European fraudsters steal $7B in carbon credit scam
Last Updated: Friday, December 11, 2009 | 3:38 PM ET
CBC News

Fraud within Europe's carbon credit trading system has cost taxpayers
more than $7 billion in the last 18 months, European police said
Friday.

Officials at Europol, the body in charge of co-ordinating police
forces inside the European Union, say fraudulent activity on the EU's
Emission Trading System was first suspected in late 2008 when police
noticed the volume of trades in certain countries would mysteriously
spike.

"It is estimated that in some countries, up to 90 per cent of the
whole market volume was caused by fraudulent activities," Europol
said.

Since late 2008, the total value of fraudulent activity is believed to
be in excess of five billion euros ($7.7 billion Cdn) from bogus
trades in European unit allowances, or EUAs, the credits that
companies in some countries buy to offset their greenhouse gas output.

In the EU and other jurisdictions, caps are put on the total amount of
carbon dioxide that is allowed to be emitted. Companies that pollute
more than their fair share must then buy carbon credits from companies
that don't pollute, to keep the total output below the prescribed cap.

Market volume on the EU's carbon trading system peaked in May 2009,
with several hundred million EUAs traded in France and Denmark alone,
Europol said.

Market worth $140 billion annually
At the time, one EUA was worth about 12.5 euros, or about $19.30.

In the scam, criminals set up a carbon trading account on a recognized
European market. They would then buy credits tax-free on exchanges in
countries outside Europe. Those credits are then transferred into the
European account, and the fraudsters collect tax on that transaction,
but the monies are never paid to any European tax agencies.

The bogus trading account is then shut down before tax authorities can
collect.

To prevent further losses, governments in France, the Netherlands, the
United Kingdom and most recently Spain have all changed their taxation
rules on the transactions. Trading activity from the aforementioned
countries has declined by as much as 90 per cent as a result, Europol
said.

Police agencies throughout Europe are currently collaborating to
uncover specific fraudulent trades, and there are reasons to believe
that fraudsters might soon migrate toward the gas and electricity
branches of the energy sector, Europol said.

The EU carbon trading market is estimated to be worth nearly $140
billion a year, and 12,000 emitters have purchased more than two
billion EUAs thus far. The Emission Trading System is one of six
recognized European carbon trading markets.

"Just A Guy" wrote in message
...

In the scam, criminals set up a carbon trading account on a recognized
European market. They would then buy credits tax-free on exchanges in
countries outside Europe. Those credits are then transferred into the
European account, and the fraudsters collect tax on that transaction,
but the monies are never paid to any European tax agencies.

Similar scams have been used for any portable item eg mobile phones. I
guess carbon credits are even easier to move across borders.