Isle could face fraud probe on Covid loans
ISLANDERS involved in one of Scotland’s most famous community buyouts could face a fraud inquiry over Covid recovery cash.
Later this year, residents of Gigha in the Inner Hebrides will celebrate 20 years since taking their island out of private ownership.
However, the anniversary could be overshadowed by a probe into claims they received thousands of pounds in UK Government-backed loans they were not entitled to.
A Government source has confirmed a series of Covid crisis loans taken out by the local residents’ group, which owns the island, are being looked into.
Billions of pounds of Bounce Back Loans (BBLs) were rushed out at the start of the pandemic to help ailing firms survive lockdown.
They quickly became a target for fraudsters as applicants were trusted to tell the truth. Gigha was given three BBLs totalling £150,000 – but accounts suggest they claimed far more than the rules allowed.
Last night, Scottish Conservative MSP Murdo Fraser said: ‘From what I’ve seen of this case, it sounds like questions need answered.’
Gigha, with a population of around 150, was bought in 2002 by locals for £4 million through the Isle of Gigha Heritage Trust (IGHT).
The cash was provided by the Scottish Government and Lottery funding, but only £1 million of it had to be repaid. Ever since, the island has been weighed down with debt and relied on scores of further public sector grants to stay afloat.
The Trust’s latest accounts show Gigha got £270,000 of grants during the first year of the pandemic. On top of that, the island secured three £50,000 Bounce Back Loans.
Under the Government scheme, groups of businesses were allowed to apply for one payout only.
IGHT and two of its subsidiaries all took cash on the basis they were separate entities. However, minutes from last April show all three loans were being dealt with by the same Trust directors.
In addition, BBLs could not exceed 25 per cent of a company’s turnover – yet the pre-pandemic income of Gigha Trading Limited and Gigha Renewable Energy Limited (GREL) fell short of the £200,000 needed to justify applying for the maximum £50,000.
Companies also had to have been affected by Covid and yet GREL’s trade appears not to have suffered.
BBLs worth £47 billion have been paid out and the National Audit Office warns the scheme could cost taxpayers £17 billion due to fraud and companies going bust.
A spokesman for the Department for Business said: ‘We take any allegations of abuse of Covid loan schemes extremely seriously.’
IGHT board member Jane Millar said: ‘The applications wouldn’t have been approved if they weren’t in accordance with the rules. Our accountants are aware of the applications and requirements to repay these loans and have no concerns.’