From France24.com H/T Alan Poirier.
The trial of 12 people accused of involvement in a multi-billion euro carbon-trading fraud opened in Paris on Monday, in a case that has been described by French authorities as “the heist of a century”.
Shady deals, offshore accounts, money laundering… The trial has all the hallmarks of a crime thriller and comes nearly seven years after French authorities cracked down on a carbon-trading scheme that cost the European Union €5 billion – including €1.6 billion in France – according to Europol.
The case dates back to October 2008, around the same time the European Commission introduced phase two of its EU emissions trading system (EU ETS), which was designed to combat climate change by reducing greenhouse gases.
Despite the good intentions behind the EU ETS, it was an imperfect system that was easily exploited.
“The structure was poorly conceived from the start and had some real flaws,” Katheline Schubert, an environmental economics professor at the Sorbonne university in Paris, told FRANCE 24.
Investigators believe that a group of three men – Mardoché Mouly, Arnaud Mimran and Samy Souied – realised this, and devised a scheme to defraud billions of euros by purchasing emission allowances on the European market from abroad, using a complex network of shell companies and offshore accounts in Latvia, Cyprus and Hong Kong.
Because the allowances were purchased outside of Europe, they were not subject to the European Union’s 19.6 percent value-added tax (VAT). Front men acting as brokers then resold the allowances in Europe, taxes included. But instead of handing the VAT over to the authorities, they pocketed the cash to use in future trades. But the money needed to be laundered before it could be reinvested. This involved placing it in a bank in China, where it was then handed over to businesses or transformed into playing chips at casinos, among numerous other ploys.