Officials ‘allowed Covid loans to turn into fraud bonanza’
TOP officials were blasted in Parliament last night for allowing a ‘bonanza of fraud’ that led to criminals trying to flee the country with suitcases stuffed full of cash from Covid loans.
Mandarins were told that even Russian crime syndicates had been able to ‘ransack the UK public purse’ for millions of pounds after the Treasury relaxed checks on applicants for the £47billion Bounce Back Loan scheme.
But the senior civil servants defended the move, insisting the money had to be rushed to businesses to save them from going bust when the pandemic struck.
It comes after it emerged that some of the estimated £4billion lost to fraud through the loans – which were funded by banks but guaranteed by the Government – was seized at airports by Border Force officials as criminals tried to smuggle it out of the country.
Dozens of company directors have been disqualified after taking out the maximum £50,000 loans intended to support their firms before blowing the money on gambling sprees, home improvements and luxury cars, The Times revealed.
Among the fraudulent claimants were a restaurant owner handed a loan despite being evicted from his premises for defaulting on rent, and a softdrinks tycoon who overinflated his company’s turnover 100-fold to get £50,000.
In another case, a sandwich shop owner used a £35,000 loan to do up his garden.
At a select committee hearing yesterday, Labour MP Angela Eagle told senior figures from the Treasury and the British Business Bank: ‘It’s just a bonanza of fraud, isn’t it?’, adding: ‘You’ve had 49 arrests. It’s not even touching even the first little iota of what’s going on, given that the schemes that you put into place were so open to abuse for at least a month.’
She cited the case of a Russian man and a Lithuanian man, both since jailed for money laundering, who were able to get £10million in 200 Covid loans – despite being on bail for fraud when they made the applications.
‘It would be deeply alarming if Russian organised crime and illicit finance milked our Bounce Back Loan system and was able to access that amount of public money as a result of the Government’s lack of checks in the Covid support package. So are there ways of checking whether other Russian crime syndicates have ransacked the UK public purse?’ she said.
The Treasury’s Permanent Secretary Sir Tom Scholar said he was not aware of that particular case, adding: ‘There were particular features of the scheme that were a direct consequence of the circumstances at the time that meant some of the normal controls didn’t apply.
‘As a consequence, as everybody knew at the time, there was a greater risk of fraud, and we’re taking every step we possibly can to tackle that.’
‘Suitcases full of cash’