in Australia

Supreme Court finds Shift2Neutral issued “fake” and “valueless” carbon credits

By the end of 2010, a small company in Australia called Shift2Neutral claimed to have set up REDD-type deals in Malaysia, the Philippines, Indonesia, the Solomon Islands, the Democratic Republic of Congo and Brazil.

The company claimed to have helped Oakhill College, a school in Sydney, become “carbon neutral”, and to have generated more than $1 billion in carbon credits. If true, the company’s claims would have made it one of the biggest REDD project developers in the world.

In August 2010, REDD-Monitor asked Brett Goldsworthy, the founder of Shift2Neutral, some questions about his REDD projects. Goldsworthy didn’t directly answer any of the questions, but stated that,

From Shift2Neutral’s perspective, may I just advise [sic] we deal in facts, we manage our projects in an ethical and open way to those people involved in the project and respect the wishes and desires of those involved.

Goldsworthy also sent REDD-Monitor a statement explaining Shift2Neutral’s position on Avoided Deforestation – a statement that was cut and pasted from another website.

In April 2011, in an article in the Sydney Morning Herald, Ben Cubby wrote that,

A Sydney carbon credits company thought to have been running some of the world’s biggest offsets deals appears to be a fake, shifting paper certificates instead of saving forests and cutting greenhouse emissions.

Goldsworthy brought defamation charges against Fairfax Media, the company that owns the Sydney Morning Herald over this and another article published in April 2011.

This week the New South Wales Supreme Court found that Goldsworthy and Shift2Neutral had lied and that the carbon credits were “fake” and “valueless”.

The decision by Acting Justice Henric Nicholas is available in full on the New South Wales Supreme Court website. It makes for interesting reading.

Acting Justice Nicholas had this to say about Goldsworthy:

Although Mr Goldsworthy appeared to be a person of extensive commercial experience, I formed an unfavourable view of him as a truthful witness, and found that his evidence should not be accepted unless corroborated by credible documentation. He was generally unwilling to assist the Court on matters about which he was the repository and controller of relevant information. On many occasions he feigned difficulty in understanding or responding to direct questions, and was ready to tailor his evidence in accordance with what he perceived would best advance his case.

On the carbon credits that Shift2Neutral issued to Oakhill College Acting Justice Nicholas stated:

In my opinion, the truth is that the credits described in the certificates issued to Oakhill were non-existent and the numbers were bogus. I find that the certificate was valueless and provided no support for the claim that Oakhill had become carbon neutral by the acquisition of carbon credits. It was a fake. Mr Goldsworthy’s claims that the credits described were valuable and genuine were, in my opinion, false and deceptive.

Acting Justice Nicholas also found that Shift2Neutral’s carbon credits from its REDD project in the Philippines were a figment of Goldsworthy’s imagination. REDD-Monitor wrote a timeline of the project in December 2010, and asked whether Goldsworthy was fraudulent, incompetent, or both.

Here’s an extract from Acting Justice Nicholas’ Judgment:

77 On 14 May 2009 Shift entered into an agreement with the Coalition to supply carbon credit certification services for its land on Mindanao, an island of the Philippines. It was agreed that the benefits would be shared equally. Mr Goldsworthy said the project had not been completed, and certification had not taken place as the identity of the owners was, and remains, uncertain, although in his mind the owners are the tribes identified in the agreement.

78 In emails of 5 and 6 October 2010 to Mr Victoriano Vidal, a representative of the Coalition and a signatory to the agreement, Mr Goldsworthy questioned whether he wished to stop the tribes from receiving their share of $500 million. In an email to Mr Vidal said to have been sent in November 2010 (Ex 30) Mr Goldsworthy stated:

    The NGO in charge of the tribes – TRICOM have advised tonight they do not want the US$500,000,000 funds held in trust by our carbon credit broker.
    I believe they have trouble confirming the ownership of the ancestral land we have certified and sold the credits for (sic).

    Therefore may I request a phone conversation so I may forward the funds to the Climate Change Commission and ask that you and the Senator may choose to do what is appropriate with the funds for Climate Change and the Tribes.

    As far as SHift2Neutral is concerned we wish to just give the funds to the rightful owners but Tricom chose to cause issues with the process of certification and had made threats of kidnappings in Manila.

79 He agreed the email stated in explicit terms that there were half a billion dollars held in trust by a carbon credit broker. However, he denied that he intended to convey that carbon credits had been sold and the money banked. Mr Goldsworthy proceeded to say that the funds were “…held by the broker, by an investor, who was looking at purchasing our carbon credits for this particular project” (T p217 lines 17-18) and adhered to his evidence that there were $500 million in a trust account although no carbon credits had been issued. His counsel said supporting documentation would be produced, but none was.

80 In my opinion, the email of November 2010 is to be reasonably understood to represent that Shift had certified and sold carbon credits, and that $500 million was held in trust as funds payable to the Coalition as its share of the proceeds of the sale. As the agreement provided that the sale proceeds were to be shared equally, as Mr Vidal would be likely to know, the effect of the representation was that Shift had sold the carbon credits for the total amount of $1 billion. This was consistent with the message conveyed in the emails of 5 and 6 October 2010.

81 Mr Goldsworthy’s evidence demonstrated the falsity of the representation. Certification had not been completed, and no carbon credits had been issued. There was no evidence which supported the existence of the transaction to which the email referred, and such evidence as there was negated it.


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