Germany jails six for quarter-billion-euro tax carousel

Dec 21, 2011, 11:34 GMT

Frankfurt - Six men were jailed Wednesday for operating Germany's biggest ever tax carousel, in a scam involving the trading of carbon dioxide emission rights that netted them hundreds of millions of euros.

A Briton found to have led the Frankfurt-based gang was jailed for seven years and 10 months.

The scam involved charging value-added tax (VAT) and then absconding without handing over the tax to the government.

A Frenchman who registered ghost companies to collect the tax was jailed for three years by the Frankfurt court.

The group was allegedly backed by rich investors. The defendants, aged 27 to 66, had largely admitted the charges.

Under the European Union's carbon trading scheme, polluting businesses such as cement factories must buy rights to emit C02 from clean-energy businesses.

When British authorities decided to stop charging VAT on the rights, the trade in Britain almost dried up and moved to Germany, one defendant explained. Germany does charge VAT on such rights.

The defendants used accounts at Deutsche Bank, Germany's biggest bank. Prosecutors say they are still investigating seven employees of the bank. The bank says its own inquiry has found no evidence the employees were involved.

The bank's offices were among 230 premises around Europe raided in April 2010 by prosecutors and police.

The gang is alleged to have made off with 230 million euros (300 million dollars). Police say they had recovered 100 million euros so far. German prosecutors say more charges are pending against up to 170 persons, with possible total tax loss estimated at 850 million euros.