German prosecutors searched Deutsche Bank AG and RWE AG in a raid on 230 offices and homes nationwide to investigate 180 million euros ($238 million) of tax evasion linked to emissions trading.
The Frankfurt Chief Prosecutor’s Office said it targeted 150 suspects at 50 companies and has frozen assets. Deutsche Bank, Germany’s largest bank, and RWE, the country’s second- biggest utility, said they are cooperating with the probe and aren’t the focus of the investigations.
The U.K., France, Netherlands are among nations that started investigations last year of “carousel fraud,” where carbon traders collect tax and disappear before turning it in to authorities. Today’s raid was the biggest related to a fraud that may have tainted an estimated 7 percent of carbon trades in last year’s $125 billion market.
“We are glad to see that German authorities are taking the necessary steps to deal with a fraud that has affected, however unfairly, foreign perceptions of the EU emission trading system,” Henry Derwent, chief executive officer of the Geneva- based International Emissions Trading Association, said in a phone interview. The lobby group speaks for CO2 trading firms.
Europe lost about 5 billion euros in revenue for the 18 months ending in 2009 because of value-added tax fraud in the CO2 market, according to Europol, the law enforcement agency.