It all started with a fine example of a diligent public servant at work. In June 1997 Sam Gill, an assistant principal officer in the Revenue Commissioners' office in Limerick, was doing the routine job of processing a VAT return form.

The form was checked and, because something suspicious caught the officer's eye, checked again. The snag on the form was the thread that soon unravelled the biggest fraud of its kind in the State.

The Garda arrested Brendan O'Doherty in Ennis, Co Clare. He was just about to collect a cheque for £3,823,716 issued by the Revenue Commissioners on foot of the dodgy VAT return.

Sam Gill's smart work had saved the public purse almost £4 million, enough to take a few hundred long-suffering patients off the waiting-list or to teach a few thousand neglected people to read and write. It was a triumph for the much-maligned bureaucracy, a timely reminder that those who do the unglamorous work of running the State can have their own kind of heroism.

Or at least, it would have been if the Garda investigation had not then led all the way back to the same Revenue office in Limerick where Sam Gill had first examined the suspect VAT return. For it turned out that the key figure in the scam was not O'Doherty but Gill's own superior, and manager of the State's entire VAT repayment system, Brendan Murphy.

And this week it emerged that in spite of being jailed for seven years for his part in the fraud, Brendan Murphy is still on the staff of the Revenue Commissioners and still being paid from the public purse.

Four years after he was caught in a clever conspiracy from which he stood to gain £2 million, the Revenue has not got around to sacking him. Since he is still formally a civil servant, his family remains entitled to draw an amount, which the Revenue will not disclose, from "hardship funds" paid from the public purse.

The explanation given to The Irish Times by a Revenue spokesman was that disciplinary proceedings against Murphy were still being conducted. If and when Murphy was dismissed, the family would lose the hardship payments. "There is no such thing as summary dismissal in Civil Service or public service employment, regardless of criminal conviction. There has to be another procedure that has to be gone through," he said.

It would be hard to think of a better example of snatching defeat from the jaws of victory. What ought to have been a model of public-service values in action has been turned into a unsatirisable image of bureaucratic absurdity.

With its unerring instinct for putting its worst foot forward, the Civil Service has ensured that what will be remembered is not the quick mind and speedy response of Sam Gill, but the lumbering logic that requires a four-year disciplinary procedure to decide whether trying to steal millions of pounds of public money is a sacking offence.

The obvious truth is that Murphy has already been through a disciplinary procedure. It is called a trial. Murphy pleaded guilty to the charges, and Judge Kevin Haugh was satisfied that he had "misused his power and perpetrated a gross breach of privilege as a trusted employee".

The judge found that the "very clever and ingenious" scam could have been carried out only with deep inside knowledge of how the Revenue Commissioners operated.

The crime, in other words, was not incidental to Murphy's job, but entirely entangled with it. A shop assistant who gets caught speeding home from work might still be a very good shop assistant. A senior tax official who uses inside knowledge to concoct a major tax scam is clearly not a fit person to be a senior tax official. The notion that it takes a convoluted and protracted procedure to establish this fact is deeply alarming.

There may well be, of course, a humanitarian case for helping Murphy's wife and five children, who are entirely innocent in the whole affair. Nor is there any reason to behave vindictively towards Murphy himself, who emerged from the court hearings as a troubled man with a long-term dependency on tranquillisers, a history of depression, and what a psychiatric report described as a "chronically compulsive, restless" personality.

In fact, however, Murphy's family is in a somewhat better financial position than the families of most convicted criminals. Murphy has substantial pension rights based on 18 years' service, and his family, quite rightly, has access to that income. If public funds are to be used to help the families of prisoners, there are almost certainly thousands of spouses and children in much worse circumstances.

The reality, of course, is that the State has few qualms about the harsh treatment of the families of most small-time fraudsters. The State got back £214 million last year from people who were caught fiddling social-welfare claims.

As the Minister in charge, Dermot Ahern, warned earlier this year: "The people who abuse the system are in fact robbing the people who are genuinely dependent on welfare payments as well as the taxpayers. They do not have a place in society; they will be detected and they will pay the price."

When the cheats are obscure little people, that threat is carried through with commendable zeal. Somehow, when grubby little scams are elevated to the level of white-collar crime, the zeal diminishes. And when the white-collar criminals are within the system itself, it turns into a slow, gentle ramble through the proper procedures. It is, it seems, better to have abused your privilege than never to have been privileged at all.

fotoole@irish-times.ie