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Four caged in UK after cyber-heist swipes €7m in EU carbon credits

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Four men were jailed in the UK this week following the theft of millions of pounds in carbon-emission credits.

The gang was convicted for their part in an operation that stole half a million credits – valued at €7m (£5m) at the time – from the Czech Republic’s carbon-emission registry back in January 2011.

European carbon-trading registries were set up to help limit organizations' carbon emissions. Polluters must buy and sell credits within a cap-and-trade system: companies must obtain enough credits to cover their carbon emissions, or face fines. If a company finds itself with too many credits – ideally by lowering its CO2 and N2O output – it can sell them to another.

It's designed so that cleaner factories and power plants pay out less each year, and dirty companies pay more. Free market economists and green activists hate the system, albeit for markedly different reasons.

According to investigators, computers within the Czech registry were hacked, and carbon credits siphoned off to two fake firms in Poland, which subsequently sold on the credits to a legitimate dealer before the loss was recognized. To pull off the heist, a hoax bomb call was made to the Czech registry, causing its offices to be evacuated on the day of the compromise.

The theft prompted the European Commission to suspend trading on all of Europe's 30 national registries for carbon credits.

Intelligence shared between the UK National Crime Agency (NCA) and Czech police showed two fly-by-night firms at the centre of the scam – Segel Sp Zoo and Huntingdon Sp Zoo – were set up for the sole purpose of transferring the stolen credits. A joint investigation was conducted across a number of jurisdictions, requiring cooperation from China, Hong Kong, India and Dubai.

This probe resulted in the arrest of four UK-based men linked to the registration of the fraudulent firms in Poland. All four were charged with encouraging or assisting in the handling of stolen goods, fraud, and/or money laundering, contrary to the Serious Crime Act 2007.

Hanif Patel, 53, of Preston, Lancashire was found guilty following a three-week trial and sentenced to seven years behind bars this week.

Ruman Patel, 32, and Mohammed Patel, 52, both of Preston, Lancashire, and Ayyub Ibrahim, 60, of Dewsbury, Yorkshire, all pleaded guilty. Ibrahim and Mohammed Patel were each jailed for 42 months. Ruman Patel was sent down for 32 months.

In a statement, NCA branch commander Ian Betts claimed the caper effectively raided the public purse, and was therefore not a victimless crime.

“This criminal investigation concerned a ‘virtual’ commodity which can be traded electronically, in large numbers and at great speed across international borders," Betts said.

"Let me be clear this is not a victimless crime – it hits the pockets of every taxpayer in the UK. Officers in the National Crime Agency will work with their partners both here and internationally to ensure criminals realise international borders will not protect their illegal activity from law enforcement and they will be brought before the courts.”

No credits or funds linked to this particular fraud have been recovered to date. A separate scam, also in 2011, tricked utilities into unwittingly buying blacklisted emission credits. ®

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