Checks bounce on Covid loans
HUGE RISK OF FRAUD, MINISTER TOLD
BUSINESS Secretary Alok Sharma was warned in May of the “very high” risk of fraudsters targeting the Government’s bounce back loan scheme, it has emerged.
Keith Morgan, the then head of the British Business Bank, told him the rush to set the system up had left it “vulnerable to abuse by individuals and by organised crime”.
The state-run bank is tasked with overseeing the scheme, which is designed to help firms hit by the coronavirus crisis.
It has funnelled £ 38billion to firms, with loans of up to £50,000 provided by high street lenders but guaranteed by the Government.
However, there are fears loans are being exploited by greedy business owners, rogue landlords and criminal gangs.
In one example, a car dealer caught a fraudster trying to use a taxpayer-backed loan to buy a Porsche Cayman sports car. Mr Morgan, who has since retired, told Mr Sharma that his board was worried about the “propriety, value for money and feasibility” of the loan scheme.
He added: “Alongside the fraud risk, there will be credit risk in the current economic environment, which will be exacerbated by removing significant elements of the credit checks that would otherwise have been undertaken.” He warned the speed at which lenders built systems meant they could not stop one firm applying for loans via several businesses. A Government spokesman said: “We’ve looked to minimise fraud – with lenders implementing a range of protections including anti-money laundering and transaction monitoring controls. “Any fraudulent applications can be criminally prosecuted.”