The name has changed but Customs is still failing

For its last few years Britain's most powerful law enforcement agency was dogged by controversy over bungled investigations. The collapse yesterday of the mobile phone fraud prosecutions suggest that problems persist with the newly created HM Revenue and Customs.

The Customs service suffered a potentially lethal blow to its morale in 2002 with the fiasco of its investigation into the London City Bond warehouse, where there was a suspected racket avoiding duty on beer and spirits.

Fifteen cases involving more than 100 defendants were taken to court in Liverpool. But they all collapsed amid doubts over the Customs' main informant.

The fiasco led Norman Lamb, a Liberal Democrat MP, to describe HM Customs as "out of control, behaving as if it is above the law''.

The case was followed by the collapse of the trial of three men accused of £500,000 of duty fraud in Glasgow.

Then a Customs prosecution at Kingston Crown Court failed.

The convictions of Kenneth Togher, 34, and Brian Doran, 53, from Glasgow, were overturned in 1999 because of problems with another Customs investigation. Charges against them were dropped when a retrial heard that Customs officers had planted bugging devices at the Swallow and Lanesborough hotels in central London without permission.

The Office for National Statistics piled on the embarrassment in 2003 when it said HM Customs and Excise had failed to discover a scam under which mobile phones were being reimported by criminals who were claiming VAT each time.

It was that case that led to the investigation that fell apart yesterday, a reminder of the former agency's troubled past.

The new merged department is structured, as far as possible, around customers rather than taxes, and tries to identify economies of scale. But it will need a fundamental rethink of how investigations are conducted if it is to avoid the public relations disasters of the past.

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