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When plagiarism is not plagiarism: University of Peshawar allows 19% plagiarism to protect plagiarising Vice Chancellor

August 26, 2011

When plagiarism is not plagiarism

The Vice-Chancellor of the University of Peshawar,  Dr Azmat Hayat Khan was found guilty of plagiarism by a three-member committee of the Higher Education Commission that was constituted to probe the matter. The Higher Education Commission had submitted its report to the Governor of Khyber-Pakhtunkhwa who is also the Chancellor of the university.

For apparently political reasons, no action has so far been taken against the Vice Chancellor. Instead the University went on the attack. First they attacked the complainant, Mohammad Zubair, an assistant professor at the UoP Law College. They  suspended him and have now dismissed him and are going through a paper exercise to strip him of his law degree. Now they have attacked the Higher Education Commission for finding their beloved Vice Chancellor guilty. The defence of the Vice Chancellor is ingenious. First they have objected to the procedures followed by the Commission in not interrogating the Vice Chancellor. Since they felt this argument was probably a little weak they then redefined plagiarism so that the Vice Chancellor’s plagiarism was no longer plagiarism!!

The University has effectively created a Cheaters Charter. It has reinvented and redefined a plagiarism “threshold” of allowable copying as being 19% for scholarly articles and 25% for theses. And since – they claim – the Vice Chancellor only cheated to the extent of copying 18% of his book from others – what he did was not plagiarism!!

From being a case of the Vice Chancellor’s plagiarism this has now escalated to become a case of blatant corruption at the highest levels of the University and not excluding the Chancellor – who is of course merely taking a political position as the Governor of Khyber-Pakhtunkhwa.

The ethical standards of the University of Peshawar are beginning to stink.

Pakistan Today reports:

The University of Peshawar issued a clarification on a news item pertaining to plagiarism stating certain elements from a political group were involved. …. 

The HEC thus already had jumped to conclusions without inquiring into the matter which shows a partial approach and mala fide intentions. This in fact was the only inquiry in history in which the author under investigation was not called before the committee. The plagiarism policy of HEC point number eight section“E“ clearly reads that the author under investigation must be provided opportunity to justify the originality of their concepts. …..

The HEC Plagiarism policy states plagiarism cases be dealt by respective universities and the threshold is setup by the concerned University in light of the Quality Assurance guidelines of HEC. The percentage of allowed threshold decided by meeting of the Advance Studies and Research Board of University of Peshawar in light of HEC Quality Assurance guidelines, in its meeting held on 25/11/2009 was 19% allowed matching (threshold) for published research articles and 25% for thesis.
The plagiarism allegations against the Vice Chancellor were looked in HEC recommended software and the result was shown to be 18%. This is the same software which is being used all over the country and by HEC. The same document was checked manually and the matching percentage of Kulwant Kaur Book “Pak Afghan relations” to that of Dr Azmat Hayat Khan book was 17%.  …….

The press release stated the case was in court and an unbiased decision would be issued because the author would get a chance to explain his point of view and the facts of the matter. It said the University of Peshawar considered the HEC’s recommendation of a penalty and the press conference organized by them as contempt of court (against PHC decision) and will take the case to legal corners. It claims that the victimizing campaign is spear-headed by Zubair Mehsud. The press release denied Zubair was being targeted, as claimed by a newsreport, for raising his voice against the VC.
The press release said ex-Law College faculty member Zubair had been terminated for engaging in political activities against the VC’s directives and the used of defamatory language when issued show cause notice to explain his position on the matter.

But the demands on the Governor to replace the tainted Vice Chancellor are continuing to grow.

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Posted in Corruption, Education, Ethics, Pakistan, Politics, scientific misconduct | 2 Comments »

University of Peshawar turns vindictive against plagiarism complainant

August 26, 2011

An earlier post reported that the Vice-Chancellor of the University of Peshawar,  Dr Azmat Hayat Khan had been found guilty of plagiarism by a three-member committee of the Higher Education Commission that was constituted to probe the matter. The complainant, Mohammad Zubair, an assistant professor at the UoP Law College was suspended by the University. Now Noor Aftab at The News reports that the actions against Zubair have turned nasty and the University is trying to cancel his degree in retaliation:

A teacher who raised voice against alleged plagiarism by the Vice Chancellor of University of Peshawar now himself faces hard times , as somewhat controversial internal Fact Finding Inquiry Committee, constituted to probe authenticity of his own LLM degree, has recommended cancelling his degree. ….

