A carbon offset pioneer who sold hundreds of millions of dollars in carbon credits has been charged with fraud by US authorities following an investigation by Channel 4 News.
A carbon offset pioneer who sold hundreds of millions of dollars in carbon credits has been charged with fraud by US authorities following an investigation by Channel 4 News.
Ken Newcombe, a former Goldman Sachs managing director and founder of C-Quest Capital, was indicted on Wednesday in New York on wire fraud and commodities fraud charges, and could face up to 20 years in prison if convicted.
Mr Newcombe set up his carbon credit organisation, C-Quest Capital, in 2008. The company ran carbon reduction projects in the developing world to earn carbon credits, which were then sold to large companies like BP and Shell to offset their emissions.
Many of the projects were based on the distribution of so-called cookstoves, simple devices that emit far less carbon dioxide during cooking than open fires. The company ran cookstoves projects in several African and Asian countries.
But in an indictment released on October 3 by the US Justice Department, prosecutors accused Mr Newcombe of deliberately falsifying data about how much carbon the cookstoves were saving. These false credits were then sold on the carbon offset market.
Tridip Goswami, C-Quest Capital’s former head of carbon and sustainability accounting was also charged with fraud.
In December 2023, Channel 4 News broadcast an investigation into the trading of “phantom” carbon credits. Africa Correspondent Jamal Osman, travelled to a village in Malawi, where locals had been given cookstoves by C-Quest Capital.
The stoves were more energy efficient and therefore produced less carbon than open fires. C-Quest Capital had then calculated how much carbon was being saved through use of the stoves in order to generate credits.
But Channel 4 News found that many of the stoves that had been provided by C-Quest Capital had broken or been abandoned. Our team spoke to 30 families in the village. Sixteen of them told us they were not using the stoves, usually because they had been damaged.
Channel 4 News also interviewed Professor Barbara Haya, a leading expert in carbon credits at the University of California, Berkeley. Professor Haya told the programme that her team had carried out a quantitative analysis of the major cookstove offset programmes which “found they’re claiming over six times the amount of climate benefit they’re really achieving.”
Professor Haya’s analysis suggested that the claims that cookstoves projects around the world were reducing carbon emissions by 330 million tonnes were wildly exaggerated. The real number, by her calculation , was just 44 million tonnes.
At the time, Mr Newcombe and C-Quest Capital strongly disputed our findings. The company signed an open letter criticising Professor Haya’s methodology, and Mr Newcombe gave Channel 4 News an on-camera interview saying the criticism was “flawed”.
Mr Newcombe told Channel 4 News that C-Quest Capital had visited the same village in Malawi and contested our findings. “Nowhere near the level of stoves that are not in use or broken that you reported,” he told us.
However just a few months later in early 2024, Mr Newcombe resigned from C-Quest Capital. Then in June 2024, C-Quest Capital revealed that a new management team had uncovered “wrongdoing” by Mr Newcombe and the company had sold “millions” of effectively phantom credits. They revealed they had reported the information to law enforcement, and to an organisation called Verra, which certifies carbon credit projects. Verra said it would suspend 27 cookstove projects around the world.
US prosecutors allege Mr Newcombe, Mr Goswani and Chief Operating Officer Jason Steele deliberately conspired to “fraudulently inflate” the calculations of how much carbon dioxide was being saved. This involved “manipulating survey results and fraudulently inflating the number of stoves” and “not writing off stoves the co-conspirators knew were missing or broken”.
This week’s indictment says the “scheme to manipulate” data was found in projects in Malawi, Zambia, Angola, Zimbabwe, Thailand, Cambodia and Vietnam.
Mr Newcombe denies the allegations against him. A spokesman said he was dying from cancer. “He is confident that if he lives to see a jury hear this case, that jury will reject these false charges and return his good name to him.”
Prosecutors have not pursued charges against the company because of its “voluntary and timely self-disclosure of misconduct” and cooperation with the authorities.
