August 9, 2010 / 9:34 AM / 10 years ago

CEZ stops some carbon trade over fraud suspicions

* CEZ says remains in carbon trading despite media reports

* Declined to name firms involved, to issue statement later

PRAGUE, Aug 9 (Reuters) - Czech CEZ CEZPsp.PR, central Europe’s biggest utility, has stopped trading carbon emissions with a number of smaller companies over fears of potential tax fraud, CEZ said on Monday.

CEZ, which declined to say what companies were involved and said it planned to issue a statement later on Monday, made clear that contrary to local media reports the company had not stopped speculative trading in European Union carbon emissions permits.

“We only stopped cooperating with some of the smaller players, where there could be suspicion that they are involved in a similar type of transaction (involved in tax fraud),” CEZ spokesman Ladislav Kriz said in a telephone interview.

“Otherwise, emissions trading has not been affected.”

European tax authorities are investigating a suspected 5 billion euro ($6.65 billion) tax evasion scam in carbon trading in at least 11 countries. They have carried out raids and have arrested at least 29 people in several nations earlier this year. [ID:nLDE64J25K]

The scam, also called ‘missing trader’ or ‘carousel’ fraud, occurs when companies buy carbon permits in one country without paying value-added tax (VAT) and sell them on the spot market in another, adding tax to the price but pocketing the difference for themselves before disappearing. (Reporting by Jan Korselt and Michael Kahn, Editing by Michael Szabo)

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