Nineteen carbon credit companies that ripped off nearly £24m from over 1,500 investors, including a 94-year-old man, have been wound up in the last 15 months by the Insolvency Service, UKs Consumer Minister Jo Swinson has announced.
The companies, including Eco Global Markets Limited ('Eco Global'), which alone took at least £8.5m from over 230 investors – targeted mainly older people and sold them Certified Emission Reduction Units (CERs) – or carbon credits - using high pressure sales techniques. Most of the victims ranged in age between 50 and 85 years.
Eco Global was wound up by the Insolvency Service in July 2013.Two other companies, Anglo-Capital Partners Ltd and Cavendish Jacobs Ltd which between them took over £1.2m, were wound up in October 2013. Salesmen played on people’s keenness to ‘do their bit’ to save the environment while making an investment at the same time. Investors were promised huge returns by selling these credits to corporate giants such as Marks and Spencer and British Airways. But instead most found there was no market for the relatively small amounts they held as companies that trade CERs only trade in high volumes.
Salary and commission payments to Eco Global staff appeared to account for a significant amount of the company’s expenditure. Some members of the sales team earned £10,000 per month and some as much as £25,000 per month. Other staff such as directors and family members, who did not appear to play any significant role in Eco Global, were paid £3,000 per month with further lump sum payments totalling more than £50,000 in the five months from April to August 2012.
19 carbon credit companies wound up in the public interest by the Insolvency Service
Name of Companies: Eco Global Markets Limited, World Future Limited, Capital Wealth Ltd, Fourteenforty Limited, Hildon Green Energy Markets Limited, Tullett Brown Limited, Foxstone Carr Limited, Carvier Limited, Sloane Knight, Bric Global Limited, Foreco Growth Investments Limited, The London Carbon Credit Company, The London Carbon Company Limited, Carbon Acquisitions Ltd, Oxford Sunergy Ltd, Fast Corporate Solutions Ltd, Vero Energy Ltd, Anglo Capital Partners and Cavendish Jacobs Ltd.
Insolvency Service investigators have seen the number of companies selling carbon credits increase over the last year. This has coincided with a reduction in the number of companies involved in land banking scams as more people have become aware of the risks.
Action taken by the Insolvency Service against the perpetrators of such scams does not stop at winding up the companies. Two directors have already been disqualified and appropriate enforcement action can be taken against any other director for misconduct.
Commenting on the emerging carbon credits scam, Consumer Minister Jo Swinson, said: "this is a particularly contemptible scam as it not only preyed on older people trying to maximise their savings, but also targeted their sincere desire to make ethical investments. Instead, investors have been left out of pocket with shares that are either worthless or do not exist. In the last 15 months we have wound up 19 companies for trading in these non-viable credits and we will continue to take robust action against any more companies attempting this scam.”
Caroline Abrahams, Charity Director for Age UK said, “it is despicable that these companies seem to home in on older people as an easy target . Scams can take place on the doorstep, by phone, on the internet or through the post and the sad fact is that if something sounds too good to be true then it probably is. Our advice is if you feel under pressure to commit, then please just step away because any reputable company will allow you time to think an offer over. Anyone can be taken in by a scam so people should never be embarrassed to report a crime. If you feel you are or have been a victim speak to the police, a family member or friend.
Case study 1
Eco Global Market Ltd targeted elderly people – at least 50 of the 230 were over 70 years old - through unsolicited phone calls and used high pressure sales techniques including unclear sales terms and took just over £8m over a two-year period. Investors were led to believe that they could expect returns of up to 42 per cent - a figure taken from a news article published in 2010 and out-of-date. The company also sold more carbon credits than it had, leaving 230 people with no nothing of value.
Eco Global salesmen visited potential clients at home and asked for immediate payment after sales. One of their victims, an 89-year-old man, told investigators that the salesman met him near his home twice - once at a train station near his home where he handed over £20,000 for 2,000 CERs. This had the effect of not giving the investor time to reflect on his decision to buy and given his age, the court agreed this was particularly unscrupulous business practice.
The investigation also found that Eco Global:
Case study 2
Oxford Sunergy Ltd, Fast Corporate Solutions Ltd and Vero Energy Ltd were wound up on 18 September 2013 in the public interest by the High Court following enquiries by the Insolvency Service.
All three companies traded through virtual office and email contact facilities, trading in the period August 2011 to October 2012, in which time they engaged high pressure sales techniques, inducing people to invest in Voluntary Emission Reduction carbon credits. This was on the basis of short term high returns resulting from the onward sale of customer’s carbon credit holdings to corporate clients, including Marks & Spencer and British Airways. In practice the companies took customer funds without providing any products in return, thereby depriving customers of their funds.
The companies were found to have all been abandoned and none of their appointed directors and persons in charge co-operated with the investigation, except a director of Vero Energy Ltd, who claimed that she had been a victim of identity theft, being unaware that her name had been used as that of an appointed company director. None of the companies’ customers had received any proof of ownership of carbon credits documentation, and have been left out of pocket in the sum of £690,000.
In her judgment on 18 September 2013 in the High Court in London, Register Derrett stated that she was, “satisfied that the trading practices of the companies demonstrated fraudulent trading and for that reason alone those companies should be wound up in the public interest.”
Case study 3
Anglo-Capital Partners Ltd, a London company that cold-called the public offering carbon credits for investment went into liquidation on 23 October 2013 on public interest grounds following an investigation by the Insolvency Service.
The winding up order followed a petition presented by the Insolvency Service. The investigation found that the company charged investors between £4.45 and £9.22 a credit and raised over £1 million by promising investors that the credits were a phenomenal investment opportunity and to expect returns of between 20-25 per cent within two years.
The company’s website www.angloalternatives.com described carbon credits as the ethical alternative investment stating that: “Anglo Alternative Investments was developed not only to offer a variety of ways to invest but also to start making a real and influential difference to companies and individuals carbon output”.
The real and influential difference in reality was that elderly and financially inexperienced investors were deprived of their savings after answering calls from the company’s representatives, some of whom, when contacting investors referred to themselves as bankers and/or implied they were calling from a bank; thereby giving the false impression to investors that they were dealing with a reputable financial institution.
A carbon credit is generally defined as a permit that allows the holder to emit one tonne of carbon dioxide into the atmosphere. Here the business was about releasing as much hot air as it took to achieve a sale.
Mr Registrar Baister, who made the liquidation order, said, "There was no real exit strategy for investors to dispose of the carbon credits they purchased never mind at the profit levels represented to them. Whilst the company materials contained a risk warning, this was in small print and at odds with the general tenor of the way sales were conducted. "