Fine, suspended sentence in €4.4m heating scam

A retired Mayo businessman and chairman of the Connacht Oil Promotion Federation who was involved in a west of Ireland home-heating fuel price-fixing scam has been given a six-month suspended sentence and ordered to pay a €15,000 fine.

Judge Katherine Delahunt at Dublin Circuit Criminal Court said JP Lambe had participated fully in this criminal activity and was an experienced business man. She said that "without his talent, acumen and knowledge this kind of distortion could probably not have functioned at any significant level".

The court heard that as a result of the cartel’s price-fixing, the cost to the public was possibly €4.4m per year and prices were perhaps 10% higher than they would otherwise have been.

Lambe (aged 69), of Brookhill, Claremorris, pleaded guilty to two counts of aiding and abetting an oil company to enter agreements within the meaning of section three of the Competition Act 1991 to prevent, restrict or distort competition and thereby directly or indirectly fix the selling price of gas oil and kerosene.

The former treasurer of Mayo GAA county board and Mayo representative of the Central GAA Council took an unpaid and part-time position as chairman of the federation which agreed to fix prices. Lambe had a long career in the oil industry and was approached to act as an independent arbitrator to facilitate agreement between oil distributors in Co Galway.

Mr David McFadden, a solicitor and officer of the Competition Authority, told Mr George Birmingham SC, prosecuting, that he led an investigation into the activities of "the great bulk" of oil distributors in Galway.

Mr McFadden said that ostensibly competing companies in Galway came together under a trade association called the Connacht Oil Promotion Federation and entered agreements to fix prices.

Mr McFadden said that while the Competition Authority had not gone into the actual effect of the price-fixing, the estimated cost to the public was possibly €4.4m in a 12-month period and it was possible that prices were 10% higher than they would otherwise have been.

The investigation revealed a high level of conformity across many distributors in the area and meetings were held to agree a tiered pricing structure. Between June 2001 and February 2002 Lambe chaired 18 meetings across Galway city and county.

Mr McFadden said that due to the fluctuating price of oil on the world market, wholesale price changes meant that members of the cartel had to meet to agree new prices.

Lambe booked rooms, chaired meetings and took minutes. Agreement between members of the federation broke down from time to time due to a temptation to break ranks. Lambe arbitrated disputes, encouraged members to maintain discipline and was allowed access to distributor's records and delivery dockets.

The Competition Authority was made aware of one such dispute and carried out surveillance of a meeting in Loughrea involving two distributors and Lambe.

Mr McFadden said there was a "high level of participation" among distributors although a small number refused to become involved. Lambe sought to induce those not involved to join the cartel. Connell Oil was one company which was approached but declined to join.

Criminal proceedings were instigated in Galway Circuit Criminal Court in June 2004 and a number of defendants succeeded in an application to have their trials moved to Dublin. Lambe gave notice ahead of his trial date that he would plead guilty.

Judge Delahunt heard that penalties for the offence were a fine of up to €3.8m or 10% of turnover and two years in prison.

Mr Roderick O’Hanlon SC, defending, said his client owned his own home, was on a pension and had €250,000 in the bank in his and his wife's name.

Lambe, who has no previous convictions, had been involved in the oil industry initially as a driver and ultimately as an owner of his own oil company. He retired due to a heart condition some years ago. He was approached to become chairman as he knew the Galway oil industry well and was seen to be independent as he was no longer selling oil and would not profit from the agreements.

Mr McFadden agreed with Mr O’Hanlon that Lambe was unpaid, only recovered expenses and was not party to the illegal gains made.

Judge Delahunt heard that two other entities involved in the scam were dealt with by Galway courts last week. One awaits sentence while the other was fined €3,500.

Mr O’Hanlon said this conviction had had a unfortunate and stressful effect on his client and resulted in increased health difficulties. He said Lambe was a family man and well known and respected within his community and now had to suffer the embarrassment of his criminal conviction.