Taxing Crime: A New Power to Control

Professor Raymond Friel and Professor Shane Kilcommins

“The power to tax involves the power to destroy”.

(McCulloch v Maryland 4 L. Ed. 579 at 607 (1819) per Chief Justice Marshall)

The story of Thomas ‘Slab’ Murphy

Though never convicted of terrorist activity, Thomas ‘Slab’ Murphy was allegedly an important figure in the South Armagh Brigade of the IRA in the 1970s and 1980s before being elected Chief of Staff of the IRA in 1997.   His farm straddles County Armagh and County Louth, the border between Northern Ireland and the Republic of Ireland. The British army observation towers along the Border hills were allegedly constructed, in part, to keep surveillance on Murphy’s IRA operations.  In 1998, he took an action for libel against the Sunday Times  which published an article in which it was alleged that a ‘farmer in the Republic’ known as ‘Slab Murphy’ was the operations commander for the IRA in Northern Ireland and was ‘likely to have had to approve’ a bombing campaign in seaside resorts in the UK. A Dublin jury held the Sunday Times had proved that the words complained of were true in substance and in fact. The claim of Murphy was, accordingly, dismissed.

In March 2006, it took 400 British and Irish soldiers, PSNI and Garda officers and officials from the Criminal Assets Bureau and the British customs and excise to mount a dawn raid on his farm which is located on both sides of the border. Almost £200,000 in mixed currencies had been found on the land, in the house and in sheds, along with 30,000 cigarettes and 8,000 litres of fuel. It also emerged that black bags hidden among hay bales in a cow shed contained cash of €256,235 and £111,185 and uncashed cheques worth €579,270, £80,000 and 24,000 in old Irish Punts. More than 30 archive boxes of documents, ledgers and cheques were seized on the farm along with computers and separate hard drives. In the yards, three tankers and a truck with a fourth tanker concealed inside it were impounded along with an oil laundering unit. Nine properties in north-west England were recovered by UK authorities. An agreed legal settlement took place in October 2008.

In October 2005, the then head of the Assets Recovery Agency (ARA) in the North, Alan McQuillan, was at a high- level meeting in Clontarf Castle Hotel in Dublin with North-South politicians, police, revenue, Assets Recovery Agency  (ARA) (as it then was called) and Criminal Assets Bureau (CAB) colleagues. He noted as follows:

We were chatting when suddenly one of the Garda officers came to me and said: ‘Come and see this quick’… On the TV was Slab Murphy standing outside his solicitor’s office with the solicitor reading a statement on his behalf where he said he had absolutely nothing to do with [properties in] Manchester, he knew nothing about it, and that he was a ‘just a farmer’, he said. My colleague in the Garda turned to me and said: ‘F*** me, we’ve got him.’ He virtually leapt in the air. I said: ‘Sorry, what do you mean?’ And he said: ‘For years he’s been refusing to put in tax returns, saying that he had no occupation. He has just admitted on national TV that he is a farmer. We now have enough evidence to open a tax-evasion case against him.’ That statement was the trigger for the whole investigation,” said McQuillan.

In December 2015, Murphy was found guilty on nine counts of tax evasion following a lengthy investigation by the Criminal Assets Bureau. In February 2016, he was jailed and sentenced to 18 months in prison. What seems striking about this is that for all of the legal, extra-legal, and military powers of the authorities in Northern Ireland, England and Wales, and the Republic of Ireland, it was civil and criminal tax provisions that were ultimately used to bring him to account.

What can the vignette tell us?

We believe that the vignette demonstrates, to begin with, that the taxation of crime is part of a new actuarial approach to criminal wrongdoing. Its appeal lies in its permanency and low visibility efficiency. It forms part of a networked rather than hierarchical model of governance, one that is not limited by national boundaries. It has a fluid arrangement which ensures that it can penetrate most aspects of everyday life, making resistance very difficult. This is copper fastened by the disequilibrium in power relations – the onus is very much on the subject of a tax audit to demonstrate compliance. Moreover, the taxation of crime is not designed to produce a ‘socially engineered solution’, to make the wrongdoer better by correctionalist intervention and normalisation. Unlike modern criminal justice practices which focus on the ‘soul’ of the offender, taxation instruments attempt to permanently alter the criminogenic networks that exist around the individual, thereby neutralising the possibility of future bad choices. In this regard it is pessimistic about the normalising potential of modern criminal justice practices. It is also pessimistic about the capacity of States to ‘win the war’ on crime. In taxing crime, there is an implicit acceptance that it will always occur. Sharing in the profits of such activities is simply a late modern, pragmatic response to the reality of living in high crime societies.

This piece is a shortened version of chapter submitted for consideration in an edited collection of essays entitled, Handbook of Criminal and Terrorism Financing Law. The book will be edited by Dr Colin King, Dr Jimmy Gurule, and Professor Clive Walker, and it will be published with Palgrave in 2017.

Professor Raymond Friel is Director of Research and Director of the International Commercial and Economic Research Group, based in the School of Law, UL

Professor Shane Kilcommins is Head of the School of Law, UL