Tuesday, October 6, 2009

Interpol: "Forest-CO2 scheme will draw organized crime"

Like it's not enough that the Mafia is in the wind biz:

Feb. '09
Italy police arrest 8 in Mafia wind farms plot
...There is, however, a broader reason why the Mafia is more active in the renewables and other politicized businesses than in competitive segments of the market. When the state is involved, it is not just economic reasoning that determines which investments are to be made: Political decision makers do not answer to transparent economic incentives. The greater their arbitrariness, the greater is the temptation of being corrupted.

Corruption has a very high opportunity cost in the private sector—if you make economically unsound decisions, you are likely to be expelled from the market by more efficient competitors; therefore you have a long-term incentive to resist temptation. But if you are a politician, there is no such thing as the long-run: You will try to maximize your own interest as soon as possible, and, because your term will end, you will not bear any cost (except from the relatively low risk of being caught)....
May '09
Mafia link to Sicily wind farms probed
Reporting from Palermo. Might be time to mosey up to Rome.
Or Norway....
To be fair:
Mafia crime is 7% of GDP in Italy, group reports
I am unsure whether these gentlemen participate in the EU's Emissions Trading Scheme.
The easy joke, of course, is that they set it up....

SEVEN Percent!
So a Sicilian mafioso walks into HSBC…

As we said in "The Possibility of Carbon-Trading Fraud Elbows Into Senate Climate Debate"
Well duh.
Anyone who says we can legislate against traders acting as traders is either a liar or a fool. Period....

The story below isn't news it's from May, 2009 but I wanted to hammer the point home. Not only are we setting ourselves up for huge "legal" wealth transfers but the size of the carbon markets is going to bring in the "non-sanctioned" crowd too.
From Reuters:

NUSA DUA, Indonesia (Reuters) - Organized crime syndicates are eyeing the nascent forest carbon credit industry as a potentially lucrative new opportunity for fraud, an Interpol environmental crime official said on Friday.

Peter Younger, an environmental crimes specialist at the world's largest international police agency, was referring to a U.N.-backed scheme called reducing emissions from deforestation and degradation.

REDD aims to unlock potentially billions of dollars for developing countries that conserve and restore their forests. In return, they would earn carbon credits that can be sold for profit to developed nations that need to meet greenhouse gas emission reduction targets.

"If you are going to trade any commodity on the open market, you are creating a profit and loss situation. There will be fraudulent trading of carbon credits," he told Reuters in an interview at a forestry conference in Nusa Dua on the Indonesian island of Bali.

"In future, if you are running a factory and you desperately need credits to offset your emissions, there will be someone who can make that happen for you. Absolutely, organized crime will be involved."

Younger called on governments, multi-lateral bodies and NGOs to involve law enforcement agencies more in the development of REDD policies and in the fight against illegal logging and deforestation, which are responsible for about 20 percent of mankind's greenhouse gas emissions.

"It struck me, as I sit here at this conference, as ironic that I am the only policeman here. You say you want to strike up partnerships to address illegal logging -- who with?" he said. "Consider resourcing law enforcement efforts and not just relying on NGOs and other nice people to do it for you."