A Fine Gael TD has claimed that the authorities are turning a blind eye to illegal activity in the border area, and has suggested that it is motivated by what he called "appeasement".

Patrick O'Donovan was speaking during a debate at the British-Irish Parliamentary Assembly on a report dealing with smuggling and fuel laundering.

The Limerick TD said the illicit trade had replaced what he called a very nasty political underbelly and cited Sinn Féin leader Gerry Adams saying "they hadn't gone away you know".

Mr O'Donovan suggested that Sinn Féin was benefiting from the activities.

He said that while Fianna Fáil and Fine Gael could say where their money came from, there were question marks about the funding of some political parties.

Another Fine Gael backbencher, Martin Hayden, said paramilitaries had decommissioned their arms but they had not decommissioned their personnel.

Committee chairperson Senator Paul Coghlan said the illegal trade was worth hundreds of millions each year.

A report by the committee recommends a permanent multi-agency task force to deal with illegal activity and legal changes to prevent filling stations prosecuted in connection with illegal fuel reopening with months of conviction.

However, Sinn Féin MLA Barry McElduff told the meeting that the Garda Commissioner had written to his party to confirm that gardaí held no information to the effect that the IRA retained its command structure and was involved in smuggling fuel laundering and counterfeiting.

He said Sinn Féin unequivocally condemned these activities.

Fianna Fáil Senator Jim Walsh said that if the Garda Commissioner was in "denial", as he put it, that he would be happy to take her on a tour of the border area to show her what the committee had seen.

He said they had been told that a percentage of the takings from illegal activities went to what he called "the cause".

This had the capacity to distort the political landscape across the island and had to be tackled, he said.

Members of the British-Irish Parliamentary Assembly, which marks its 50th meeting in Dublin today, toured the border areas when compiling the report.

They visited PSNI and garda stations in Co Louth and Co Armagh, and were taken to up to a dozen fuel laundering operations that had been uncovered.

The inter-parliamentary body, which includes Westminster MPs, TDs and senators, has called for a crackdown on criminality in border areas.