How criminals cash in on Rishi’s largesse on Covid

This month, at Manchester Crown Court, Judge Anthony Cross QC appeared bewildered – and deeply disgusted.

How, he wanted to know, had a criminal drug gang managed to get their hands on a £ 25,000 coronavirus recovery loan, backed by taxpayers and intended to help struggling small businesses?

That’s a very good question. The judge will undoubtedly find the answer – which he requested in writing by the end of the month – deeply depressing.

Loan architect :: Chancellor Rishi Sunak (pictured), architect of Covid loan programs, was fully aware of the risk of fraud

The array of Covid loans and support programs have protected the economy, but they have also served as gigantic honeypots for swarms of fraudsters and chancellors.

The Manchester loaner violin appeared in the trial of five men, who had previously admitted to being part of a conspiracy to supply cocaine, over a plot to kidnap and rob an elderly businessman.

They were using a company called South Manchester Plastics as a front company for their criminal activities.

A gang member applied for a £ 25,000 ‘rebound loan’ through the bogus company. The bad guys were duly given the money, despite the fact that even a cursory check would have revealed that the company had no legitimate business and had never filed a tax return.

How this money meant for real businesses, desperate to survive Covid lockdowns, has been so easily siphoned off by a gang of criminals.

This case is shocking, but it is far from isolated.

The coronavirus loan granting, while well intentioned, was so lax it was an open invitation to fraud and other abuse.

Billions of pounds have been handed over to companies with minimal scrutiny.

For once, the banks cannot be entirely to blame for this, as they were acting at the behest of the government, which had a deliberate policy in place of abandoning any attempt at strict control.

Instead, the priority was for businesses to get their money back in record time.

Banks were greenlighting loans for existing customers within a day or two, relying on “self-certification” and without a credit check.

The ultra-cowardly regime offered a golden opportunity for fraudsters, whether they were petty opportunists or sophisticated organized criminals.

It also made the system vulnerable to requests from companies who knew they were unlikely to be able to repay the money – and from those who didn’t actually need to borrow but found it necessary. low cost loan offer too tempting to resist.

Bounce Back Loans, the most common form of aid, were made available in April last year for a maximum amount of £ 50,000.

Judge Anthony Cross QC presided over case in which Manchester drug gang defrauded £ 25,000 Covid recovery loan

Judge Anthony Cross QC presided over case in which Manchester drug gang defrauded £ 25,000 Covid recovery loan

In total, nearly £ 48bn in borrowing has been approved under the scheme, which is now closed to new requests.

As much as £ 26 billion will be lost to fraudsters and borrowers who cannot repay, according to the public accounts watchdog, the National Audit Office.

Everyone, including Chancellor Rishi Sunak, the architect of the Covid loan plans, was fully aware of the risk of fraud.

But it was accepted as a price to pay in order to avoid the greater evil of mass layoffs and wholesale business bankruptcies.

No one, however, can have envisioned the scale of the losses now appearing, or that many who have cynically defrauded coronavirus support programs are likely to get away with little retaliation.

The five men in the Manchester case were found guilty, along with a sixth who pleaded guilty to drug charges, and sentenced to a total of more than 130 years in prison.

But scammers know that in many cases, they are likely to get just a slap on the wrist.

Take Muneef Ihsan, 26, a young man from Rotherham, who started three bogus companies and used them to fraudulently obtain £ 150,000 in bounce loans.

His 21-year-old friend Mahir Towid Ul Haque also took out a £ 50,000 Bounce Back loan, using part of it to buy himself a Rolex watch.

So far, the only penalties for the couple, whose behavior came to light after an insolvency service investigation, are lengthy bans on acting as a director.

It is understood that no sum has yet been recovered from them and that no criminal proceedings are currently in progress.

Covid’s vast loaner lifeboat, launched by the Chancellor last year, has saved millions of genuine businesses from falling into the wall and spared the economy untold damage.

Even so, that’s no excuse for the incompetence and laxity that allowed fraud to explode on such an epic scale.

Perhaps the most depressing example is that of Greensill, the collapsed financial firm that employed former Prime Minister David Cameron as an advisor. When the coronavirus hit, doubts about Greensill were already widely circulating in the city and beyond.

Regardless of that, when Greensill applied to become a lender, the British Business Bank, a government agency that administered the programs, gave his approval.

Greensill then made eight taxpayer-guaranteed loans totaling £ 400million to companies linked to GFG Alliance, a group of companies led by Steel Baron Sanjeev Gupta, which is under investigation by the Serious Fraud Office.

Members of the Public Accounts Committee discovered last week that the due diligence carried out on Greensill was “woefully inadequate” and said £ 335million in taxpayers’ money was at increased risk as a result.

As Meg Hillier, the committee chair, the British Business Bank put it “only had to read the papers to be aware of the serious issues regarding Greensill’s lending model and ethical standards.”

Bounce Back loans, the most common form of aid, were made available in April last year for a maximum of £ 50,000

Bounce Back loans, the most common form of aid, were made available in April last year for a maximum of £ 50,000

The government hired a company called Quantexa, advised by former MI5 chief Lord Evans to uncover the corona loan fraud.

But in addition to the windfall of fraudulent loans, taxpayers are also expected to lose around £ 3.5bn on three other programs: leave, the self-employed safety net and Eat Out to Help Out.

In an explosive revelation over the weekend, Jim Harra, managing director of HMRC, admitted that tax authorities would only recover less than half of the £ 5.8 billion paid by mistake or fraud under the initiatives.

This despite the creation of a special task force with nearly 1,300 employees this year, at a cost of £ 100million.

The holiday has played a valuable role in supporting the economy and is one of the reasons the jobs numbers are so strong now.

But again, it spawned an explosion of fraud.

Hundreds of ‘off the shelf’ companies appear to have been set up just to exploit the scheme, with suggestions they have claimed millions of pounds from government coffers.

A decision to go easy on people who owe money led to an explosion in debt to HMRC, which rose to £ 42bn from £ 16bn before the pandemic.

It is unclear how much of this is owed by those who fail to pay and benefit from forbearance from the tax authorities, as opposed to people who really cannot pay their bills due to the pandemic.

For some, the pandemic has sparked feelings of solidarity and community spirit. For others, it was an opportunity to satisfy their greed at the expense of their fellow citizens.

And it is all the more shameful that crooks are stealing public funds at a time when the country is groaning under over $ 2 trillion in debt and Rishi Sunak needs every penny he can find.

Some links in this article may be affiliate links. If you click on it, we may earn a small commission. This helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Comments are closed.