Two men have been disqualified from acting as company directors in the UK for a combined 17 years after their firm was found to be involved in VAT fraud relating to the EU carbon market, Britain’s Insolvency Service said on Friday.
Shiraz Omar Khan and Omar Chaudry Shareef were disqualified after an investigation by the agency found that between June and July 2009 their firm ISK Management Ventures Ltd. bought £189 million worth of EUAs from “missing traders” before selling them on to other wholesalers in the UK.
“ISK was involved in trading in a fraudulent VAT scheme which had been costing the UK Exchequer significant amounts of money at the time the fraud was perpetrated,” said Paul Titherington, official receiver in the Public Interest Unit of the Insolvency Service.
Khan, of Warlingham, Surrey, is disqualified until 2024, while Shareef, of London, is disqualified until 2023, the agency said. It did not state whether either man was charged with any crimes.
The probe was launched after Croydon-based ISK was wound up by the Insolvency Service in March 2012 for unpaid debts of £128.4 million owed to a supplier, Classic Mark International Ltd, which itself was wound up by UK tax authorities for hefty VAT losses.
“ISK acted as a ‘buffer’ intermediate trader separating the end user from the ‘missing traders’ earlier in the supply chains … Both of ISK’s suppliers of carbon emission credits were identified as missing traders with a common director,” the Insolvency Service said in a statement.
“Such missing trader fraud indicators included: no significant investment made yet a rapid increase in turnover to £189 million within six weeks of trading; the rapid succession of same day trades with all the goods sold without any leftover stock; sourcing suppliers and customers through the same internet forums; and websites the use of offshore banks.”
Missing trader fraud, or carousel fraud, involving EU carbon allowances is estimated to have cost European governments more than €5 billion in lost revenues in the past decade.
The agency said ISK’s directors failed to conduct adequate due diligence, or even “the most basic checks” into its suppliers despite being made aware of the high risk of VAT fraud in their sector.
All of the deals conducted by ISK were traced back to tax losses totalling at least £19 million, the Insolvency Service added.
By Mike Szabo – firstname.lastname@example.org