other organisations are at a very high level of activity at the present time. What sort of mechanisms do you use to co-operate with An Garda Siochana and the other agencies in the Republic of Ireland to get information on this sort of cross border activity, bearing in mind, to use the word that was mentioned earlier on, the sensitivities?

Mr Hughes: Again, I will let Bob explain the practicalities but the essence of being able to deal with this is gathering the right intelligence and being able to assess and analyse that intelligence and that is why another major part of SOCA is around our intelligence gathering operations, both covert from surveillance and technical means but also from obtaining intelligence information from other sources such as police and law enforcement agencies in other countries. We are fortunate in that within our legislation we have gateways built in that enable us to share and recover data from other law enforcement agencies in other countries in order to deal with serious organised crime. That is the first thing, to build up that intelligence picture, and then to find the best way in terms of operational approach. It may not always be towards a criminal justice outcome, it may be in terms of disruption or dismantling or simply being in a position where we can destabilise the particular organised crime enterprise from being successful in what they are seeking to do. For example, you can make sure that you can put preventative measures in place if people are intending to cross the border with certain contraband at certain times and they get captured in that. The point there is not to make a recovery so much as to find the way back to the main protagonists who are running this particular organised crime enterprise in the first place, which is what SOCA was set up to do. This is not to deal with the low level stuff, it is to try and find our way back to the main players and put them out of business, and that is why it is a very much more complex picture because you will not catch them necessarily hands-on with the offending articles - the drugs or involved in the tax evasion or the contraband cigarettes or the people they are trafficking, but they will put their hands on the money at some stage as well. If we can show conspiracies and show the activities that they are involved with then we will take them to criminal justice outcomes and we will also seek wherever we can to ruin and destabilise their business.

Q187 Stephen Pound: Mr Simpson wanted to ask about the dissident republican groups. The traditional model, going back hundreds of years, was that you hold up a post office to buy the arms to commit an atrocity. Do you find that there is an overlap between overt criminality and dissident groups, the former to fund the latter? Is that your experience?

Mr Hughes: As I said before we deal with serious organised criminals however they manifest themselves or portray themselves, so what we are looking at is criminal activity that they engage in. Obviously the point you are making about whether they are a dissident group, that is important intelligence information for us because it gives other linkages into other agencies that may be able to assist us. Bob, I do not know if you want to go forward on that one.

Mr Lauder: It is again back to this information sharing and intelligence sharing and it is about taking the opportunity to gather these intelligence things and the intelligence that comes in, whether that comes in to An Garda Siochana, whether it comes in to HMRC or whether it comes in to PSNI or SOCA indeed, and to brigade that together to get the most effective opportunities. The problem you are looking at is does serious organised crime fund the criminal activity that they are actually exhibiting towards the communities. In truth it probably does and if you can remove that criminality from it then you destabilise their ability to impact on the areas of violence that they do. It is an ongoing process and it is some time down the road, it is about developing our skills in terms of that gathering of intelligence. Intelligence is worthless on its own unless you can turn it into executive action, so we have to be prepared to think outside of the box, to make sure that we take most advantage of that intelligence and turn it into tactical opportunity, so we are working hard on that and we are seeking a wide range of co-operation from our partners in doing that. It is a very productive area that we need to exploit even further than we are doing just now; that is something that we need to move on to.

Mr Hughes: I would not want you to think that we are hedging around this and the point you are making is quite right, but the important aspect is that in order to deal with these matters we have to deal with it as a law enforcement agency, so whatever their ideals and whatever they portray as their ideals, they are committing crime and that is what we are going after them for.

Q188 Stephen Pound: One of things I would take from this afternoon is the Lauder doctrine that intelligence is worthless unless it leads to executive action or is shared. Before Mr Murphy comes in can I just say that we are making very good time but there may be a division in the House shortly. If there is the Committee will have to stand adjourned, but it is entirely possible that we can complete our evidence session before that happens. Could you indicate now whether you wish to speak to us in private?

Mr Hughes: There was a particular matter that Ms Hoey raised regarding trafficking issues.

Stephen Pound: That is fine. Mr Murphy.

Q189 Mr Murphy: Is the recent emergence of large scale cannabis factories down to indigenous criminals in the North and the South or is there growing evidence of involvement of gangs from Europe, Eastern Europe in particular?

