Being “green” is a 21st century phenomenon.
We have energy-efficient cars, companies, and even vacuum cleaners. Solar panels and non-smoking zones have become more prevalent, and we are more conscious than ever of our consumption and waste. There are more vegetarians and vegans in the world and even some people, called freegans, who only eat discarded food.
And as with any new popular movement, there are people ready to exploit.
Now, legal authorities and regulators around the world are facing a wave of “boiler-room” scams that claim to sell carbon credits to individuals with the promise of high returns, even though experts say there is no economic reason to invest in such a product other than to offset your carbon footprint.
The market for carbon credits, which represent the right to emit one tonne of carbon dioxide, started out as a legitimate environmental effort by governments and corporations to cut down on greenhouse gases. It then began making its way to individual customers.
But unlike the regulated market, which was first formalised in the Kyoto Protocol, companies involved in the carbon credit scam buy credits in the voluntary market, which is not regulated by any authority and is much smaller.
Andrew Ager, who works as a consultant to the London Metropolitan Police on these scams, says that from a “from a pragmatic point of view it’s a very successful business model and well thought out”:
“The aim of these companies is to get as much money as possible in the shortest amount of time.
They buy something [of little to no value] and sell it for considerably more than it is worth. There’s no law to stop someone selling something for more than they bought it for but the difficulty for authorities is to prove the investment was misleading.”
One company is now attracting suspicion: Dubai-based Advanced Global Trading, headed by Charles Stephenson, a British salesman who had spent the last decade working for a company specialising in audio-visual digital displays, Balfour Group.
AGT promised investors 30% returns and “for a minimum investment of $25K you too can invest in Carbon and make a difference,” the company said on its website.
But, last week, clients were contacted by AGT and informed that the voluntary credit market was about to crash from $15.85 per credit (AGT’s value) to $3, and that there was an exit strategy to sell all credits to a third party high end investor. In return clients would receive Strategic Earth Metals (SEMs), or Rare Earth Metals which are widely known to also be used by conmen as part of similar scams.[caption id="attachment_1669" align="aligncenter" width="586"] AGT even offers an iPhone app. Source: redd-monitor.org[/caption]
However to make this deal go through, the clients were asked put in an extra $15,000.
For experienced traders in the carbon credits industry, and other journalists investigating carbon credit scams, soliciting money for these SEMs was highly suspicious.
“Sadly, this situation is all too familiar. We call this the double scam,” said Matthew Gray, an associate at investment banking firm Jefferies & Company, specialising in carbon markets.
“Companies illegally entice individuals to buy carbon and then tell them the market has crashed as a means to get more cash.”
These companies often have an 18 to 24 month exit strategy and when the spotlight falls on them, it is not unusual for a company to suddenly change strategy to garner more investments and keep the company going, or to disappear entirely.
AGT first launched in London around 2010, then set up a trading floor in Dubai a year later.
According to legal records obtained by RebelEconomy, a British company affiliated with AGT has changed its name twice in the last two years, from Business Saints Consultancy Services Ltd, then to Nviro Capital Ltd and finally to AGT.
The company has also shut down affiliated companies including AGT “UK & Ireland”, AGT “Europe” and two offices in Abu Dhabi and Zurich in the last two years.
LinkedIn records show a number of employees have recently left the company recently, including Nick O’Dwyer, formerly a director at AGT, Franklin Connellan, who was head of investments at AGT and Amine Benkaddour, a senior investment consultant and corporate advisor.
AGT’s director, Charles Stephenson, is still associated with the company. He explains AGT’s strategy in this news clip:
In many cases with carbon credit scams, the staff are unaware of the ultimate business they are in, Mr Ager says.
“Usually only a few people know. Many of the staff, particularly the young sales force, and all the way through to senior staff usually don’t know,” he said.
AGT refutes the allegations that it is asking clients to purchase the additional product, and in a statement to RebelEconomy said “no one is being strong armed to take this option”. It also denied allegations that it told clients there was a price crash:
AGT in Dubai has not ceased operations and continues to operate in Dubai out of its headquarters in Emaar Square, Downtown Burj. The UK company that was shut down has no relationship with any client (contractual or otherwise) of Advanced Global Trading in Dubai. Please note there may be many companies globally using the name “Advanced Global Trading” but the AGT trademark is licensed only to the entity operating in Dubai. Therefore, there are no additional monies being sought from clients (or otherwise) with the company having been shut down as you suggest.
AGT has instituted a relatively new product (Strategic Earth Metals) which it offers to its interested clients. Despite what has been blogged [this is a reference to the REDD-MONITOR.org blog coverage], such new products are not being forced onto anyone. AGT has offered as an option for its carbon clients to trade into the new product upon commercial terms and conditions which are transparently described to any interested client. All of which shall be pursuant to a sale and purchase agreement between any interested client and AGT. Thus, no one is being strong armed to take this option. Any clients that do will be pursuant to their investment decision at their sole discretion.
Regarding the pricing of carbon, there has not been any price crash as suggested in the blogs. AGT is currently doing a survey amongst its clients who have shown an interest in exiting out of their carbon position to determine what new price, if any, should be assigned to carbon credits. End of the day, any price for carbon is meaningful if a buyer can be found at such price. AGT has no plans to unliterally bring the price of carbon down.
We have always done everything we can to protect the interests and investments of our clients and will continue to do so.
The company also says that although the voluntary market is unregulated, it is has developed a self-regulatory and best practices framework, which was developed in conjunction with its legal counsel in Dubai (Anjarwalla Collins & Haidermota) and the United States (Baker McKenzie). Neither firm responded to a request for comment from RebelEconomy.
AGT says it closed its Abu Dhabi office to streamline the business and more effectively serve UAE clients. It said AGT Europe and AGT (UK & Ireland) were never directly or indirectly part of the AGT group corporate structure. “Both of these entities (in Spain and UK respectively) were our efforts to establish joint ventures with others to expand the AGT business in Europe. Both of these ventures did not break ground in any significant way and we decided to not proceed as planned,” the company said in its statement.
The company adds that “AGT in Dubai has never changed its name. The mentioned companies have nothing to do with us. These are corporate names of the UK company that was dissolved in 2012”.