Watch out for this Brazilian rainforest scam
The conversation did not auger well. “Is that Anthony?”, a total stranger phoning from a noisy room asked.
Only my mother calls me “Anthony”. I would expect anyone else to use my surname as well.
But the caller, John Richards, from “Eco Global Markets in the City of London” claimed he already had a relationship with me.
“We called you last year,” he said.
I can’t remember the conversation and anyway - since Eco Global Markets (EGM) was only established in April 2010 - whoever called in 2009, it was not EGM.
Then came the standard unsolicited call question: “How are your investments today?”
“OK, some are up and some are down,” I replied.
But my reply did not matter. The next sentence came straight from the script. “Markets are volatile. We at Eco are not involved in stocks but a low risk investment which will return 25 per cent in a year.”
Carbon credit investments
Obviously, low risk investments with a virtual guarantee of 25 per cent annual growth do not grow on trees although I would soon discover this one did – on trees in the Brazilian rainforest.
John was offering carbon credit investments based on the Kyoto agreement.
Warming to his theme, John told me that due to “stricter emissions targets in 12 months time”, the price will double. So within a few minutes, my gain had risen from 25 to 100 per cent. And I would feel virtuous in reducing carbon.
“What investment level would you be comfortable with?” he asked, also a standard question that I have heard countless times before. I came up with a five figure number which pleased him.
60 years of experience
EGM's website says: ”Our team of motivated individuals holds over 60 years of combined financial expertise in the field of green investments. This allows us to determine low risk opportunities with the most potential for high returns whilst maintaining an ethical stance.”
The firm has two directors; Robert William O'Brien, aged 27, and Linda O'Brien, 58. As both give the same address, Linda might be Robert's mother. Robert is also involved in a Canary Wharf currency firm.
Carbon credits are a speciality investment – not just any old ethical scheme – and have only been around for a few years. So the “team” must be enormous to have that amount of combined experience.
Short on facts
The next day, the brochure I'd requested arrived. It was full of platitudes about global warming (I'm not a denier) and short on investment facts.
The accompanying letter said: “Analysts were expecting the price to rise [from €15]to circa €25 in the next 18 months to two years.” So that was a third growth forecast.
Richards called shortly afterwards. “Anthony, checking to see if you have the information?”
“Yes, but what does it mean? What am I buying?” Richards then put me on to a “senior adviser” . There's always a “senior” analyst or adviser after the initial warm-up – I am supposed to be flattered by this attention.
Here's the deal. Each £7,500 unit gives a 10 year lease on 7.5 acres of rainforest. When this gets “accredited”, my little piece of Brazil can turn into a 750 to 1,500 carbon credits, worth, currently, I was told £10,500 to £21,000. So I could not lose. Apparently, land becomes accredited when it is rescued from loggers.
Rainforest research
Now I have to admit that I did not understand and still don't fully understand this process which apparently sends my bank balance soaring. But I know I would never invest in anything that can't be explained on a postcard.
I then checked prices for rainforest land with potential accreditation rights. One site was selling at £2.80 an acre, and another (for smaller sized plots) at £17.50.
I asked the 'senior adviser' about this gap. “It's the cost of accreditation,” he told me.
EGM is not authorised by the FSA. It does not need to be. Neither land sales nor carbon credits come under its remit, so the firm can legally avoid any regulatory scrutiny.
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