Christopher James Thompson, a director of CT Carbon Limited (CTCL), which traded in carbon credits, has given an undertaking to the Secretary of State for Business, Innovation & Skills to be disqualified as a director for a period of 14 years for selling Voluntary Emission Reductions (VERs), a type of carbon credit, as an investment.
The disqualification regime exists to protect the public and Mr Thompsons disqualification from 11 November 2015, means that he cannot promote, manage, or be a director of a limited company until 2029.
This disqualification follows investigation by the Official Receiver at the Public Interest Unit, a specialist team of the Insolvency Service, whose involvement commenced with the winding up of the company in the public interest following an investigation by Company Investigations into the affairs of the company.
The Official Receivers investigation uncovered that between 2011 and 2012 CTCL made sales totalling 1.1 million by cold calling members of the public to sell them VERs charging them two and a half to three and a half times the price it had paid its supplier.
After receiving a letter from an investigative journalist highlighting concerns regarding the favourable rates offered by CTCL, the performance of the VERs as an investment, and the absence of a market where investors could sell their VERs, Mr Thompson approached a new supplier and continued to sell VERs.
As early as 2010, it was apparent that HM Revenue & Customs; the Financial Conduct Authority; the Registries and the carbon credit markets own self-regulating authorities considered that there was no viable exit strategy for the carbon credits sold by NFA at the time and that, even if there was, members of the public had no access to it. Even if there was a viable exit strategy, the price CTCL was charging for the carbon credits meant that the carbon credits could not be sold without financial loss.
Commenting on this case Paul Titherington, Official Receiver in the Public Interest Unit, said:
Mr Thompson should have known that the carbon credits the company was selling were wholly unsuitable as an investment given the price the company charged, and the absence of a marketplace where investors could sell their carbon credits.
In ignoring a letter from a journalist alerting him that he should not be selling these, Mr Thompson displayed a complete disregard to whether members of the public could receive a return on their investment, or sell their carbon credits at all.
Directors who choose to ignore specific concerns and warning signs to the detriment of their clients should expect to be banned from running any limited company for a significant period of time.