SINGAPORE – Temasek-owned investment firm GenZero said it is reviewing its involvement in a South-east Asian carbon credit programme after US federal prosecutors filed fraud charges against a senior figure behind the company running the programme.
Former C-Quest Capital (CQC) chief executive officer Kenneth Newcombe, who stepped down from the role in February, was indicted on Oct 2 in New York on wire fraud and securities and commodities fraud charges.
Under Newcombe, the US-based CQC ramped up its programme from 2021 to roll out more efficient cookstoves to local communities, mainly in Africa and Asia. The stoves are said to burn less fuel and produce less pollution. Carbon credits can be claimed for each tonne of carbon dioxide (CO2) emission avoided.
Newcombe and some of his ex-colleagues were charged with fraudulently exaggerating the amount of emissions avoided and duping investors in a case that risks further damaging the already tarnished image of the global voluntary carbon market.
Among the others facing charges are Tridip Goswami, former head of CQC’s carbon and sustainability accounting team, and Jason Steele, the company’s former chief operating officer.
The 77-year-old Newcombe, a pioneer of the carbon credit market, denies any wrongdoing, Bloomberg reported, quoting a statement from him.
GenZero said in a statement to The Straits Times on Oct 3: “As a partner in C-Quest Capital’s South-east Asia Clean Cookstove Programme, we are assessing the implications on the integrity and impact of the current outcomes on the programme.
“We take allegations of wrongdoing by our programme partners seriously, particularly when those actions impact the credibility of carbon markets.”
In a deal announced in 2022, GenZero and Pavilion Energy – until recently a wholly owned subsidiary of Temasek – invested US$14 million (S$18 million) in the South-east Asia cookstove programme.
Pavilion Energy told ST on Oct 4 it has fully exited the CQC project and has no further comment.
In statement, the US Attorney’s Office for the Southern District of New York, accused Newcombe and his co-defendants at CQC of fraudulently obtaining carbon credits worth tens of millions of dollars, and fraudulently securing more than US$100 million in investment. The charges are related to misdeeds allegedly committed between 2021 and 2023.
The statement said the defendants “manipulated data to make it appear as if certain cookstove projects were far more successful in reducing carbon emissions than was actually the case”.
The statement cited internal e-mails showing that there was a coordinated attempt to inflate the emission reductions of several projects or claim reductions from cookstoves that did not exist.
As a result, investors were misled, along with the carbon credit standards body Verra.
Verra is the main non-profit organisation that vets and verifies voluntary carbon credit projects and issues carbon credits for those projects.