Case No. EWCA-Crim-2366

1.On 14 June 2012 the three appellants were convicted in the Crown Court at Southwark of a major Value Added Tax (“VAT”) fraud involving a total loss to the public purse of £39 million. The mechanism of the fraud was a Missing Trader Intra Community (‘MTIC’), with carbon credits as the purportedly traded commodity. The prime organisers were said to be the appellant Sandeep Dosanjh and his second cousin Pardeep Dosanjh (who fled the jurisdiction before arrest). Gill and Chahal were variously described as “organisers under the Dosanjh family” and “lieutenants”.2.On 18 June 2012 the trial judge HHJ Testar sentenced each of them for the offence of conspiring to cheat the public revenue. Dosanjh received a sentence of 15 years imprisonment, Gill 11 years’ imprisonment and Chahal 9 years’ imprisonment. They were each disqualified from acting as directors for 12 years. The co-accused Dhanvinder Singh Basra, Sandeep Harry, Pritpal Singh and Kernjit Gill Dhillon were all acquitted by the jury. 3.The prosecution case against the appellants was that they were involved in manipulation of the EU Emissions Trade Scheme. The scheme was set up pursuant to the Kyoto Protocol to help reduce ‘Green House Gases’ and it regulated trade in carbon allowances or ‘credits’. A ‘carbon credit’ or European Union Allowance (‘EUA’) was the right to emit one tonne of carbon into the atmosphere. Polluting companies were issued with a number of carbon credits to cover a particular period, but could sell surplus credits or buy more credits on the market. 4.The appellants were involved in the running of companies that formed two artificial ‘trading chains’ through which the fraud operated. At the bottom end of each chain was a ‘missing trader’, a company that defaulted on its VAT liability. There were then two ‘buffer’ companies in each chain. At the apex of each chain was a company owned and operated by the appellant Sandeep Dosanjh, called KO Brokers Ltd. 5.KO Brokers Ltd was incorporated in 2006 and registered for VAT in 2008 but had little legitimate business activity prior to and after the fraud. The fraudulent trading took place over a total of 69 days between January to May 2009 and the total VAT owed to the UK Treasury by the missing traders was approximately £39 million (41,039,261 Euros). 6.The first chain involved carbon credits being acquired on a zero-rated basis from other EU traders by Mak & Co UK Ltd which sold them on to Helios Technical Services Ltd. Helios sold them onto Infiniti UK Ltd and Infiniti sold them on to KO Brokers Ltd. KO Brokers sold them onto the open market to ‘blue-chip’ companies such as BP, Shell and Gazprom at a profit. 7.Gill was involved with both Infiniti and Mak. There was little legitimate business activity in either company before the start of the fraud. Chahal set up a replacement for Mak in case it was needed. The first trade through chain one was on 20 January 2009 and the final trade was on 8 April 2009. A total of 19,478,000 carbon credits were traded during this period. In total a sum of 240,214,116 Euros (of which 31,332,276 were VAT) was paid on invoices into this chain by KO Brokers. Mak, as a ‘missing trader’, defaulted on the VAT due in the sum of 31,244,175 Euros. 8.The second chain involved credits being acquired on a zero-rated basis from other EU traders by Swift Enterprises Ltd that sold them on to Allianz Group Ltd. Chahal supervised the operation of Swift. Gill introduced one of his companies AGH Associates Ltd into the Swift chain, as a ‘buffer’, to be run by his wife. Chahal was a director of Allianz that sold credits on to AGH. They, in turn, sold them on to KO Brokers Ltd, which sold them onto blue-chip companies. 9.The first trade through chain two was on 2 April 2009 and the final trade was on 6 May 2009. The trading ended at this point because AGH Associates Ltd lost their registration for VAT. A total of 5,283,000 credits were traded during this period. In total, the sum of 77,964,745 Euros (of which 10,169,315 was VAT) was paid on invoices into the chain by KO Brokers. Swift was a ‘missing trader’ and defaulted on the VAT due in the sum of 9,795,086 Euros. 10.The proceeds were swiftly moved offshore into ‘banking platforms’, in particular, commercial banks in Hong Kong, Australia and New Zealand. These operated in a manner described as being ‘analogous to a solicitor’s client account’. All the money went into one account but there were internal ledgers used to allocate it between the ‘sub-accounts’ of the traders. This meant the true nature of the transfers was effectively disguised and difficult to detect.11.All three appellants were of previous good character and were each arrested on 19 August 2009. Dosanjh was 31 years of age. He gave a prepared statement in interview denying any involvement in a conspiracy to defraud and then declined to answer further questions. Of those charged, he took the lion’s share of the profits which amounted to approximately £6,600,000 (spending a million pounds in cash on one property in London and on a Rolls Royce). At a hearing on 16 October 2013 the judge made an order for £12,887,685 to be confiscated and paid within six months. The default sentence was set at 10 years imprisonment. 12.Navdeep Gill was 33. He too declined to answer questions in interview. His personal benefit was calculated at £309,000. A bundle of 8 character letters were produced on his behalf. 13.Ranjot Chahal was 36. He answered no comment to all questions, but gave a prepared statement denying any involvement. His benefit was calculated at £40,000 half of which was paid to HM Revenue and Customs