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Fraud investigators arrested nine people on Wednesday over a suspected £38m carbon credit trading scam in one of the clearest signs yet of criminals targeting international schemes to combat climate change.

More than 100 Revenue & Customs officers raided dozens of properties in the south of England over an alleged cross-border fraud to evade value added tax, just weeks after the Treasury imposed emergency rules in an effort to curb the problem.

Trading in carbon credits – allowances for companies to produce greenhouse gases – has been dogged by problems, from legal but ethically dubious practices to alleged scams involving fictitious products.

Anand Doobay, a partner at Peters & Peters, a City-based law firm specialising in financial crime, said the ethereal nature of the fast-expanding multi-billion dollar international market in carbon credits had made them an attractive target for graft: “There is an increasing amount of fraud connected with them as a commodity. It’s trading with something that’s intangible, and that isn’t regulated in the way some other commodities are.”

Customs said 130 officers had made the arrests in Greater London and Gravesend in Kent, and raided 27 business and residential premises as part of an investigation launched at the start of this year. It said it was seeking other members of the suspected conspiracy, which allegedly operated a network of companies to buy large volumes of carbon credits overseas VAT-free and then sell them in Britain at VAT-inclusive prices.

The alleged scam would be the latest in a long line of so-called VAT carousel frauds based on the cross-border trade of small, high-value goods such as computer chips, pharmaceuticals and precious metals.

The government last month followed France and the Netherlands in abolishing VAT on carbon credits in an attempt to make it impossible to use them for import scams. The fraud cost the exchequer between £2bn and £3bn in 2005-6.

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