….  Assistant Professor Muhammad Zubair said he approached HEC on March 10 and Governor House on March 16 this year to raise issue of plagiarism by the University of Peshawar vice chancellor. “The university administration got infuriated over it and an inquiry was launched on March 17 and I was suspended on March 20 to mute my voice against illegal act of the University of Peshawar vice chancellor”, he said.

Some small hope for Zubair lies in that the Civil Society has started a movement against the plagiarism of the Vice Chancellor Dr Azmat Hayat Khan, reports Pakistan Today.

After the alleged involvement of University of Peshawar (UoP) Vice Chancellor Azmat Hayat Khan in plagiarism, the Joint Action Committee of Civil Society against Plagiarism on Thursday announced to launch ‘Save Peshawar University’ movement to stop any such future incidents. Idrees Kamal, Dr Syed Alam Mehsood and office bearers of other civil societies told a press conference that plagiarism was not only an academic dishonesty but it also challenged the moral norms of the society. …

The committee said that ‘zero tolerance for plagiarism’ was the slogan often raised on various literary platforms. The Supreme Court chief justice termed literary plagiarism as a legally punishable crime, it added. 
Idrees Kamal and Dr Syed Alam Mehsood expressed their disapproval of the relevant authorities’ negligence in the matter. “Azmat Hayat (Khan) is still enjoying the office and the Khyber Pakhtunkhwa governor is a silent spectator”, they said, adding that if the vice chancellor was allowed to continue as head of UoP it would be a disgrace and the university might get blacklisted internationally.

But I am very pessimistic about  Zubair’s prospects. He is fighting a losing battle against a powerful establishment and he will likely have his law degree cancelled. Whether civil society in Pakistan can or will mobilise itself sufficiently to make any difference, either in protecting him or in having any sanctions levied against the plagiarising Vice Chancellor, is is very doubtful. Zubair does seem to have some support in society and at least in one newspaper but the blogosphere is probably not sufficiently developed or influential in Pakistan to have much impact.

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Posted in Education, Ethics, Pakistan, scientific misconduct | 2 Comments »

David Cameron was “played” by News International

August 23, 2011

David Cameron’s judgement in employing Andy Coulson has already been brought into question. Apparently Coulson was also privy to confidential documents and meetings beyond his security clearance and that he was spared – or protected from – the highest level of security vetting. It has been suggested that his appointment may have been at the behest of Rupert Murdoch or Rebekah Brooks.

It now appears that Andy Coulson was working for two paymasters strengthening the impression that David Cameron was not just a “dupe” but that he was being “played” by News International. Presumably the real objective for News International was the acquisition of BSkyB.

The BBC breaks this story:

Coulson got hundreds of thousands of pounds from News Int

Andy Coulson, the former editor of the News of the World who has been arrested on suspicion of involvement in phone hacking and bribing the police, received several hundred thousand pounds from News International after starting work as the Conservative Party’s Director of Communications in July 2007.

These payments were part of his severance package, under what is known as a “compromise agreement”.

According to sources, Mr Coulson’s contractual leaving pay was given to him in instalments until the end of 2007 – which means he continued to be financially linked to News International for several months of his tenure as David Cameron’s main media adviser. ….. Mr Coulson also continued to receive his News International work benefits, such as healthcare, for three years, and he kept his company car. ………

Related: Phone hacking: PM’s defence of Coulson over the years

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Posted in Business, Ethics, Politics, UK | 1 Comment »

Where are Muller’s Saab shares going?

August 22, 2011

The end-game for Saab is being played out and I can’t help feeling that – unlike for Gaddafi – this end-game is still one designed by Vladimir Antonov and implemented by Victor Muller. Svenska Dagbladet reports today:

Confidence in Saab is faltering as two major car dealers have stopped selling Saab in Sweden and also in the U.S. 

