in France, Israel

Jail sentences for 11 in France’s carbon scam of the century

2016-07-08-201927_1680x1026_scrotA French court has sentenced businessman Arnaud Mimran to eight years in jail and a €1 million fine, for his role in a €283 million carbon tax fraud. The scam took place from November 2008 to June 2009, during which time the scammers pocketed €283 million in non-paid VAT on €1.4 billion worth of emission allowances.

VAT fraud consists of buying products in another EU country VAT free. The products are then sold through shell companies. The shell companies charge VAT, but withhold the tax from the state. Mimran provided funding for the fraud. He invested around €9 million, and made €21 million in profit.

Those convicted were jointly sentenced to pay the €283 million in non-paid VAT tax to the French state. Six of the 12 defendants were not in court and were tried in absentia. Associated Press reports that they “are believed to be in Israel”.

Also jailed was Polish businessman Jaroslaw Klapucki. The court sentenced him to seven years and also ordered to pay a €1 million fine.

In 2000, Klapucki set up a Polish company called Consus Sp. z o.o. Ltd. Co. In 2006, the company started its carbon trading business. The court accused Consus France of helping six shell companies to sell more than 117 million emission allowances on BlueNext. Consus made payments to its clients’ bank accounts in Cyprus and Hong Kong, without checking that the companies’ tax affairs were in order.

A trading company based in Paris called Ellease was at the centre of the scam. In the French media, the case is named after Ellease.

EurActive.com reports that on a single day (6 March 2009), Ellease sold 272,000 carbon credits in France for more than €5 million. Ellease kept the 20% VAT that it should have paid to the government. Or €1 million for a day’s work.

In May 2009, the BlueNext exchange was temporarily shut down. The Financial Times reported that, “a sustained period of unusually high trading volumes led the French authorities to suspect there might have been fraudulent transactions taking place”.

In February 2012, the French Court of Auditors wrote about carbon VAT fraud in its annual report:

The carbon emissionq quota VAT fraud is the largest tax fraud ever recorded in France in so short a time. It demonstrates failings in regulating a market in which naivety about how resourceful fraudsters can be combines with risk perception errors on the part of market administrators and government. It also highlights the inadequacy in forward planning to provide effective regulation tools for markets in which, given their characteristics, the fraud potential has been overlooked.

Blood of the Carbon Market

In February 2016, Fabrice Arfi published an article on Mediapart titled “La sang de la bourse carbone“. It’s in French and behind a paywall, but an English translation of parts of it is available here. It’s an extraordinary story.

Mimran’s accomplices in the fraud include Mordoche “Marco” Mouly and Samy Souied. The French court has issued a warrant for Mouly. Souied was murdered in September 2010.

Souied lived in Tel Aviv, Israel. He made around €200 million from the carbon fraud. Way more than Mimran made. The day he was murdered, Souied flew to Paris from Tel Aviv to meet Arnaud Mimran, to discuss a share investment. It may have money laundering, or it may have been a way for Mimran to get hold of some of Souied’s money.

Souied and Mimran met three times that day, the last time in front of the Palais de Congrès. Mimran said he wanted to give Souied a gold ring embossed with a skull. Souied turned up on time. Mimran was three minutes late.

Souied was shot six times, twice in the heart, by a man on the back of a scooter. Mimran dropped the ring and waited for the police to turn up.

The French Serious Crime Squad report on the murder states,

The violent death of Samy Souied follows the implacable logic of revenge killings linked to the considerable flow of money generated by large scale fraud.

One of the witnesses in the French court said, “Mimran is behind the murder of Samy Souied.” Mimran denies this, and he has not been charged.

There were three other murders linked to the carbon scam. In April 2010, three men dressed as policemen killed Amar “blue eyes” Azzoug in a restaurant in Saint-Mandé.

Journalist Aline Robert has spent years investigating carbon VAT fraud. In her book “Carbonne Connexion“, she writes that Azzoug was carrying documents relating to carbon when he was killed. He was in the company of Patrick Bellaiche, one of the 11 people sentenced by the French court.

Claude Dray was a hotelier, a real estate entrepreneur, with an estimated personal wealth of €2 billion. Dray lived in in a huge villa, protected by police and private security guards. He was the father of Arnaud Mimran’s first wife. In October 2011, Dray was murdered in his home, shot three times in the neck.

The next murder was in April 2014. Around 1 am, Marco Mouly’s cousin Cyril Mouly returned home with his driver Albert Taieb. Two men dressed in black and wearing crash helmets were waiting in the stairwell of his building. Mouly ran into the street. Taieb was stabbed to death.

Mimran’s donations to Benjamin Netanyahu

In his first interrogation after his arrest in January 2015, Mimran said he had donated US$200,000 to Israel’s Prime Minister Benjamin “Bibi” Netanyahu. Mimran said,

“I used to go there [Israel] a lot back then, because that was during the campaign, and I’m close to Netanyahu, to whom I donated $200,000.”

During the court hearing, Mimran testified “I funded Netanyahu at the level of one million euros” in 2009. At the time Netanyahu was running for prime minister and the money was to fund his election campaign.

Netanyahu denied receiving €1 million from Mimran. He did admit to receiving US$40,000 in 2001, but said that the money was not for a personal campaign.

Mimran subsequently said that Netanyahu had the numbers right. “It’s possible that I got the numbers wrong because it’s been more than 10 years,” he told Israeli TV Channel 2.

“In any event, there was nothing illegal on Bibi’s part. I transferred a sum to him and invited him to vacations in Monaco and a ski resort in the French Alps.”

 

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