Mr Hughes: This is a common problem that we are seeing elsewhere in the United Kingdom as well and there is a lot of background to this, particularly with Chinese gangs who are importing in the main Vietnamese or other south-east Asian people to run these hydroponic cultivation factories. In terms of what is happening in Ireland there are some areas there where clearly people are turning their hands to local cultivation because it is easier than bringing the drugs in. Our particular worry in Northern Ireland is that this is an area where it is being used certainly for bringing in cocaine now. There has been a very low uptake of cocaine in the past but this may change, and of course as you go into any form of recession there is always a danger that people will turn to drugs like heroin as well and there have been issues around heroin, particularly in the Irish Republic, real problems with heroin there. In terms of cannabis though I do not know what particular angle Bob may have on that.

Mr Lauder: Domestic cannabis cultivation has really expanded out from the Metropolitan Police area where there was a lot of activity and it caused a certain degree of displacement to provincial forces. Certainly in Scotland there has been a wide usage of domestic lettings to put in place these cannabis cultivations and the work that has been ongoing there has been fairly successful. That has spread across into Northern Ireland where to date they have had well in excess of 120 identified cannabis cultivations and they are dealing with that proactively. So it comes from experiences across the United Kingdom, it comes from Chinese-based criminality and it is not something that we have found a great number of the indigenous population to be involved in, it is more these ethnic groups which we find to be organising and managing and the illegal immigration of Vietnamese people to actually do the physical gardening of it. That is an experience that is common to England, Wales, Scotland and Northern Ireland and I am quite sure that there will be instances of that in other European countries.

Q190 Mr Murphy: Are you finding as part of the normalisation process that members of the public are more prepared now to share information with you than they would have been previously?

Mr Lauder: That is something which is growing. This is about criminality and it is encouraging the members of the public to have the confidence to come to us. They are the holders of the key intelligence because if they see a house which has been taken over and largely blacked out by curtains and whatnot, although they get probably a sunburn when they pass it, you can be pretty sure that there is cannabis cultivation going on inside. These criminals are fairly ingenious as to how they shield themselves from other law enforcement temperaments for finding that out, so the public are coming forward and the public are claiming the unusual aspects may be relative to criminal activity. That is very promising.

Q191 Mr Murphy: To paraphrase your words there, Mr Lauder, people will only continue to do this if they see action as a result of that information.

Mr Lauder: Absolutely, and that is what we need to feed back into the communities. They need to see law enforcement taking action, they need to see the result of that before they are going to have any confidence that when they report things to the police, to SOCA or to HMRC actually something comes out the other end of it and they are not disappointed or frustrated by continually having to ask what are you going to do about this, what are you going to do about it.

Mr Hughes: It is one of the areas where because, as Bob described, we are the new kids on the block our image or brand has not yet been widely accepted. We are looking at other ways in which we can build upon this intelligence and one of the partners that we have most effect with is Crimestoppers. They are extremely effective and useful and they provide a totally separate and insulated approach to getting intelligence and information in. The other point that Bob was alluding to just then and the point you were making is we have established within SOCA a community liaison side to our business. It is not about helping in sweetshops or anything like that, it is actually about making sure that we understand the community within which we are operating. Because we are, if you like, a UK-wide agency and not a locally based agency then we could go in and cause a lot of problems for the local police or other agencies in that area, if we operated an insensitive route, so we are making sure that we link in with their community liaison side before we operate in that area; it builds up a huge amount of intelligence. The other aspect that we are looking at is how we can put money back that we have recovered from serious organised criminals into more community-based approaches, and I would like to see a change in the way that at the moment recovered assets are dealt with. At the moment they go back to the Exchequer and into law enforcement through a complicated funding mechanism, but there may be some areas where we should be able to do some community benefit work with those proceeds of crime. That would then show members of the public that actually giving us the intelligence information against serious organised criminals is to the benefit of the community. That is more complicated; we have done a small bit of that because we have recovered some funds which we could not identify and no one would claim, surprisingly enough. We recovered them through the Police Property Act which allows us to make donations to charities and we have done that to both charities supporting the rehabilitation of drug addicts and also communities for supporting the victims of criminality as well. So there are some real examples and I know that PSNI and other police forces in the UK would dearly love to do that same work as well.

Stephen Pound: That is very, very helpful. Can I then suggest that the Committee move into private briefly to take this matter?