Meanwhile Victor Muller is “lending” his private shares to the fund that recently bought newly issued and discounted Saab shares to raise cash to pay salaries. And  it seems that to avoid the dilution of shares a complicated deal is being done with Muller’s shares

Saab (actually the parent company Swedish Automobile) in August, in a last desperate measure, used cash from GEM fund to pay salaries. GEM’s business is to buy newly printed shares at a discount and then sell them at a profit on the open market. This provided Saab with a needed cash injection, but was also a dangerous dilution with the risk that the stock price would go down.

The Dutch financial agency AFM, has said that now Victor Muller has got rid of almost half of his shares, 3.3 million and converted them into stock options along with 2.5 million unlisted class A shares.

“I sold zero shares, but lent my shares to GEM to allow them to sell them. I get non-listed A shares of the Company as compensation” Muller said in a an SMS text message. According to the AFM, it means at this time that Muller’s influence has decreased from 8.5 million to 3.6 million voting shares. According to Muller, the options are now directly convertible into A shares. “There is an instant convert to A shares and there are no conditions associated with stock options” he writes in his SMS.

Worker’s wages are due on Thursday and white-collar employees should be paid on Friday. Saab itself has been emptied of cash and assets and this may be another ploy. Of course money Muller raises by lending his own shares is cash to his private account. It can only get into Saab’s coffers if he provides a secure loan of some kind to Saab and I am sure he will not lose out as other creditors will in the event of an insolvency.

In the meantime Swedish authorities – the Swedish Enforcement Administration, or Kronofogden – have launched an official debt collection probe of  Saab where unpaid bills have been piling up for months as a first step in what could end in bankruptcy. Kronofogden’s Hans Ryberg announced last week that the probe results from the unpaid bills of  Sweden’s Infotiv, owed 224,000 kronor, and of Norway’s Kongsberg, owed 145,000 kronor.

Production has been at a standstill since April.

Related: Saab being plundered by Victor Muller and his friends

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Posted in Automobiles, Business, Ethics, Sweden | 1 Comment »

College athletes and accommodating professors

August 22, 2011

The massive commercialisation of college sports in the US has led to the situation where coaches can make $10 million per annum and sometimes have salaries which are 25 times higher than what the college president may earn. The media payments to the colleges for covering these sports is enormous and provides the incentive for colleges to have sports programs attracting the best athletes in spite of any academic shortcomings. Colleges provide the forum and the vehicle for the money-spinning sports enterprises. And since the colleges are supposed primarily to be academic institutions it becomes necessary to have – or seem to have – minimum academic standards that even the athletes must satisfy.

A PRICE TO PLAY  ‘Corrupt’ system in danger of collapse

But the academic standards to be fulfilled are merely a cover for the sports-based enterprise.  This in turn creates the pressure for colleges to create easy courses especially designed for academically disabled athletes and  for academics to go easy on athletes attending their courses. Effectively athlete students are encouraged to cheat and all the different codes of ethics and integrity that are created serve only as a way to define all the loop-holes in the code that can then be used to cheat without being declared a cheat.

“(Stanford) accommodates athletes in the manner that they accommodate students with disabilities.” Prof. Donald Barr, Associate Professor of Sociology and Human Biology

The recent case of Prof. Julius Nyang’oro and his 400 level class in Bioethics in Afro-American Studies is a case in point. An athlete got into the class despite having a score on the written portion of the SAT that was low enough that he needed to take a remedial writing class, which he took in the subsequent fall semester. No student received less than a B-minus on Nyang’oro’s course. The Charlotte Observer writes:

Julia Nichols, the student services manager for UNC’s Academic Advising Program, said it is unusual for any freshman to begin his or her college education with a 400 level course. The exceptions, she said, are freshmen who have demonstrated an aptitude, either through advanced placement classes or other experience and petition the professor to be allowed to take the course.

“As a general, blanketed rule, freshmen are not normally allowed to take 400 or 500 level classes,” she said.

