Tycoon jailed for multimillion-euro scam of French state

A French court convicted and jailed a tycoon today over a 283 million-euro (USD 314 million) carbon tax fraud, dubbed "the scam of the century" by French media.
Arnaud Mimran was sentenced to eight years and a 1 million-euro fine for the 2008-2009 fraud, which resulted in a major tax shortfall for French authorities.
During his trial he also caused upset in Israel by claiming that on another occasion he had donated 1 million euros to the election campaign of current Prime Minister Benjamin Netanyahu.
Mimran was taken away by the police inside the courtroom to be brought directly to prison, as ordered by the judge. Ten other defendants received sentences of between one and eight years from the Paris court, and six were also fined 1 million euros.

All were convicted of aggravated fraud and money- laundering. One person was acquitted.
A dozen lawyers attended the verdict hearing. They left the courtroom looking somber and unusually refusing to comment on the verdict to reporters.

The complex fraud involved an ultra-juicy financial sleight of hand, bringing into play phony offshore companies with straw managers and sidekicks used as figureheads, and causing huge losses to the coffers of France.
To fight global warming, the 1997 Kyoto Protocol created a tool, the "carbon market." In Europe, companies receive CO2 emission quotas every year, tantamount to a "right to pollute" to a certain limit. If they pollute less, they can sell the allowances they have left to other, more polluting companies.

But this market soon attracted organised crime. Criminals bought quotas in one country, free of tax, and sold them in another including value added tax. But they kept the nearly- 20-per cent VAT amounts for themselves and failed to pay them to the state.
The dirty money from VAT was transferred to foreign accounts, and part of it was then invested again in new, similar fraudulent transactions in order to multiply gains. Shell companies were specifically created for this purpose and deliberately went bankrupt or ceased operations just before paying VAT due in France.
The scam exposed in the trial lasted only seven months. It started in November 2008 and ended in June 2009 when French authorities decided to exempt the transactions from VAT due to suspicions of widespread fraud.