Undercover wildlife agents met financial sleuths for the first time last week in Lyon, France at a conference sponsored by Interpol intended to highlight the increasing complexity of environmental crimes and the tightening of environmental regulations in developing as well as developed countries. “Governments,” said Bakary Kante, in charge of the United Nations Environment Programme environmental law division, “should start preparing for an onslaught of environmental court cases.” Two hundred agents who will be investigating those cases came here from some thirty countries for the week-long conference to coordinate strategies around global environmental crime networks.
Inside the high security Interpol compound, located just blocks off the River Rhone, the only visual reminder of ‘the environment’ was a heap of discarded computer parts assembled like an art installation in a corner of the marble and stone atrium. Emile Lindemulder, a Criminal Intelligence Officer with the Interpol Environmental Crime Unit, assembled the e-waste heap as a reminder of one of the agency’s chief responsibilities: helping national police agencies to enforce a global treaty, the Basel Convention, which restricts the international trade in hazardous electronic waste, which contain highly toxic chemicals and minerals.
The world inside Interpol’s global headquarters seemed somehow inverted, with police talking like environmental ngo’s about the need for vigilance and intelligence sharing to establish liability for environmental abuses—albeit dispassionately, and with a ‘get the job done’ directness. “We have to prove, and prevent, murder in the future,” is how M.C. van Leeuwen, an investigator with the Netherlands National Police, put to me the unique challenges of environmental policing. Following the evidence to prove liability can be challenging, he said, and it gets down to some of the unique characteristics of environmental crime: A polluter’s fingerprints may have been laid down decades before, a system of corporate trap-doors—front companies, foreign registries and the like—tend to obscure liability, and the uncertainties surrounding the science of toxicology can make establishing clear cause and effect difficult.
Now Emile Lindemulder and others at the agency want to expand Interpol’s mandate into an entirely new terrain: criminality in the global carbon markets. Those markets, operating in countries subject to the emission restrictions of the Kyoto Protocol, have grown exponentially over the past five years, churning through more than $300 billion worth of transactions over the past five years. “When there’s this amount of money involved,” Lindemulder commented, “criminals get interested.” Wildlife and e-waste police were encouraged to meet financial fraud experts—including agents from British, German and other securities police agencies monitoring financial crimes. Lindemulder explained that police from traditional realms of environmental enforcement are now compelled to understand the complexities of global finance. “The carbon markets involve so many parties, so many new instruments and forms of vulnerability that we haven’t been aware of before.” (I was invited to present my findings at the gathering, published in Harpers Magazine and aired on PBS FRONTLINE/World, exposing the difficulties in measuring the veracity of carbon offset promises, and the many uncertainties involved in turning tropical forests into carbon offsets).
The complexity of the carbon markets, operating with ambiguous oversight, present an array of new opportunities for fraud, commented Peter Younger, a veteran with Interpol and now in charge of the agency’s enforcement of wildlife and forest protection in Africa. “You’re talking about an international financial trade mechanism and the question is still evolving, where does the liability lie? We’re still filling in our knowledge gap.” The carbon commodities being traded, he said, are unlike any others. “You’re obtaining not a physical entity or asset but a piece of paper.” He cited as an example the rapid growth of interest in tropical forests serving as ‘offsets’ to companies’ carbon emissions. In countries where matters of land ownership are often disputed and unclear, the possibility for fraud is considerable, he said. “In effect, you could be falsifying ownership in something you can see in order to sell something that you can’t. And then inserting that into the carbon markets and selling it to people.”
Such a scenario is not as far-fetched as it sounds. The Overseas Anti-Corruption Unit in the City of London Police force is currently investigating allegations that a London-based offset developer, Carbon Harvesting Company, may have improperly claimed access to the forests of Liberia in order to sell the carbon rights to European and other companies. In other instances, traders have generated hundreds of millions of euros in illicit profits by pocketing unpaid taxes—a case which revealed that ninety percent of the carbon trading houses in Denmark were fronts for tax fraud.
The UK’s new Minister of Environment, Lord Christopher Smith, gave a keynote address, where he stressed his government’s commitment to cooperate with international law enforcement to tighten oversight of global environmental agreements. That includes the Kyoto Protocol, governing greenhouse gas emissions, which gave birth to the now multi-billion dollar carbon markets. “As the price of carbon increases, we know that the more lucrative it becomes, the more criminals will be attracted to the market,” he commented after his speech. “Being here at Interpol suggests how we need to be way ahead of the criminals in thinking about what they’re likely to do—whether trafficking in endangered species, in ewaste, or what might happen in carbon trading as it becomes an increasingly valuable commodity.”