$171 million CO2 trading fraud probe: Germany issues warrants for two Pakistanis

German authorities on Tuesday sought the arrest of two Pakistani nationals on suspicion of tax evasion of 136 million euros ($171 million) related to the European carbon market, widening a carbon trading probe that has also drawn in Deutsche Bank. International arrest warrants were issued in late July for Mobeen Iqbal, 32, and Ashraf Muhammad, 35, both of whom are thought to be living in Dubai, the Frankfurt prosecutor's office said in an emailed statement.
"The accused are strongly suspected to have been backers and leading members of a gang employing a tax evasion scheme in connection with the trade of CO2 emission rights and to having evaded a total of approximately 136 million euros between August 2009 and April 2010," the statement said.
The prosecutors also took to social media website Facebook to seek help from the public in tracking down the two men. Tax fraud rocked the EU Emissions Trading System in 2009 and 2010, with European police agency Europol estimating that the activity had cost EU governments more than 5 billion euros in lost revenues. The fraud, often called missing trader or carousel fraud, involves a buyer importing goods free of value-added tax (VAT) into one EU member state from another.
The buyer then sells the goods onwards with VAT included in the price, often through a series of firms in an untraceable chain, before pocketing the tax and disappearing. In April, Frankfurt prosecutors charged two British citizens for suspected tax fraud amounting to 31 million euros in the same carousel trading investigation. Another Briton was arrested by US authorities in Las Vegas in May. The investigations broaden the carbon trading scandal that has also affected Deutsche Bank, where prosecutors are investigating 25 staff, including co-Chief Executive Juergen Fitschen and finance chief Stefan Krause, on suspicion of tax evasion, money laundering and obstruction of justice.
Prosecutors are not preparing to lay any such charges against the bank as investigators have turned their focus to the role of independent traders, a person close to the investigation told Reuters last month. The source said any potential charges against the bank would likely be over its negligence in failing to properly screen clients. The probe could conclude by the end of the year with a possible settlement agreement. Deutsche Bank said on Tuesday it was co-operating fully with authorities in the investigation, but declined to comment further. At least 14 people have been jailed across Europe since 2011 for their part in carbon trading carousel fraud.