Between 2 May 2011 and 24 October 2012 a London-based company called MH Carbon sold more than four million carbon credits to members of the public as investments. The carbon credits were worthless and investors lost their money. The company took at least £14.3 million from retail investors.
In December 2016, Gavin Manerowski, director of MH Carbon from September 2010 to October 2012, was disqualified from being a director in the UK for 12 years.
Reporting on Manerowski’s ban, Tony Hetherington writes in the Financial Mail on Sunday:
Though the Insolvency Service found Manerowski responsible for misrepresenting the value of carbon credits, no further proceedings have been brought against him and it appears he will be allowed to keep the profits he made through MH Carbon.
REDD-Monitor first wrote about MH Carbon in January 2013:
MH Carbon was another investment scam that managed to convince the Financial Times’ blog FT Adviser to run stories by its employees.
In March 2012, Richard Clark, a senior consultant at MH Carbon, wrote a long piece for FT Adviser titled “Carbon investments: Would you credit it?”.
Clark’s article acknowledges that some “carbon brokers” are reading from scripts, but he attempts to make MH Carbon appear different. The article starts as follows:
Carbon credits are the new talk around the investment community, offering promises of huge returns along with the added bonus of saving the planet.
But, looking beyond the hubbub on the trading floors, is the carbon market an over inflated bubble or is this really the beginning of a new, stable market?
Contrary to the regurgitated scripts of some carbon brokers, there are no guarantees, there are risks and there are downsides. However, if done the right way, there is also the potential to make incredible returns.
In its case against Gavin Manerowski, the Insolvency Service points out that had Manerowski carried out research about the suitability of carbon credits as an investment he would have found that:
- As early as 2010, it is apparent that HMRC [HM Revenue & Customs]; the FCA [Financial Conduct Authority]; the Registries and the carbon credit market’s own self-regulating authorities considered that there was no viable secondary market for VERs [voluntary carbon credits] and that, even if there was, members of the public had no access to it.
- In the absence of a viable secondary market for VERs, investors were and are unable to sell their VERs, whether for a profit or at all, and will suffer financial loss as a consequence. He knew, or ought to have known, that this was the case.
Unfortunately, FT Adviser’s editors appear not to have carried out any research into the suitability of carbon credits as investments. Clarke wrote on the FT Adviser blog that,
The spot trading of voluntary carbon credits is now widespread and has become increasingly mainstream. Now, speculators are starting to reap the benefits as carbon brokers around the City begin to show profits. Profits are realised when the carbon broker sells the investor’s asset to a company that buys them at a higher price than that originally paid.
Clarke’s article has since been quietly removed from the FT Adviser website.
MH Carbon was part of a web of companies selling carbon credits as investments. In May 2014, the Insolvency Service announced that 13 of these companies were being shut down, including MH Carbon. Citadel Trustees was operating behind the scenes of this web of companies. Citadel Trustees has since been renamed as Highpoint Trustees and has recently gone into liquidation.