There is little doubt that while inter-collegiate athletes are privileged, others suffer from being stigmatised as academically stunted. It would be unthinkable however for an academic student to be required to satisfy some minimum sports or athletic standard to graduate or to be stigmatised as athletically stunted. No athletically inept student is stigmatised because he cannot catch a ball.

If a professor knows you are an athlete, you are assumed to be stupid until you can prove otherwise. (White male water polo)

In a big, class (400 people). Before test professor said, “It’s an easy test. Even athletes can pass.” (White male swimming)

Professor asked the student athletes to stand on the first day of class and said, “These are the people who will probably drop this class.” (African American female, basketball)

….. They are seen as academically unqualified illegitimate students whose only interest is athletics, who expect and receive special treatment from professors and others. The perception is that in order to remain eligible and participate in sports they put in minimum effort, do little academic work, take easy classes and have others do their work for them. …..

But there is no reason to confine a college to only the so-called academic courses.

Perhaps if every college had a sports or athletic faculty where grades were obtained for performance and where courses at this faculty demanded a minimum level of performance, some of the hypocrisy would be eliminated. Promoting excellence in any discipline – even a sport – is surely a legitimate activity for any University or College. The brain does not have to be separated from the brawn.

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Posted in Education, Ethics, Sport | 1 Comment »

Vice Chancellor of Peshawar University found guilty of plagiarism but uses the courts and political pressure to remain in office

August 21, 2011

Dr. Azmat Hayat Khan : image US Embassy Pakistan

The Vice-Chancellor of the University of Peshawar,  Dr Azmat Hayat Khan has been found guilty of plagiarism by a three-member committee of the Higher Education Commission that was constituted to probe the matter. The Higher Education Commission has submitted its report to Governor Khyber-Pakhtunkhwa who is also the Chancellor of the university. The Vice Chancellor has gone to court to prevent any actions being taken against him.

Noor Aftab in  The News.

University of Peshawar Vice Chancellor Dr Azmat Hayat Khan has been found involved in plagiarism by the three-member committee of Higher Education Commission (HEC) that was constituted to probe into the matter. …  Dr Khan, a former director of the Area Study Centre has been accused by a university teacher Muhammad Zubair, of including in his book titled ‘The Durand Land: Its Geo Strategic Importance’, published in 2000 by Area Study Centre, University of Peshawar, and Hanns Seidel Foundation, some passages from the book ‘Pak-Afghan Relations’, written by Dr Kulwant Kaur of Jammu University, Jammu, and published by Deep and Deep publications in 1985.

As per plagiarism policy, vice chancellors are responsible to constitute the plagiarism standing committee and committee will report to him but in this case the complaint is against the VC himself. Finding itself toothless in the said situation, HEC asked the Governor KPK to intervene and conduct an independent, impartial and unbiased enquiry against the incumbent VC, being fully in charge of the university. However, the Governor wrote letter to HEC and authorised it to constitute a committee to probe into the matter. 

Challenging the jurisdiction and authority of Higher Education Commission (HEC) in dealing with the cases of plagiarism, University of Peshawar Vice Chancellor (VC), Dr Azmat Hayat Khan has filed a writ petition in Peshawar High Court in which he has asked the apex court to refrain the commission from taking any action on the grounds of alleged plagiarism against him. …..

The complainant Mohammad Zubair believes that some political leaders of ANP were trying to cover VC by stopping the Governor to take any action against him.

Back in March, the complainant Mohammad Zubair, an assistant professor at the UoP Law College was suspended:

Mr Zubair had been accused of ‘gross misconduct’ under the University of Peshawar Employees Efficiency and Discipline Statutes, 1977 and charged with violation of the university rules. The teacher has been charged with taking part in political activities and making objectionable speeches. He has also been charged for direct and frequent correspondence with the chancellor and the HEC and delivering misleading information.

There were also reports in June that Zubair had complained of his life being threatened.

