Between 2008 and 2009, 1.6 billion euros were swindled in a huge carbon quota market scam dubbed the "fraud of the century". On Monday, 36 people suspected of running the scheme’s largest operation went on trial in Paris.
At the head of the Marseille-based gang appearing before the judges this week is Christiane Melgrani, a former maths teacher who once managed a piano bar. The outspoken 59-year-old, known as “La Marseillaise”, had previously been sentenced for drug trafficking and sales tax fraud in telephone businesses.
Today, Melgrani stands accused of embezzling 385 million euros between April 2008 and March 2009 using the European Union's carbon-trading scheme. She is suspected of helping to set up and run a large number of dummy companies used for money laundering from Marseille.
Among the 35 people standing trial with Melgrani is her partner Angelina Porcaro, a former owner of a hostess bar, whose restaurant ‘La Cantinette’ served as a meeting place for the gang. Others include a wide range of people that highlight the extent of the network’s reach: 75-year-old Jean-René Benedetti, a big name in the city’s underworld, retirees, a lawyer, an accountant, a sculptor, an estate agent, businessmen, event organizers, a waitress and some unemployed people.
Fraudsters saw a golden opportunity
All are thought to have profited from a weakness in the European Union’s carbon trading scheme that enabled the protagonists to sift off millions from the French state.The scam – which threw together wealthy businessmen, a high-ranking police official and France’s seedy underworld – operated as follows: in 2005, the EU set carbon emission quotas for companies, in an effort to find a market-based mechanism to tackle climate change. Companies were allocated credits which they could then sell or buy according to their needs.
France, unlike other EU countries, slapped a sales tax (VAT) on these credits. Here, fraudsters saw a golden opportunity. They bought VAT-free credits abroad and then sold them on the French market with the added sales tax, which they did not pay back to the French government. This money was either reinvested into buying new quotas, placed in a network of dummy companies created for that purpose or invested in luxury goods and real estate.
'The CO2 wasn't work at all'
In France, a total of 12 networks involving mostly Franco-Israeli citizens were created. They operated out of Paris and Marseille among groups who had previous experience with VAT fraud using material goods such as clothes, telephones and computers. Buying credits off the internet proved more lucrative and simpler. “I worked hard running my scams. But with the CO2, it wasn’t work at all,” one protagonist told French daily Le Monde.
The tricksters, who made vast amounts of money very quickly, stashed it away with help from extended family in Tunisia, the Chinese community in Aubervilliers near Paris, and bankers in Dubai. The money transited around the world from Paris and Marseille to Singapore, the Cayman Islands, Latvia, Cyprus and New Zealand, right under the nose of the unsuspecting French state.
Money came quick and plentiful
They also managed to lure a high-ranking police officer in Lyon, Michel Neyrat, into their net. In exchange for information about forthcoming arrests, gang members invited him to their parties, topped up his bank account and took him on trips to Morocco.
Money came quick and plentiful and some protagonists spent it as fast as they earned it. One fraudster paid the US singers Puff Daddy and Pharell Williams to sing at his son’s Bar Mitzvah. But the party ended as spectacularly as it had begun. In June 2009, after warnings of possible fraud, France abolished the sales tax on the credits, and the carbon market scam collapsed.
Police caught wind of a possible scam after a murder
In the following months, word spread in the underworld that huge amounts of money had been made. Police caught wind of a possible scam after a man with links to the networks was murdered near Paris in April 2010. Three other assassinations followed. Many of the fraudsters who had sought refuge in Israel started to raise suspicions from French criminal investigators. France and Israel began exchanging information which led to the first wave of arrests.
In June, two men were handed eight-year jail terms for their part in the fraud. On Wednesday, 12 people were jailed by a Paris court for terms of up to nine years and one million euro fines.
The present trial will last 2 months until March 30.
Date created : 2018-01-29