Worldwide Commodity Partners Limited – another carbon credit boiler room?

PHOTO Credit: Boiler Room.

Worldwide Commodity Partners Limited is a London-based commodity trading firm that is currently focusing on the carbon markets. Its website explains that “With carbon offsetting emerging as a rapidly growing market, an opportunity was clear.”

The company was recently named as Western Europe’s fastest growing broker, by an outfit called World Finance. (Yes, that’s the same World Finance that named Tullett Brown “Commodities Broker of the Year in Western Europe”, shortly before the High Court ordered Tullett Brown into liquidation “in the public interest”.)

After the Daily Mirror published an article a week ago titled, “So how exactly did Worldwide Commodity Partners get this award?”, World Finance removed from YouTube the video of James Burn, Senior Emissions Analyst at Worldwide Commodities receiving the award. In the video, Burns explains why Worldwide Commodity Partners is focusing on climate change and the carbon markets:

“We’ve seen a huge increase in clients wanting to be involved in a market that is going to give them more growth than the conventional investments that they currently have. The main reason for this is I think because sovereign debts are so high and obviously on the basis of the interest rates being so low, more conventional investments haven’t shown them the kind of returns they are looking for. So on that basis we’ve seen a move, a lot around, into the carbon market.”

Earlier this week, World Finance had posted a note on its website explaining that, “Pending further investigation into the category Fastest Growing Broker, Western Europe, 2012 (originally awarded to Worldwide Commodity Partners) this award has been rescinded.” Today, the note has been removed and Worldwide Commodity Partners is once again World Finance’s fastest growing broker in Western Europe.

But when the Daily Mirror’s reporters, Andrew Penman and Nick Sommerlad, decided to visit Worldwide Commodity Partners’ head office in the City of London, they found only a mail forwarding service. Worldwide Commodity Partners’ phone is answered by a virtual office servicing company.

The company’s director, Lee Thompson, didn’t reply to the Daily Mirror’s questions about his firm and carbon trading.

Worldwide Commodity Partners used to be called World Carbon. The company changed its name just one week before the Daily Mail published an article by Tony Hetherington about World Carbon titled, “Watch out for hot air over carbon sales”.

The company has an explanation of “REDDS” on its website:

“REDD is presented as an ‘offset’ scheme of the carbon markets and thus, will produce carbon credits. Carbon offsets are ’emissions-saving projects’ that in theory ‘compensate’ for the polluters’ emissions.”

And there’s a video explaining REDD, featuring World Carbon’s website address, giving the impression that World Carbon was somehow involved in making the video. But the video was borrowed from The Global Canopy Programme’s project, The REDD Desk. World Carbon simply added a couple of optimistic quotations about carbon markets, such as this one, slightly misquoted from a 2007 article in the New York Times: “The carbon market is expected to become the world’s biggest commodity market and looking to be a trillion dollar industry very soon.” (I couldn’t find any source for the second quotation, supposedly from Bloomberg: “2005 to 2011 the carbon market has grown by 791%.”) At the end of the video, after the Global Canopy Programme, is the World Carbon logo, with the note, “For more information on the carbon market visit . . . www.worldcarbon.co.uk”.

When the Daily Mail’s Hetherington contacted Worldwide Commodity Partners director, Lee Thompson, he got a response from Thompson’s lawyer, Anthony Field of Rosenblatt Solicitors:

“World Carbon Limited is a carbon credit trader in the Compliance and Voluntary market. Our [sic] terms and conditions clearly state the risks and these are signed by all our clients.”

It is true that Worldwide Commodities Partners website includes “Terms of Business” which have to be agreed to before registering with the company. These include the statement that,

“The purchase of VERs [Verified Emissions Reductions] should be regarded as high risk and speculative in nature, It can be difficult to assess what the market price is for Carbon Credits. You may not get back the full amount originally paid for VERs and you may lose the whole amount paid.”

The small print is honest, at least. The Terms of Business also explain that a company called Citadel Trustees Limited is the “Appointed Custodian”. Citadel Trustees is registered with the Financial Services Authority, the UK’s financial regulator. Worldwide Commodities Partners is not registered with the FSA. “So what does Citadel do?” asks Hetherington. It holds the carbon credits for Worldwide Commodity Partners and its clients. Which as Hetherington points out, puts it in a strange position. Citadel Trustees’ director, Anna Rickard told Hetherington that, “It would only be unethical for Citadel Trustees to knowingly and intentionally involve itself in a scam.”

But Citadel Trustees has no contact with World Commodity Partners’ clients. As Hetherington points out, Citadel Trustees should carry out its own due diligence.

Hetherington wrote his article because one of his readers wrote to him to tell him that he had received “very high-pressure phone calls from World Carbon” trying to persuade him to buy carbon credits.

Worldwide Commodity Partners recently advertised for new sales brokers to join the firm. The advert certainly suggests that Worldwide Commodities Partners uses a boiler room approach to sell carbon credits. Among the duties to be carried out is the following: “Will be given leads from a database to call and generate interest in the company’s products”, and in the skills required is this: “Strong telephone skills as this is 90% of the role”.