Though Vice-Chancellors are generally former academics, the appointments as Vice Chancellor are entirely political. The Awami National Party (ANP) is a political party and is very strong in the Pashtun dominated areas of Khyber- Pakhtunkhwa, Balochistan and Sindh provinces. With party support and considering the balance of political forces in Pakistan it is highly unlikely that any serious action will be taken against the VC.

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Posted in Ethics, Universities | 3 Comments »

Medtronic pays 5 surgeons $7m kickbacks in just 9 months: The rape of Medicare

August 21, 2011

The Medtronic story is not just about ghost- writing and paying for favourable peer-reviewed scientific papers and supporting researchers to the tune of millions but it is also about all the surgeons in their pocket and how they exploit and “rape” Medicare.

Earl Stevens writes:

Norton Hospital in Louisville, Ky., may not be a household name nationally. But five senior spine surgeons have helped put it on the map in at least one category: From 2004 to 2008, Norton performed the third-most spinal fusions on Medicare patients in the country.

The five surgeons are also among the largest recipients nationwide of payments from medical-device giant Medtronic Inc. In the first nine months of this year alone, the surgeons — Steven Glassman, Mitchell Campbell, John Johnson, John Dimar and Rolando Puno — received more than $7 million from the Fridley, Minn., company. Medtronic and the surgeons say the payments are mostly royalties they earned for helping the company design one of its best-selling spine products.

Corporate whistleblowers and congressional critics contend such arrangements—which are common in orthopedic surgery—amount to kickbacks to stoke sales of medical devices. They argue that the overuse of surgical hardware ranging from heart stents to artificial hips is a big factor behind the soaring costs of Medicare, the government medical-insurance system for the elderly and disabled. ….

Using a Medicare database that tracks hospitals’ billing, The Wall Street Journal was able to ascertain that Norton is among the most aggressive practitioners of spinal fusion in the country.

Spinal fusion has become one of medicine’s most controversial procedures. It involves fusing together two or more vertebrae to alleviate back pain, usually with the help of metal plates, rods and screws implanted in the patient’s back. Tens of thousands of dollars of hardware can go into a single surgery. ….. Conservative spine surgeons argue that a spinal fusion is appropriate only for a small number of conditions, such as spinal instability, spinal fracture or a severe curvature of the spine known as scoliosis, and that financial incentives have caused the procedure to become overused. …

One health insurer, the nonprofit Blue Cross and Blue Shield of North Carolina, announced in September that it would stop paying for spine fusions performed on such patients beginning on Jan. 1. The insurer said that the procedures are “considered not medically necessary.” …

Some recent studies have suggested poor outcomes for spinal fusion.

So much for the Hippocratc Oath which requires “prescribing regimens for the good of my patients according to my ability and my judgment and never doing harm to anyone“.

Related: Medtronics and others – “supporting doctors with multi – million dollar payments”  

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Posted in Business, Ethics, Medicine, scientific misconduct | Comments Off on Medtronic pays 5 surgeons $7m kickbacks in just 9 months: The rape of Medicare

University of Utah fires tenured Bakhtiari for a “pattern of plagiarism”

August 20, 2011

I  just returned from a few days in Vienna and the Ruhr Valley – a region which is no stranger to political high intrigue and deception and I am just catching up with some of my backlog.

Salt Lake City has had its share of intrigue in the past but the latest is the firing of Utah University’s tenured Director of its Middle East Centre, Dr. Bahman Bakhthiari:

A faculty panel substantiated nine instances of plagiarism by former University of Utah political scientist Bahman Bakhtiari, who directed the Middle East Center from July 2009 until February 2011. The materials include five book chapters, his doctoral dissertation and three opinion commentaries. Bakhtiari says the plagiarism was due to carelessness. The U. administration terminated Bakhtiari against the recommendation of the panel, which proposed lesser sanctions.

Bahman Bakhtiari

Bahman Bakhtiari

The university interim President, Lorris Betz,  overruled the panel recommendations writing in a June 30th letter:

“Plagiarism — holding out the work of another as one’s own — strikes at the very core of academic integrity. …. The only appropriate sanction in this case is dismissal, which is necessary to preserve the academic integrity of the institution and to restore public confidence in the university.” 

