April 10, 2014 / 2:48 PM / 5 years ago

Germany seeks arrest of Briton in carbon trading scam

FRANKFURT (Reuters) - Frankfurt prosecutors on Thursday sought the arrest of a British national in connection with suspected tax fraud worth 58 million euros ($80 million), widening a carbon trading probe that has also drawn in Deutsche Bank.

Authorities issued an international arrest warrant for Faisal Zahoor Ahmad, 33, saying that as general manager of a Munich-based company called Roter Stern GmbH, he evaded taxes through trading European Union carbon emission certificates.

“Acting as a member of a gang committing value added tax fraud in connection with emission allowance trading throughout Europe, his task was to act as a so-called ‘buffer’,” the authorities said in a statement published on their website.

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Reuters was unable to reach Ahmad or any representatives of Roter Stern for comment. Roter Stern was suspended from trading on the Munich-based Bayerische Boerse’s carbon platform in 2010 and was dissolved after insolvency proceedings the same year.

The warrant broadens the carbon trading scandal that has also affected Deutsche Bank, where prosecutors are investigating 25 staff, including co-Chief Executive Juergen Fitschen and finance chief Stefan Krause, on suspicion of tax evasion, money laundering and obstruction of justice.

Deutsche Bank, contacted by Reuters on Thursday, referred to its December 2012 statement in which the bank said it was cooperating fully with the authorities.

Prosecutors said they believed Ahmad was staying in the United Kingdom. British tax authorities declined to comment on the investigation.

Tax fraud cases rocked the EU Emissions Trading System in 2009 and 2010, and officials warned then that peripheral markets such as power and gas could also become targets.

Investigators have looked Europe-wide into networks of trading companies that were established purely to carry out such fraud.

The fraud, often called missing trader or carousel fraud, involves a buyer importing goods free of value-added tax (VAT)into one EU member state from another.

The buyer then sells the goods onwards with VAT included in the price, often through a series of firms in an untraceable chain, before pocketing the tax and disappearing.

Earlier in April, Frankfurt prosecutors brought charges against two British citizens for suspected tax fraud amounting to 31 million euros in the same carousel trading investigation.

The judicial proceedings are being held in Germany because this is where the defendants are suspected of having committed the fraud.

At least 14 people have been jailed in three countries so far for their involvement in carbon trading VAT fraud.

European police agency Europol has estimated that such crime has cost taxpayers more than 5 billion euros in lost revenue since 2008.

($1 = 0.7234 euros)

Reporting by Thomas Atkins; Editing by Michael Szabo and Dale Hudson

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