Carbon offsets and tax havens: ClimateCare, Bunge, and Tricorona

By Chris Lang

Tax havens exist so that individuals and corporations can avoid paying income taxes. Registering a company in a tax haven is not illegal. Just a way of avoiding paying tax.

Torsten Fensby is a Swedish lawyer and expert on international tax evasion. He recently explained to the Swedish newspaper Dagens Nyheter why companies register in tax havens:

“The overall reason is always to reduce transparency. The business that the company conducts and the transactions carried out are of such a nature that they want to hinder transparency. Here, of course, the tax reasons play a big role.”

The result is that governments are robbed of money that could go on health care, education, or transforming the economy to avoid greenhouse gas emissions.

Fensby was speaking to Dagens Nyheter for an article by Lisa Röstlund looking at how Swedish authorities have bought carbon offsets from several companies registered in tax havens. This post is based on Röstlund’s article.

ClimateCare Limited is registered in Jersey

The Swedish Energy Agency has an agreement to spend about US$2.6 million on carbon offsets from ClimateCare Ltd.

On its website, ClimateCare gives its office address in Oxford. The company at this address, ClimateCare Oxford Limited, was registered at Companies House on 12 May 2011.

But a company called ClimateCare Limited was registered in the tax haven of Jersey on 6 May 2011.

ClimateCare was founded in 1997 by Tom Morton, Mike Mason and Edward Hanrahan. In March 2008, the company was bought by JPMorgan.

In August 2011, ClimateCare announced that it had completed a Management Buyout of the company. Hanrahan declined to tell Bloomberg how much it cost.

ClimateCare Limited appears in the Paradise Papers, a massive leak of financial documents, many from the companies Appleby and Estera. Appleby is one of the largest providers of offshore legal services. Appleby and Estera operated together under the Appleby name until 2016, when Estera became an independent corporate services provider.

(Click on the image for a larger version – or go to the original version on the Offshore Leaks website.)

The directors of ClimateCare Limited are Edward Hanrahan, Stuart Hanrahan, Tom Morton, and Richard Prosser. Prosser is a group director of Estera. Maxine Hanrahan, Edward Hanrahan, and Tom Morton are beneficial owners of ClimateCare. Appleby Secretaries (Jersey) Limited is the company’s secretary.

Two companies, Central One Limited and Central Two Limited, are shareholders in ClimateCare. According to OpenCorporates Estera Trust (Jersey) Limited is an administrator of Central One, Central Two, and ClimateCare.

Dagens Nyheter asked ClimateCare’s press officer why the company is found in the Paradise Papers. “We will get back to you on this issue,” she said.

No one from ClimateCare got back to Dagens Nyheter.

Bunge Emissions Limited is registered in the British Virgin Islands

Several Swedish authorities have bought carbon offsets from Bunge Emissions Limited, a company registered in the British Virgin Islands.

The parent company Bunge Ltd is registered in Bermuda.

In 2012, Bunge bought the UK-based company Climate Change Capital Group Limited. Bunge bought the company for US$9 million after the price of carbon offsets collapsed. Carbon Pulse reports that, “From 2002, CCC was one of the biggest investors in CDM projects, employing 150 people at the market’s height in 2009, but had shed more than half its workforce by the time of the sale.”

Bunge closed down Climate Change Capital in 2015.

As one of the biggest exporters of soy to China, Bunge is a major driver of Amazon deforestation. Not long ago, Chinese farmers fed their pigs with anything they could get hold of. Then in 2000, Bunge opened its first marketing office in China. By 2003, Bunge was the biggest importer of soy to China. In 2018, Brazil exported US$33 billion worth of soybeans.

Tricorona is owned by Sofostene which is registered in Cyprus

Tricorona Climate Partner AB runs the website klimatkompensera.se where individuals can offset their emissions from flying, driving a car, or heating their home. Tricorona also offers a similar service for companies.

Röstlund and Lindwall report that Tricorona is 66% owned by Tricorona AB and Tricorona Carbon Asset Management in Singapore. These two companies are wholly owned by Strofosene Limited, which is registered in the tax haven of Cyprus.

In July 2010, Barclays Bank bought an 85.7% stake in Tricorona for US$142 million. In July 2012, Barclays sold the company back to Strofosene.

In 2004, Barclays became the first major bank to set up a carbon trading desk. In May 2010, Barclays set up a company called Barclays Carbon (UK) Holdings Limited. It was registered in the Cayman Islands. When Barclays bought Tricorona, the shares were transferred to Barclays Carbon (UK) Holdings.

Niels von Zweigbergk was a director of Tricorona, and is an owner of Strofosene. He was also a director of Barclays Carbon (UK) Holdings. In 2012, he emigrated to Singapore.

Dagens Nyheter asked Zweigbergk about Strofosene’s turnover and profit. “I don’t comment on my private finances,” he replied. He also declined to answer how much he has earned from his carbon trading operations.

Asked why Barclays Carbon (UK) Holdings was registered in the Cayman Islands, he replied, “I don’t know why Barclays chose to register the holding company in the Cayman Islands.”

Zweigbergk also makes an appearance in the Paradise Papers. He is a shareholder and director of a company called Goldblue Plc. The company is registered in Malta, listed in Sweden, and offers online casinos, jackpot games and slot machines aimed at the Asian gaming market.

Dagens Nyheter asked Zweigbergk about a 2008 deal between Tricorona Carbon Asset Management and the Swedish Energy Agency to buy carbon offsets from China. It was reported in Sveriges Natur and involved an agreement to buy nine million carbon offsets from wind farms in China, at a fixed price of €12 each. The carbon offsets were to be delivered between 2009 and 2012.

But the price of CERs (Certified Emissions Reductions, or offsets under the UN’s Clean Development Mechanism) collapsed after the financial crisis. At the beginning of 2012, CERs were selling for €4 each. A year later the price had fallen to €0.30.

When Carbon Asset Management went bankrupt, the Swedish Energy Agency was left with €14 million to pay. In effect, the Swedish Energy Agency had taken on the business risk for a private company.

Zweigbergk claimed to know nothing about any of this. “I can’t comment,” he told Dagens Nyheter. “I know of no official criticism of Tricorona from any authority.”

In 2014, a UK high court judge ruled on a case involving Tricorona AB, Barclays, and a company called CF Partners. The judge, Robert Hildyard, found that Barclays had misused confidential information during its acquisition of Tricorona. Barclays agreed to pay CF Partners €10 million.

Zweigbergk was a witness in court. In his judgement (which is well worth a read) Hildyard describes Zweigbergk as “ostensibly polite”. He writes that Zweigbergk “pretended considerable experience in the primary markets, which the evidence suggests he did not have.” And he describes part of Zweigbergk’s evidence as “unreliable”.

“I do not regard him as dishonest; but he was not candid,” Hildyard concludes.

 

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PHOTO credit: Elin Lindwall, Dagens Nyheter.