I have always wondered why “political scientists” are so-called and the use of the word “artist” – as used in “con-artist” – may be much more appropriate for “scholars” dabbling in the black-arts.

Lorris Betz

Needless to say, Bakhtiari sees a certain level of political connivance against him says the Salt Lake Tribune

Bakhtiari, whose name also appears in print as “Baktiari,” maintains the overlap between his work and that of others was not intentional. He says his firing represents an unwarranted intrusion by administration into faculty governance. The Iranian-born scholar also alleges he is the victim of discrimination perpetrated by a “pro-Arabist faction” within the MEC.

 Bakhtiari defended his integrity, arguing that he has produced 3,500 pages of scholarly material with 14,000 footnotes over the course of his career and the panel found problems with only eight pages. Twelve diplomats and prominent scholars, including Gary Sick and Judith Yaphe, from around the world submitted letters vouching for his character.

“It is not a pattern when you have published 90 articles,” Bakhtiari said.

In a letter to Betz asking him to limit the sanction to a private reprimand, Bakhtiari’s lawyer Christopher Finley said no evidence was presented to suggest the political scientist’s mistakes were motivated by a desire to take credit for others’ original work or that these mistakes harmed the university. 

In fact he may well be right because the case of administrative “clerks” – even if holding high rank – over-ruling an academic finding is rare – but not unknown for political reasons (as with hospital administrators firing doctors from time to time). Nevertheless Bakhtiari was clearly not good enough at the game of political intrigue which – after all – should have been his speciality. He seems to have made elementary errors of money management and political judgement. Exhausting all the money available must have been a red rag to the administrative bulls.

The plagiarism probe focused mostly on materials Bakhtiari submitted to the U. when he applied for a tenured position two years ago, according to the U. documents. At that time he was director of the University of Maine’s School of Policy and International Affairs.

In his defense to the panel, Bakhtiari conceded he made “mistakes” and was “sloppy,” but denied he intentionally copied, despite “convincing evidence” that his work borrowed whole sentences and paragraphs from other sources with no attribution, according to the June 14 CHC report. His defense focused on the history of “internecine strife” plaguing the Middle East Center and the “derelictions” of his former U. colleagues, alleging one professor concealed his lack of a doctorate for decades but was not fired.

The faculty panel acknowledged Bakhtiari faced “extreme hardship” trying to right the center, but pointed out that much of the documented plagiarism occurred long before he arrived in Salt Lake City. Noting it reached its conclusions with “great sadness,” the panel by a 3-2 vote recommended a public reprimand, six-month suspension without pay, transfer out of the College of Humanities and “retraction” of the offending publications. ….

The case against Bakhtiari was based on a March 7 complaint filed by four professors and humanities dean Robert Newman, who hired Bakhtiari with the hope of revitalizing the Middle East Center in the wake of a leadership shake-up. This group was particularly incensed with Bakhtiari for inserting two paragraphs — taken verbatim from a speech delivered by National Endowment for the Humanities Chairman Jim Leach — with no attribution into a conference proposal prepared by students. … 

In February, U. graduate students first uncovered passages in Bakhtiari’s published work, starting with an opinion piece in The Tribune that appeared to contain unattributed material from others’ work. Around that time, an audit revealed that the center had exhausted its financial resources under Bakhtiari’s leadership.

Newman placed Bakhtiari on paid administrative leave in February, took over the center’s fiscal affairs and initiated an investigation. This probe documented 11 instances of suspected plagiarism, including material used in his course syllabus, book chapters, the MEC newsletter and commentaries. It discovered eight pages of Bakhtiari’s 1984 dissertation at the University of Virginia, which awarded his doctorate, contained passages that had been pulled from five other sources without attribution.

The faculty panel substantiated nine of these instances, but concluded sanctions weren’t warranted for the copying apparent in the conference proposal and course syllabus.

Meanwhile, the University of Maine, where Bakhtiari taught when he wrote most of the material found to be plagiarized, will review his work according to spokesman Joseph Carr.

