Industry RE and a very big REDD carbon credit scam
Between 2009 and 2013, a UK-based company called Industry RE fleeced members of the public out of at least £13.3 million. Last week, the Insolvency Serviceannounced that Ian James Hamilton, the sole director of Industry RE, had been disqualified as a director for 15 years.
Industry RE was ordered into compulsory liquidation in August 2013. Hamilton’s company has gone, and he can’t act as a director for 15 years. But so far, that’s the only price that Hamilton has had to pay for his £13 million scam.
Industry RE sold carbon credits from two REDD projects (one in Brazil that probably didn’t exist, and one in Papua New Guinea that certainly does exist). Selling REDD credits as investments wasn’t the company’s only scam — the other main one was selling interests in land in Dominica that Industry RE never owned.
One million REDD carbon credits from Brazil
REDD-Monitor first wrote about Industry RE in March 2012. An Irish company, Celestial Green Ventures, which claimed to have 20 million hectares of REDD projects in Brazil, forward sold one million uncertified voluntary carbon credits to Industry RE.
In a marketing brochure titled, “Carbon offsetting through avoided deforestation”, Industry RE announced that,
Industry RE have partnered with Celestial Green Ventures PLC to become a global team dominating the forestry sector in the rapidly emerging and expanding climate change marketplace.
The brochure also tells us that Industry RE teamed up with a company called Emerald Knight, “to provide a superior customer service experience with a superior investment opportunity”.
Carbon credits from Celestial Green Ventures’ REDD projects were on sale for £7.50, with a minimum investment of £20,250. Here’s how Industry RE explained the deal:
HOW CAN I RESELL MY VER’s
A purchaser can opt in to allow Industry RE to sell their credits upon delivery through the carbon retailing service described in the previous section. Industry RE will sell the credits for £10 per VER to provide a fixed return to the purchaser of 30% of the original purchase price payable upon delivery of the VER.
Emerald Knight was a boiler room operation. Its telesales team offered investments in carbon credits, bamboo plantations, biofuel bonds, social housing in Brazil, forestry, renewable energy and REDD projects.
In fact, the carbon credits simply did not exist. Here’s how the Insolvency Service explains the scam in its press release about Ian Hamilton being banned as a director:
In the first scheme IRE received money from consumers by guaranteeing a return on their investments, which was actually a money circulation scheme. Most investors believed they were purchasing carbon credits, which IRE said that it would repurchase within 12 months for 30% more than investors had paid, and sell the credits onwards to a connected company in Dubai.
IRE made payments totalling more than £8.6 million to customers that included what were claimed to be investment returns. However, the investigation found that IRE had not made any of the claimed investments and did not receive any profits that it could use to pay investment returns to investors. Instead, IRE had made payments using deposits from other, newer, investors. This is the key characteristic of a money circulation scheme. Investors in the scheme have lost in excess of £5.7 million.
Five million REDD credits from Papua New Guinea
In 2011, a Swiss company called World Markets AG bought five million carbon benefit units from the April Salumei REDD project in Papua New Guinea. World Markets bought the carbon credits at US$0.61 each. Two years later it sold them for US$1.67 each.
That’s a tidy profit of more than US$5 million. Dr David Haas, Chairman of World Markets, could barely contain his excitement in the company’s 2013 Annual Report:
The selling of the remaining carbon benefit units (“CBU”) held, allowed for attractive financial returns throughout the year.
It’s probably just a bizarre coincidence that one of the developers of the April Salumei REDD project, Sean Lewis was appointed chairman of World Markets in 2011. And Stephen Hooper, who runs the project was a director of World Markets AG from December 2011 to March 2013.
Industry RE wasn’t the only scam company in the UK selling carbon benefit units from April Salumei. In November 2015, the High Court ordered London Carbon Neutral and seven other linked companies to close down following an investigation by the Insolvency Service.
The companies were selling carbon benefit units from two projects in Papua New Guinea: April Salumei and Lake Murray. Both projects are run by the Pacific Rainforest Alliance, whose director is Stephen Hooper.
The boiler rooms sold carbon credits from April Salumei as investments for £7.50 each. Here’s how the Insolvency Services describes the operation in a press release:
Investors were lied to and bullied into investing such that one vulnerable couple trusted London Carbon Neutral to look after all of their financial affairs, that all of their mail was directed to the company, which systematically deprived them of all their life savings of £1.2 million.
Other companies that sold carbon credits from April Salumei include Industry RE and World Futures Ltd:
Carbon benefit units from the April Salumei project have also been marketed and sold to the public for investment by World Future Limited (CN: 07662439), which company was ordered into liquidation in the High Court on grounds of public interest on 6 March 2013. The recorded directors of World Future Limited were Hollie Emily Chapman (from 8 June 2011 to 19 September 2011); Edward George Lee (from 5 August 2011 to 31 October 2011); Julie Sellers (from 31 October 2011 to 1 April 2012) and James Ward (from 1 April 2012 to the date of liquidation).
Carbon benefit units from the April Salumei project have additionally been marketed and sold to the public by Industry RE Limited, which company was ordered into liquidation in the High Court on 19 August 2013. The sole recorded director of the company throughout was Ian James Hamilton.
Insolvency Service explains that the money didn’t reach the indigenous people in Papua New Guinea:
Behind this callous boiler room activity was an overseas framework to supply the pre-verified carbon units from the two projects in Papua New Guinea that were sold to investors. Far from the “ski money” promised to the indigenous land owning tribes in PNG and funding to save the rain forest, investors’ money went to those behind the scheme and those selling it to vulnerable people whose lives have been ruined as a result.
Perhaps surprisingly, given the record of the April Salumei REDD project, the project still appears on the USAID-funded Stand for Trees website, where you can buy a carbon offset from April Salumei for US$10. Actually, I’m not surprised. After all this is a completely unregulated market:
Posted on REDD-Monitor, 20 September 2016