First Published Friday, 21 January 2011 06:27 pm - © 2011 Dow Jones

http://www.automatedtrader.net/real-time-dow-jones/42189/eu-co2-permit-thefts-near-eur49-million--money-laundering-suspected

PRAGUE -(Dow Jones)- Losses from recent electronic thefts of European carbon dioxide emission allowances have risen to nearly EUR49 million, and one victim of the thefts confirmed Friday that stolen permits have been laundered and resold.

The total value of carbon dioxide emission permits stolen since mid-November from three national registries of the European Union's emission trading scheme is well above the EUR30 million reported Thursday, new data from Czech and Austrian authorities showed Friday.

What began last November as an isolated EUR23 million theft in Romania has snowballed into a pan-European string of cybercrime, with EUR18.7 million stolen in Prague this week and another EUR7 million in Austria earlier this month.

While total financial losses remain limited, the crimes were followed Friday by evidence of laundering and reselling of virtual emissions allowances. And as no one has been prosecuted, these thefts highlight market risks as the EU plans to expand its greenhouse gas-limiting strategy in 2013.

The number of missing Czech registry allowances now exceeds 1.3 million, compared with initial reports of 475,000, Czech Environment Ministry climate change officer Zdenek Spies told Dow Jones Newswires.

Based on market prices of EUR14.4 per allowance late Friday, the total value of allowances stolen from the Czech registry is EUR18.7 million.

Spies also said that cyber-thieves hacked into at least four separate accounts at the Czech registry. Wednesday, registry officials only said the account of Blackstone Global Ventures, an environmental consultancy that trades carbon credits for industrial companies, was compromised.

The stolen allowances are still being traced, but likely passed through Poland and Estonia just after the theft, Spies said. Traders and service providers that may have handled the stolen allowances are not limited to the EU, but may also include companies based in the U.S., he said.

"Tracking the allowances is one thing," because they can't leave EU territory, "but [tracking] providers of services is another issue"--those companies handling European emission allowances can be based outside of the EU, he said. Thieves routinely shuffle stolen goods through as many countries and providers as possible to muddle their tracks, Spies said.

Also Friday, the Austrian carbon emissions certificates registry, ECRA, said the 488,141 certificates, with a value of around EUR7 million, stolen electronically from an Austrian reserve account Jan. 10, have been located and accounts frozen in Sweden and Liechtenstein.

These thefts follow, and may be connected to, the November cyber theft of EUR23 million worth of allowances from an account at the Romanian National Registry for Greenhouse Gases belonging to the local unit of Swiss cement maker Holcim Ltd. (HOLN.VX).

Following Tuesday's security breach in Prague, the third in the EU's emission trading system in as many months, the European Commission Wednesday halted spot-market trading of the CO2 emission permits through Jan. 26. The time should allow authorities to track stolen allowances, determine where security breaches took place and implement new measures.

While the search for the stolen allowances continues, officials at Holcim Friday confirmed that some of the certificates stolen from Prague were the allowances stolen from Romania.

The identification numbers of some allowances stolen from the Prague account of Blackstone Global Ventures match those of some allowances stolen from Holcim's Romanian registry account, said Peter Gysel, deputy head of Holcim's communications department.

Holcim earlier said that late last year it had recovered 600,000 of the 1.6 million stolen certificates.

A European Commission official said the EU has no systematic information from member states about which allowances have been stolen.

"But the fact that an allowance was stolen twice is mere coincidence and nothing more than that," the official said. "It's the same as if someone steals money from your purse, and a few days later the very same banknotes are stolen again after the thief has spent the money, and a third person was in possession."

Nikos Tornikidis, a portfolio manager at Blackstone Global Ventures, said the provenance of the allowances it handles is uncertain and that it is a risk all participants in the trading system face.

Blackstone Global Ventures uses an Amsterdam-based broker for purchasing allowances, and its last spot-market trade was Oct. 28, Tornikidis said, noting that the date was well before Holcim was hacked on Nov. 16.

"[However] after Nov. 16 we asked our broker to transfer some [allowances] to us," Tornikidis said.

"Brokers use omnibus accounts, all allowances from all accounts are pooled together...so what came out of the common basket is unknown," Tornikidis said.