A Northern Ireland car dealer arrested and freed without charge following a major investigation by customs has publicly denied any involvement in what is believed to have been one of the largest ever international tobacco smuggling scams.

Bob Mullan, who runs a car dealership in Ballykelly, Co Londonderry, was one of three people arrested during raids by HM Revenue & Customs investigating the smuggling of hundreds of millions of cigarettes from the Far East into the UK and the Republic. The raids were part of an 18-month probe into suspected tax evasion and laundering the proceeds of crime.

Mr Mullan said he was “shocked” by his arrest and said he had co-operated fully with the authorities.

In a statement issued through his solicitor, he said he denied any involvement in any fraudulent evasion of custom monies.

“I strenuously deny any involvement, directly or indirectly, with any issues concerning illegal importation of cigarettes or laundering of criminal assets,” Mr Mullan said.

“I strenuously deny any involvement in any fraudulent evasion of custom monies. I was shocked by what happened yesterday (Tuesday) and have instructed my solicitors and accountants to deal with the matter.

“I co-operated fully with the authorities and will continue to do so. I was released with no conditions pending a full report being prepared.

“Since yesterday I have been inundated with attention, which has led to serious upset due to inferences about which I am totally innocent and which I am totally denying,” Mr Mullan added.

The car dealer and another man from Co Derry were detained but released without charge on Tuesday. A third man from England was also arrested.

The arrests were made following the search of private and business premises by HMRC officers on both sides of the border and in Cambridgeshire.

During the raids — on one business and two private addresses in Londonderry and a business in Cambridgeshire — officers seized documents, computers and mobile phones.

The Criminal Assets Bureau in the Republic was also involved, carrying out raids in counties Cork, Meath and Louth.

John Whiting, assistant director, Criminal Investigation, HMRC, said they believed it was one of the largest ever international tobacco smuggling operations they had intercepted.

Mr Mullan runs a successful car dealership in Co Derry. In 2004 he presented Nadine Coyle with a new C Class Mercedes as a gift for passing her driving test.

At the time he said: “Nadine’s a great girl. She’s a real home grown Pop Idol and deserved a treat.”

Meanwhile it has emerged that customs officers seized eight and a half million smuggled cigarettes at Belfast docks. The find on Tuesday night, said to be worth about £5m, had been smuggled from China. A man was arrested but released without charge