August 20, 2009 / 1:12 PM / 11 years ago

Europol expects more arrests in carbon fraud probe

LONDON (Reuters) - European police agency Europol expects further arrests in connection with suspected carbon credit tax fraud after Britain’s tax office said two more people were arrested in London late on Wednesday, bringing the total to nine.

Officers from HM Revenues and Customs (HMRC), working with Europol, have now arrested seven men and two women following a suspected 38 million pounds ($62.8 million) value-added tax (VAT) scam related to carbon credit trading.

“Our experts were present a few days ahead planning this operation together with HMRC. Beforehand there was a huge investigation going on and more arrests are expected,” said Europol’s chief of media Soren Kragh Pedersen.

“We are on the lookout in the rest of Europe of course.”

HMRC raided 27 businesses and homes around London early on Wednesday. A spokeswoman told Reuters on Thursday that all the people who had been arrested had been bailed and no charges had been brought.

HMRC said the arrests are related to an investigation into what is believed to be an organized crime group operating a network of companies trading large volumes of European Union carbon emissions credits in so-called carousel fraud.

Through carousel fraud, also called missing trader fraud, fraudsters import goods VAT-free from other countries, then sell the goods to domestic buyers, charging them VAT. The sellers then disappear without paying the tax to the government.

Britain said last month it would make carbon trading exempt from VAT in response to the suspected scam.

Reporting by Nina Chestney and Michael Szabo, editing by Anthony Barker

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