August 15, 2011 / 11:39 AM / 9 years ago

Six stand trial in carbon fraud case in Germany

* Six accused named and come from Germany, UK and France

* Accused of evading over 200 mln eur in tax fraud scheme

FRANKFURT, Aug 15 (Reuters) - Six people accused of evading more than 200 million euros ($281.7 million) in a tax fraud scheme in the European carbon market appeared before a court on Monday as their trial started in Frankfurt.

The six men, aged 27 to 65, are accused of having conspired from September 2009 to April 2010 to evade value-added tax (VAT).

They were named as Claude Bauduin, Robert Peitzmeyer and his son Bjoern Peitzmeyer, Wayne Stewart Brown, Irfan Musa Patel and Fraz Mir.

The accused were not asked to make a plea at this stage.

German prosecutors have identified around 170 suspects in carbon fraud, but a spokesman for the court said the cases of the six standing trial now were seen as most pressing as they had been remanded in custody.

The prosecutors said the accused, who came from Germany, France and Britain, took advantage of certain tax rules in Germany that were valid until June of last year.

According to a court statement, the hearing is scheduled to run on Monday and Wednesday this week and then regularly until at least March 5, 2012.

The defendants could get prison sentences of six months to 10 years for each indictable offence if found guilty, the court spokesman said.

The fraud works by buyers importing carbon permits in one EU country without paying VAT and selling them in another, adding tax to the price but pocketing the difference for themselves.

In the UK, seven defendants have been charged over suspected VAT fraud in the carbon market. A plea and case management hearing is scheduled for Oct. 31, a spokeswoman for HM Revenue and Customs told Reuters on Monday.

The trial was delayed in June due to mounting evidence, which the defence said had become unmanageable in the current time frame.

The EU carbon market has suffered from a series of damaging scandals since its launch in 2005, which apart from VAT fraud include a long-running glut of permits, theft and recycling of carbon credits.

Carbon trading is a cap and trade system for CO2 emissions certificates. Transfers are recorded in national registries before being stored in the overall EU log, called CITL.

Carbon credit fraud is a variation on VAT carousel fraud which has also happened in other markets. (Reporting by Vera Eckert; editing by Nina Chestney and James Jukwey) ($1=.7099 Euro)

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