The European Investment Bank and USAID are supporting REDD through Althelia Climate Fund: A financial intermediary based in the tax haven of Luxembourg

On 13 June 2013, the European Investment Bank agreed to give up to €25 million to Althelia Climate Fund. This is the first time that the European Investment Bank has funded a European carbon fund. It is also the first time that the EIB has supported REDD, and it is doing so through a financial intermediary.

In a press release about the deal, Philippe de Fontaine Vive, EIB Vice-President responsible for new product development and innovation, says:

“The European Investment Bank is very glad to support the Althelia Climate Fund which is based on performance-based payment for ecosystem services. These innovative financial instruments, especially the REDD+ mechanism, need to be deployed at large scale.”

Althelia Climate Fund was formed in 2011. Conservation International was one of its first funders, providing US$1.35 million to Althelia. The money originally came from the Gordon and Betty Moore Foundation. Conservation International is also on Althelia Climate Fund’s Expert Board.

The two men behind Althelia Climate Fund, Sylvain Goupille and Christian del Valle, previously worked at BNP Paribas Corporate and Investment Banking. Goupille was head of Carbon Finance and del Valle was Director of Environmental and Forestry. While he was at the bank, del Valle worked on a US$50 million financial package for Wildlife Works Carbon LLC, that led to the creation of the Kasigau Corridor REDD project in Kenya.

Perhaps not surprisingly, Althelia Climate Fund’s first loan was to another Wildlife Works project, the Taita Hills Conservation and Sustainable Land Use Project. The Taita Hills project is also in Kenya, in the same region as the Kasigau Corridor project.

Profiting from the environment

On its website, Althelia explains that it aims to show that, “financial performance can be fully aligned with sound environmental stewardship and social development”.

Althelia’s Fund aims to generate profits in two ways:

The Fund generates revenues through the purchase and distribution of both environmental assets (including carbon and payment for ecosystem services) and environmentally-certified, sustainably-sourced commodities.

By 2013, Althelia Climate Fund had raised US$80 million.

In May 2014, Althelia received a US$138.8 million loan guarantee from USAID. Under the deal USAID guarantees 50% of loans that Althelia makes to REDD project developers.

Althelia Climate Fund will pay “nearly no” taxes

A 2014 report produced by Re:Common and Counter Balance investigates Althelia and questions EIB’s support to the company. The report, written by Antonio Tricarico, is based on research carried out by Merian Research.

Althelia Climate Fund is a Luxembourg-based SICAV-SIF. SICAV is the French abbreviation for a société d’investissement à capital variable which can be translated as an investment company with variable capital. SIF stands for Specialised Investment Fund. It’s an unregulated collective investment scheme that will run for eight years, with the option to extend by two years.

Re:Common and Counter Balance’s report notes that the Fund’s investment objective, is to buy Carbon Assets when prices are low and “to exit investments once underlying projects are fully operational and actually generate Carbon Assets when the markets are more liquid”.

Thanks to Luxembourg’s generous tax regime, Althelia will pay “nearly no taxes”, Tricarico writes. “The SICAV is not liable to any Luxembourg tax on profits or income. The SICAV is liable in Luxembourg to tax at a rate of 0.01% per annum of its Net Asset Value.”

The SICAV was incorporated on 12 December 2011 by Sylvain Goupille and Christian del Valle. On the same day, they established Althelia Climate Fund GP Sàrl, also in Luxembourg. Althelia Climate Fund GP Sàrl, the General Partner as it is referred to in company documents, manages the fund.

Althelia Climate Fund GP Sàrl owns Ecosphere Capital Limited, a London-based company that was registered in August 2011. Del Valle is a director of the company. Goupille resigned as director in April 2013.

Ecosphere Capital is in turn a member of a limited liability partnership called Ecosphere Capital Partnership LLP, set up by del Valle and Goupille in March 2012. Ecosphere Capital Partnership is an “investment advisor” to Althelia Climate Fund. In Re:Common and Counter Balance’s report, Tricarico suggests that, “Goupille and del Valle might be paid twice, first as General Partner and then as investment advisor”.

Althelia Climate Fund produced this diagram in 2013, illustrating the corporate structure (click on the image for Althelia’s pdf file):

Re:Common and Counter Balance’s report analyses Althelia Climate Fund SICAV’s accounts for 2013:

The 2013 Statement of Operations of Althelia Climate Fund SICAV reports total expenses of €783,503 in 2013, including €572,489 in management fees paid to the General Partner (Althelia Climate Fund GP), €106,100 of custodian, administration and domiciliation fees (to be paid to BNP Paribas Securities Services – Luxembourg) and €37,951 of similarly ill-defined “professional fees” 16 . Since the SICAV did not post any earnings in 2013, the net loss for 2013 was equal to the total expenses: €783,503.

And the report takes a look at some of the loans that that Althelia Climate Fund GP Sàrl made:

On 6 August 2013, Althelia GP “entered into a credit facility agreement in favour of Ecosphere Capital Limited for a maximum amount of €100,000. A first tranche of €50,000 has been paid on 8 August 2013”. On the same date Althelia GP signed two more loan agreements in its favour: a €150,000 loan from the company “Piccolo 5 Sa” (a company held by one of the two shareholders) and a second €150,000 loan from the second shareholder. Furthermore, in 2013 Althelia GP received a loan of €785,226.12 from the Conservation International Foundation.

Piccolo 5 S.A. is owned by Sylvain Goupille and is registered in Luxembourg.

The Luxembourg leaks

On 5 November 2014, the International Consortium of Investigative Journalists (ICIJ) released almost 28,000 pages of leaked tax agreements between more than 1,000 companies and the Luxembourg authorities.

While Althelia isn’t mentioned in the leaked documents, Althelia Climate Fund Sàrl’s registered address in Luxembourg, 5 rue Guillaume Kroll, did feature in the Luxembourg leaks. It turns out that Althelia shares its registered address with more than 1,600 other companies.

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