“I probably will go to jail,” says Steve Wentzel, the man behind the Kariba REDD+ project in Zimbabwe

New article in The New Yorker by Heidi Blake, “The Great Cash-for-Carbon Hustle”.

Steve Wentzel is a white Zimbabwean entrepreneur. He’s a former show jumper. He runs an offshore finance company called EBC Guernsey Limited, incorporated in the tax haven of Guernsey. He’s invested in gold mines, run a safari company, and sold health insurance. And he had a money-lending operation based in the tax haven of Mauritius.

He got involved in REDD after a debtor failed to repay a loan. The debtor gave Wentzel a plot of land near Lake Kariba in the north of Zimbabwe.

Wentzel at first thought the land was useless. But then he heard about carbon credits. He found a company called South Pole in a Google search.

Wentzel sent South Pole an email in 2010. It was the birth of the Kariba REDD project.

The Kariba project became South Pole’s biggest generator of carbon credits. In 2022, it accounted for about 10% of South Pole’s revenue.

A series of companies have bought Kariba carbon credits, including TotalEnergies, Volkswagen, Delta Airlines, Ernst & Young, McKinsey, Gucci, Lidl, and energy supplier Greenchoice.

But in recent years, the project has become controversial. In 2021, Bloomberg reported on TotalEnergies’ claim that its fossil gas was “carbon neutral” thanks to carbon credits from the Kariba project.

In 2023, Follow the Money has published a series of excellent investigative reports into the Kariba project and South Pole. The project massively overestimated the rate of deforestation that would have happened in the absence of the project. And, as a result, the project has sold “considerably more carbon credits than the emissions it prevented in Zimbabwe”.

The Great Cash-for-Carbon Hustle

Today, The New Yorker has published a major investigation into Kariba and South Pole’s role in selling fake carbon credits. Written by Heidi Blake and titled “The Great Cash-for-Carbon Hustle”, the article notes that South Pole has sold almost US$100 million carbon credits from Kariba.

Blake’s article is brilliant and is well worth reading in full. Blake got to speak to Steve Wentzel.

This post focusses on what Blake uncovered about Wentzel and his role in the Kariba REDD project.

Wentzel told Blake the people living in the project area in Zimbabwe would be getting money for nothing:

“Don’t cut the trees down, that’s about the sum total of what they have to do. We don’t ask them to get up in the morning, we don’t ask them to do press-ups, we don’t ask the birds to fly backwards. It is just a net positive for them.”

Wentzel set up a company called Carbon Green Investments, incorporated in the tax haven of Guernsey. He told The New Yorker that,

“You have to use certain conduits. Ultimately, my goal is to make sure that the project succeeds, and everyone gets the benefit. How it gets there? I’d rather you didn’t ask those questions.”

Due diligence red flag

In 2022, South Pole was considering investing in Carbon Green Investments.

South Pole’s head of corporate investment, Dirk Muench, carried out a due diligence process. Here’s how Blake describes that process:

[H]e pulled the records of payments to Kariba and saw that all the money - some forty million dollars - had been wired to a single account in Guernsey. He told Wentzel that he needed evidence of where the funds from that account had gone. But, after six months of e-mails and phone calls and another meeting in Zimbabwe, Wentzel remained evasive. South Pole had hardly any idea what had happened to tens of millions of dollars its clients had spent supposedly offsetting their carbon emissions.

The actual amount of money that South Pole transferred to Carbon Green Investments isn’t clear. Wentzel confirmed that €40 million figure to Follow the Money.

But in January 2023, Follow the Money wrote that,

after Follow the Money suggested to South Pole that it made more from Kariba than it disclosed to the outside world, it changed its tune, now claiming that 57 million euros went to Zimbabwe.

According to project documents, Carbon Green Investments was supposed to keep 30% of the money. The rest was to be used to fund project activities, pay district councils, and to go into a rainy-day fund. Some money has gone into school huts, clinics, farming activities, anti-poaching patrols, and fire suppression.

In the summer of 2022, Wentzel finally sent a spreadsheet that accounted for only €6 million of the money. Muench told Blake that even that had “no backing, nothing behind it”.

On 9 July 2022, Muench sent an email to Renat Heuberger, South Pole’s CEO, and other executives. The subject line was “Red flag”.

Blake writes that, “He reported that, after a long investigation, he could only conclude that most of the funds for the Kariba project had gone astray.”

South Pole removed Muench from the inquiry into Wentzel’s finances.

Muench resigned from South Pole in December 2022, three days after South Pole held an online crisis meeting about Kariba.

Before leaving, Muench filed a report detailing his concerns about the Kariba project through South Pole’s whistle-blower channel. He received a response a few weeks later:

An investigation has been completed and we conclude that South Pole were following the approved Verra methodology. We are therefore going to close this case.

Heuberger told Blake that the Kariba project was as good as it needed to be. “Is it perfect?” he asked. “Is the guy a hundred per cent? Every dollar always a hundred per cent?” He shrugged. “You have to navigate your way around.”

“No paper trail”

In September 2023, Blake met Wentzel for breakfast at a bistro on Sloane Square in London. She writes that,

He wore designer chinos, Chelsea boots, and a crisp white shirt, but when he greeted me I noticed that he was missing a front tooth.

Wentzel admitted to Blake that the fact that he couldn’t account for the money was a feature, not a bug.

“There’s no paper trail,” he told Blake.

Political and economic instability made banking in Zimbabwe too risky for Wentzel’s liking. And Zimbabwe is sanctioned by Guernsey. “Do you know how much compliance I had to go through to just have one transaction?” Wentzel asked Blake.

Wentzel devised an untraceable way of moving the money. “It was illegal,” he told Blake, “but it got looked over”.

Blake describes the process as follows:

When he needed money for the project, he said, he would transfer it from Guernsey into the account of an acquaintance who wanted electronic funds, in “Mauritius or the Cayman Islands or the Seychelles or Russia or wherever,” and they would arrange for the equivalent in U.S. dollars to be delivered to him in Zimbabwe. Other times, he would pay an invoice for someone else - for a consignment of motorbikes, perhaps - and that person would deliver him the same amount in cash.

Wentzel told Blake that,

“This looks really bad, because you’re just sending money here, there, and everywhere, but, on the receiving side, I can show where we’ve got it. Well, I can show you the bundles of cash on the floor.”

When the cash arrived in Zimbabwe, Wentzel said he distributed it to the project. “For any kind of European or American, that’s not comprehensible,” he told Blake. “How many Western people have carried half a million dollars of cash in their hand?”

“I don’t know what you’re going to report on this, and I hope to God it’s not all of it, because I probably will go to jail,” Wentzel added.

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