Earlier this month, REDD-Monitor wrote about a Dubai-based company called Advanced Global Trading. AGT is yet another company that sells voluntary carbon credits as an investment. REDD-Monitor asked whether the company was a boiler room, a Ponzi scheme, or both.
Ian Hainey, PR Director at AGT, responded to the post but provided little new information about the company and how its carbon credit Trading Platform actually works.
UPDATE – 27 May 2013: Yesterday, AGT sent a “company statement” in response to these questions.
On its website, AGT makes several extravagant claims about how much people who invest in the company will make, such as this one, “AGT Clients enjoyed 30.2% returns on their investments in 2011”:
But things started falling apart recently. According to commentators on REDD-Monitor (here, here and here), AGT is telling its clients that the carbon price is about to crash to US$3 and is advising them to sell carbon credits and buy Strategic Earth Metals – with an additional fee of US$15,000. AGT is giving them 72 hours to pay.
REDD-Monitor sent the following questions to Charles Stephenson, CEO of Advanced Global Trading, and looks forward to posting his response.
From: Chris Lang
Date: 24 May 2013 12:33
Subject: Some questions about AGT for Charles Stephenson
Greetings from Jakarta! My name is Chris Lang and I run a website called REDD-Monitor (www.redd-monitor.org).
Recently I’ve been looking into companies selling voluntary carbon credits as an investment. I wrote about Advanced Global Trading on 9 May 2013 and AGT’s Ian Hainey responded on 21 May 2013.
I would be grateful if you could answer the following questions about AGT:
1. What price is AGT selling carbon credits for today? How does AGT determine its price?
2. From which projects does AGT buy its carbon credits? Why don’t you provide these details on AGT’s website? As you know, the price of voluntary carbon credits usually varies depending on the type of project and the vintage of the credits.
3. How many people does AGT employ? How many of these people are employed to sell carbon credits as investments?
4. Could you please send a copy of AGT’s Annual Reports for 2010, 2011, and 2012. I couldn’t find them on the company’s website.
5. A recent article by Carbon Finance about the voluntary carbon market describes the market as stable, but quotes Zubair Zakir of CarbonNeutral Company as saying that, “There has been downward pressure on prices.” Yet in AGT’s graph for 2012, the price of carbon credits increases steadily. How do you explain this?
6. In 2012, Franklin Connellan, head of investments at AGT, said that “Over the last 12 months, carbon has seen a return of over 22%.” Yet when we look at The Intercontinental Exchange’s report for March 2013 (below), it clearly shows that the price of carbon is dropping, to a very low current value. How does AGT achieve returns of 22%?
7. How do you explain AGT’s price for voluntary carbon credits of US$15.47 per ton? This is significantly higher than the average price for VERs and a great deal more than the cheapest VERs available.
8. In an SMS message to a journalist in South Africa, AGT offered returns of up to 30% per annum. Isn’t this misleading, particular at a time when the carbon markets are in turmoil?
9. In 2011, you described voluntary carbon credits as, “a commodity that never goes down.” As I’m sure you are aware, there is no commodity on the planet that does not go down at some point. Why would you say that carbon never goes down?
10. In the same interview, you said that you went into business with a friend a few years ago and ended up losing a lot of money. Who was this friend and what was the business venture? What went wrong?
11. Did you buy the Ferrari that you mentioned in the 2011 interview?
12. Why did you decide to move the company to Dubai? Are any of AGT’s offices in the UK still open?
13. AGT was listed as one of the companies that Gemmax Solutions provides clearing and settlement services. This service was previously offered by Carbon Neutral Investments (which was previously called AGT Investments Ltd and is now called Opus Capital). Is there any link between AGT (your company ) and , CNI, AGT Investments Ltd, Opus Capital and/or the director of these companies, Paul Seakens? A few days ago, the Gemmax Solutions website went offline. Do you know what happened? Which company now provides clearing and settlement services for AGT?
14. Andrew Ager, ex-head of carbon and emission at Bache Commodities argues that voluntary carbon credits are not a suitable investment. “You would only buy voluntary carbon credits to offset your carbon foot print. There is no other economic reason,” he said in a 2012 presentation to the City of London police. Why are the credits that AGT sells any different?
15. Some commentators on REDD-Monitor have written that they have been contacted recently by AGT and told that the market is about to crash to US$3/ton. AGT is advising them to transfer from carbon credits to “Strategic Earth Metals” (for an additional US$15,000). Please explain what this is all about. Why is the market about to crash?
16. There have also been warnings about boiler room companies selling Strategic Earth Metals (or Rare Earth Metals as they are commonly known). For example, an article in The Independent from earlier this year warns about the risks involved. Aren’t you moving from one commodity that isn’t suitable as an investment to another?
17. Several companies selling carbon credits as an investment have gone into liquidation, the police have raided companies’ offices and two people have gone to jail for fraud. Why should anyone believe that AGT is different?
18. Why does AGT have a minimum investment of US$25,000?
19. AGT is the Lotus Formula 1 Team CO2 neutral partner. How did you calculate the emissions of the Lotus F1 Team? Which projects supplied the carbon credits to offset these emissions?
20. When Ian Hainey, AGT’s PR Director, wrote to REDD-Monitor he objected to the description of AGT as a Ponzi scheme, but he provides no information to explain how AGT manages to keep its price for voluntary carbon credits going up. Please explain in detail how AGT’s Trading Platform works, how the price is set and why it is not a Ponzi scheme.
21. In his response to REDD-Monitor, Hainey wrote the following:
“In the USA, AGT is represented by the head of carbon markets (based in Chicago) at the leading international law firm of Baker McKenzie. This framework has been presented to various participants in the voluntary carbon market, including The Gold Standard, VCS, Markit and NYSE Blue (APX) in an effort to establish it as the industry standard for the buying and selling of Carbon Credits at the retail level. AGT considers its business model and practices as industry leading and best practices which are highlighted in the framework.”
Three days ago, I wrote to Michael Morkin, Managing Partner at Baker McKenzie in Chicago to ask whether it is true that Bakie McKenzie’s head of carbon markets represents AGT. So far I have not received any reply.
Could you please let me know who I should contact at The Gold Standard, VCS, Markit and NYSE Blue (APX) to discuss AGT’s Trading Platform.
22. APX has a warning on its website about buying voluntary carbon credits as an investment:
Should I invest in VCUs?
Unlike instruments approved for use in compulsory carbon cap and trade programs, no entities are required to purchase and retire voluntary carbon offsets. Entities that voluntarily seek to offset their GHG emissions footprint (such as corporations, governments and individuals), project developers, traders and investors are active participants in the VCU market. Therefore, there is little ability to accurately forecast demand and supply in the voluntary carbon offset space. As a result, APX strongly believes that VCUs are not suited for individuals to target as a short, medium or long-term investment. Our view is shared by the UK Financial Services Authority as well as the International Carbon Reduction and Offset Alliance.
What was APX’s reaction to AGT’s Trading Platform? And who at APX was AGT in touch with about this?
Thank you for your time and I look forward to hearing from you. Please consider your response to be on the record.
Regards, Chris Lang