Malawi has been caught in a global carbon credit scandal involving Ken Newcombe, a former Goldman Sachs executive and founder of C-Quest Capital, who allegedly defrauded investors and governments by selling inflated carbon offsets.
Newcombe has been indicted by a New York court on fraud and commodities’ fraud charges and, if convicted, faces up to 20 years in prison.
According to a statement from the United States Department of Justice, Newcombe and his associates manipulated data on the effectiveness of energy-efficient cookstoves distributed across developing nations, including Malawi.
The fraudulent data allowed them to sell carbon credits that overstated emission reductions.
Tridip Goswami, C-Quest Capital’s former head of carbon and sustainability accounting, has also been charged in connection with the scheme.
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Natural Resources Minister Owen Chomanika said they were aware of the case.
“We are aware of this case. That’s why we are working on a framework to guide how this must be done in Malawi,” Chomanika said.
In response to growing concerns over carbon credit fraud, President Lazarus Chakwera has set up a committee on carbon marketing to regulate such projects and ensure transparency.
Founded in 2008, C-Quest Capital specialised in carbon reduction projects, selling carbon credits to major corporations such as BP and Shell.
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One of its flagship initiatives involved distributing cookstoves designed to reduce carbon emissions compared to traditional open fires.
However, a 2023 investigation by the United Kingdom’s Channel 4 News uncovered major flaws in the project.
A journalist visiting a village in Malawi found that many of the stoves were either broken or had been abandoned, casting doubt on the emission reduction claims.
Of the 30 households surveyed, more than half had stopped using the stoves due to damage.
Carbon credit expert Professor Barbara Haya from the University of California, Berkeley, revealed that cookstove projects globally were overestimating their impact by as much as six times.
While companies claimed to have offset 330 million tonnes of carbon, the real reduction was closer to 44 million tonnes.
At the time, Newcombe dismissed the allegations, calling the Channel 4 report inaccurate.
He insisted that the failure rate of the cookstoves in Malawi was “nowhere near” the reported figures.
Despite defending the company, Newcombe resigned from C-Quest Capital in early 2024.
By mid-year, the company’s new leadership admitted to uncovering fraudulent activity within the firm.
They reported the matter to authorities and to Verra, the global organisation that certifies carbon credits, leading to the suspension of 27 cookstove projects worldwide.
United States prosecutors accuse Newcombe, Goswami and Chief Operating Officer Jason Steele of falsifying survey results, inflating the number of cookstoves in use and ignoring stoves that had broken down or gone missing.
The fraudulent scheme affected carbon credit projects in multiple countries, including Malawi, Zambia, Angola, Zimbabwe, Thailand, Cambodia, and Vietnam.
Although C-Quest Capital has not been charged as a company due to its cooperation with investigators, the case has sent shockwaves through the carbon credit industry.
Newcombe, who denies the charges, claims he is terminally ill with cancer.
