Organized Crime Mixed Up in Environmental Initiatives — Again

Godfather_croppedAs goes the financial markets, so go the renewable energy markets. If there’s an opportunity to make a buck, or in this case, a euro, by ripping people off, rest assured, someone will do it.

In the latest case, two Italian businessmen are accused of involvement in a scheme to collect public subsidies for wind power by building sham wind farms. A two year investigation, dubbed “Gone With the Wind” by Italian anti-fraud police, culminated Tuesday with the arrest of Oreste Vigorito, head of the IVPC energy company and president of Italy’s National Association of Wind Energy, and Vito Nicastri, a Sicilian business associate on allegations of defrauding the government of millions in subsidies, according to the Financial Times.

Anti-mafia investigators in Sicily, where some of the wind farms are located, have launched a parallel investigation.

Just Because It’s Good for the Planet…

The Italian wind case follows on two investigations into fraud or negligence in the carbon credit markets in the UK in August and September. In August, UK customs officers broke up a criminal ring accused of running a “carousel fraud,” whereby carbon credits were imported into the country without paying the Value Added Tax, and then sold to UK companies. Authorities estimate millions in tax revenue was lost.

In September, United Nations inspectors suspended the accreditation of SGS UK, the world’s largest clean energy auditor, after a spot inspection revealed employees had not properly audited projects in carbon trading markets, and that auditors were not qualified to perform the work they were doing, according to the Environmental Leader.

Serious Consequences for Environmental Legislation

The competency and trust-worthiness of carbon accounting and carbon markets, such as the cap-and-trade system proposed for the US, are crucial to their long-term viability. For politicians and decision makers already aligned against robust environmental regulations, the above scandals provide ample ammunition for shooting down proposed legislation.

In a recent interview, Tim Stumhofer of the Greenhouse Gas Management Institute, said that with carbon accounting, “there’s also a massive opportunity for fraud, for things to slip between the cracks. When incentives to cheat appear, people are offered a moral quandary; they may take the wrong road out of greed, or just negligence. The result is people could lose faith in these programs – and if people lose their faith in the programs they may disappear.”

The GHG Institute is working to establish GHG accounting accreditation for individuals, and ultimately a professional guild to maintain professional quality and ethical standards. Big accounting firms have also moved into this space, potentially providing more legitimacy, although we all know such firms are not fraud proof.

BC (Ben) Upham is a freelance writer based in Los Angeles. He has written for the New York Times, and was a writer and editor for News Communications, Inc., a local paper consortium serving Manhattan. When he's not blogging on green issues -- and especially renewable energy -- he's hiking in the Angeles Mountains or hanging out at El Matador.

2 responses

  1. Pingback: Flare Network » Blog Archive » Gangsters go green!

Leave a Reply