From Bloomberg:
France opened a criminal investigation of four men allegedly involved in a 156 million- euro ($230 million) carbon trading fraud, the Paris prosecutors’ office said today.Investigating Judge Jean-Marie d’Huy is leading the probe into allegations including criminal conspiracy, money laundering, misuse of corporate funds, and carbon trading and tax fraud, according to an e-mailed statement from the prosecutors. Two of the men were jailed yesterday.
“The device created by the fraudsters allowed them, using specially created structures and screen companies, to collect value-added tax payments, without transferring them to the French Treasury, by buying carbon rights duty-free from overseas brokers and re-selling them at a price that included the French tax,” the statement said.
France ended its value-added tax on trades of European Union carbon dioxide allowances in June. It decided to lift the levy because of the risk of so-called carousel fraud, whereby carbon-permit sellers known as “missing traders” collect the tax and then disappear before submitting the money to authorities. The U.K. followed in July, and the Netherlands has shifted the levy to the buyer.
Ecofin Answer
European Union finance ministers discussed proposals to thwart the value-added tax frauds in December. One possibility would be not to charge the tax to the supplier, while the customer would still account for it, deducting it at the same time. That would eliminate the need for an effective payment to the treasury.
France’s Finance Ministry spotted suspicious carbon trades worth more than 100 million euros on the BlueNext market, the biggest exchange for spot carbon transactions, and began investigating whether the traders were evading taxes on the trades, according to the statement....MORE
No word from professor Krugman regarding his Dec. 7 comment:
...Oh, and the argument that if you create a market, you’re opening the door for Wall Street evildoers, is bizarre. Emissions permits aren’t subprime mortgages, let alone complex derivatives based on subprime; they’re straightforward rights to do a specific thing. It will truly be a tragedy if people generalize from the financial crisis to block crucially needed environmental policy....
From his Dec. 7 post: -Unhelpful Hansen
