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Carbon traders charged in fraud case

Published: 8:01AM Tuesday January 12, 2010 Source: Reuters

Three Britons and a Dutchman have been charged by Belgian authorities with money laundering in an investigation into fraudulent trading in carbon emissions permits, Belgian prosecutors said on Monday.

The fraud occurs when carbon credits are bought and imported tax-free from other EU countries, then sold to domestic buyers, charging them value-added tax (VAT). The sellers then disappear without paying the tax to governments.

The three Britons were arrested at the end of 2009 in the Belgian town of Tournai as part of an investigation into transactions worth some 3 million euros ($NZ5.8 million).

A fourth suspect from the Netherlands was arrested on Sunday. Prosecutors would not disclose the names of those arrested.

The three Britons set up a company in Tournai, in south-western Belgium, which bought the credits in Britain and sold them on to banks via an intermediary, pocketing the 21% VAT charged in Belgium, prosecutor Jean-Bertrand Combier said.

The Dutchman lives in nearby Mouscron and works for a Belgian company which bought the credits and sold them on to the banks, Combier said.

The three British suspects have denied the charges. The Dutchman's position was not yet clear on Monday, with the investigation continuing, Combier said.

Last December, European police agency Europol said fraudulent trading in EU carbon credits in the past 18 months has led to more than 5 billion euros in tax revenue losses for several EU nations.

Last August, the British tax office arrested seven people in London in a suspected 38 million pounds value-added tax fraud in the carbon market. Several other EU states have raised concerns about the potential for fraud in the market.

A European Commission working group approved a proposal in December to apply a "reverse charge" mechanism to carbon trading to prevent possible VAT fraud.

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