Ethical Trading and Marketing Limited: A scam involving tax havens, tax evasion, non-existent plantations in Brazil, and carbon credits
And a renowned British conservationist called Ian Swingland
Ian Swingland is a renowned British conservationist. In 1989, he founded the Durrell Institute of Conservation and Ecology at the University of Kent. He worked on drafting the Convention on Biodiversity, and for the World Bank, the Global Environment Facility, the Asian Development Bank, and the UK Government. He was involved with the Iwokrama International Centre for Rain Forest Conservation and Development in Guyana. In 2007, he was awarded an OBE for services to conservation.
In 2002, Swingland was co-author of a paper published The Royal Society titled “Social capital from carbon property: creating equity for indigenous people”.
The authors express their concern that carbon trading is “another tool for capitalists to exploit the indigenous communities of the developing world”.
And then they write,
However, one virtue of trade is that it can be made subject to constraints. Through international treaties and agreements, trade can be constrained and national governments obliged to observe the rules of the trade.
But, almost as if to prove the naivety of this statement, within two years of writing this Swingland was involved in a tax evasion investment scam involving carbon credits.
This story features the tax havens of Mauritius and the Seychelles, bank accounts in Cyprus, a tax evasion scam, a fake HIV cure, non-existent tree plantations in Brazil, and carbon credits. Exposing the scam required cooperation between authorities in the UK, Germany, Mauritius, Brazil, the Netherlands, France, Cyprus, and the United States.
Swingland’s role was to submit fake documents that added authenticity to the scam. At a trial at Southwark crown court in March 2017, he was convicted of one count of conspiracy to commit fraud by false representation. He received a two-year sentence, suspended for 18 months.
And in November 2017, Swingland’s name was removed from the register of members of the Order of the British Empire.
The tax evasion scam
The scam was run by Antony Blakey and John Banyard. On 13 December 2004 an Extraordinary General Meeting of a company called London International Removals Limited passed a resolution to change its name to Ethical Trading and Marketing Limited.
Blakey and Banyard became directors of the company on 15 December 2004.
Blakey was appointed to a total of 41 companies, all of which are now dissolved. Banyard was appointed to 35 companies, all except one of which are now dissolved. He resigned from many of the companies on 22 February 2010.
Here’s how The Times reported the scam on 26 February 2019 (reporting restrictions were lifted on 25 February 2019):
The scam, called Ethical Trading and Marketing, promised wealthy investors they would minimise their tax burden by investing in tree-planting in the Amazon and research into HIV care. They raised £160 million from 544 people in total, averaging £294,117 per investor.
The gang sent Swingland’s false documents and fake photographs to Her Majesty’s Revenue and Customs to maintain the pretence of environmental investment.
The scammers claimed that they were investing the money in Brazil between 2005 and 2008. But HMRC, the UK tax authority, could find no evidence of the money having been invested, or of any funding of HIV research.
Sideways tax relief and carbon credits
The total amount of tax avoided was more than £60 million, through something called “sideways tax relief”. This involves subtracting losses from one company from profits in another company. As a result less profit appears to have been made and therefore less tax is due.
Southwark Crown Court was told that the investment scheme involved planting trees in deforested areas in Brazil and subsequently trading carbon credits. This would involve spending large sums of money early on in the scheme to plant the trees - well before any returns would be made.
During the trial in September 2016, The Telegraph reported that:
The example was given of a banker who had been paid a £1 million bonus. By parting with around £230,000 the banker would “loan” the rest of the cash from a lender connected to the scheme.
As a result he would only pay out the £230,000 rather than the £400,000 he would usually pay in tax as he had “lost” £1 million in investment, the prosecutor outlined.
Blakey and Banyard set up a company called Carbon Research and Development Ltd that was supposed to carry out environmental contracts worth millions of pounds. The company was incorporated in the tax haven of Mauritius. The money was instead used to claim tax relief from HMRC.
In Southwark Crown Court the prosecutor Julian Christopher QC told jurors that Carbon Research and Development was “nothing actually more than a bank account operated by a management services company”.
The prosecution argued that Carbon Research and Development did not in fact own any land in Brazil.
The prosecutor explained that Swingland’s connection to the scheme “was a valuable asset to Anthony Blakey who could use his name to add credibility to the idea that CRD was a research company of substance”.
“Significant planning”
The Judge, Jeffrey Pegden QC, said,
“The offences required significant planning and the fraudulent activity was over a sustained period. You were all involved in different ways in dishonest tax schemes.
“Antony Blakey, you lay at the very heart of these schemes, playing a part in devising them and ensuring their sale, and then lying to Her Majesty’s Revenue and Customs over a prolonged period.”
Blakey was jailed for seven and a half years on 10 March 2017 at Southwark Crown Court. On 25 May 2017, this was revised to nine years at the Court of Appeal.
Banyard was jailed for four and a half years on 10 March 2017 at Southwark Crown Court. On 25 May 2017, this was revised to five and a half years at the Court of Appeal.
Martin King, a financial planner, was given an 18 month sentence, suspended for two years after pleading guilty to fraudulent tax evasion.
Blakey, Banyard, and King used companies registered in the Seychelles and bank accounts in Cyprus to hide their personal income and evade tax.
Simon York, Director of Fraud Investigation Service, HMRC, said:
“This was a calculated and cynical crime carried out by men who had no shame in using a worthy cause like HIV research to mask their criminality. In doing so, they attempted to steal millions of pounds from the taxpaying public - money that ultimately pays for vital public services like the NHS.
“Promoting tax avoidance schemes is bad enough and we’re making it a priority to go after those who market them, but for these men that was just a first step in establishing an elaborate criminal operation that included offshore accounts, fake transactions and blatant lies.”
Great writing and research - you should consider selling movie rights to this story! This scheme is a window into carbon marketing, for sure. What better way to make money when you have "nothing" to sell!