But still cases of tenured staff being fired from US Universities are exceptional and very rare. When it does happen a “resignation” is usually engineered (as in the case of Marc Hauser).

 

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Posted in Ethics, Politics, scientific misconduct, Universities | 1 Comment »

Saab being plundered by Victor Muller and his friends

August 18, 2011

Travelling for a few days and have to be brief.

I am pretty sure that Saab has already been plundered by Victor Muller and his friends and has been left with with very little in the way of assets or cash. It looks like the board members of Saab’s owners increased their directors fees by obscene amounts while Saab has been struggling for cash.

Dagens Industri 

Svenska Dagbladet  

Related:

Victor Muller’s games continue: Are the new Saab shares ending up in Russian hands?


 

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Posted in Automobiles, Business, Ethics, Sweden | 1 Comment »

One EU Carbon trading scam comes to trial: €5 billion just in lost taxes

August 16, 2011

The amounts of money sloshing around in the EU in carbon trading scams is mind-boggling and puts even drug money into the shade. The EU emissions trading scheme has been one of the major drivers of corruption in the last few years. The latest scam to come to trial is in Germany where just the tax evasion amounts to €5 billion ($7 billion). The total value of the carbon trades involved in this particular fraud probably exceed €50 billion. The frauds revealed so far are just a tiny fraction of all the succesful frauds that have been perpetrated – and all with the undoubted help (and connivance) of EU politicians.

It would not be surprising if the total cost of the EU emissions trading schemes (assuming  a conservative 80:20 principle) exceeded €250 billion. Eventually, the cost of all these carbon trades will have to be borne by EU taxpayers and electricity consumers.

Reuters reports:

A 5 billion euro tax fraud returned to haunt European Union’s emissions trading scheme on Monday as six individuals faced tax evasion charges at a trial which starts in Frankfurt. The case will haul the market’s multiple scandals back into the spotlight but is unlikely to implicate investment banks following a similar case against small firms in Britain.

In an activity which peaked in May 2009, traders bought carbon emissions permits in one country and sold them in another, charging for and then keeping the value-added tax (VAT) which they should have handed to tax authorities.

  • The total value of the fraud was at least 5 billion euros ($7.1 bln) in lost tax receipts, according to Europol
  • Charges have been brought against individuals at small firms. Europol said the fraud was linked to criminal networks operating outside the EU including the Middle East
  • The biggest swoop, initiated by Germany in early 2010, saw more than 2,500 officers involved across European and other countries
  • In Germany, prosecutors said in March that in addition to the six individuals charged, a further 170 suspects including seven Deutsche Bank employees were still under investigation and could be charged later
  • In Britain, the first trial of seven suspects risked delay as the investigation unearthed new evidence
  • It was easier to open an account on the carbon market registry than to open a bank account, allowing less reputable characters to participate.
  • As a new market, tax authorities in EU member states were slower to spot the fraud opportunity
  • The fraud was carried out on an unregulated spot market. Participants in such markets do not have to register with financial authorities, unlike in futures markets
  • As well as making it easier for fraudsters to gain entry, unregulated markets do not force strict know-your-client (KYC) rules on law-abiding participants meaning criminals escaped detection more easily
  • Officials at Paris-based Bluenext have not denied that their spot exchange was used by tax evaders but have maintained that they acted to stop the practice
  • French tax authorities are demanding 355 million euros ($505 million) from Bluenext, owned by NYSE Euronext, in unpaid VAT related to trades that occurred on the exchange
  • The EU’s head of tax, Algirdas Semeta, and of climate change, Connie Hedegaard, in June sent letters to EU states urging them to apply reverse tax charges which would remove the opportunity to buy EUAs VAT-free and then pocket the tax
  • The carbon market has suffered scandals besides VAT fraud, including a phishing attack, the circulation of used emissions permits and cyber theft of EUAs
  • The market has seen near-record low prices in recent weeks as the threat of a new downturn widens a glut in permits

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Posted in Alarmism, Business, Climate, Corruption, Energy, Ethics, European Union | Comments Off on One EU Carbon trading scam comes to trial: €5 billion just in lost taxes

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