BRITAIN said on Wednesday (27) it will set up a new authority to crack down on financial frauds as chancellor of exchequer Rishi Sunak admitted that the government’s pandemic assistance schemes were abused.
The announcement comes amid a series of reports that economic offenders milked the government’s low-interest loan scheme at the height of Covid-19 and even attempted to smuggle money out of the UK.
While a third of the £47-billion bounce-back loan scheme, aimed at providing businesses with access to liquidity, is unlikely to be recovered, more than 10 per cent of the total amount is suspected to be lost to frauds.
“We will chase down fraudsters who rip off the taxpayer,” Sunak said as he outlined the functioning of the new Public Sector Fraud Authority, which will be operational by “July this year”.
He said the anti-fraud squad, backed by £25 million in funding, will have data analytics experts and economic crime investigators to recover money “stolen from Covid support schemes”.
It will spot suspicious companies and people seeking state contracts, the government said, adding that the counter-fraud experts will also mount mandatory inspections on Whitehall programmes to uncover vulnerabilities.
While there are several cases of the loans being misused, The Times said border control officials foiled many bids to smuggle cash out of the country.
“Border force officials have stopped people at airports across Britain carrying large amounts of money suspected from coronavirus bounce-back loans”, the newspaper said, citing a Home Office source.
Investigations are ongoing.
While the purpose of the bounce-back loan scheme was to prop up the businesses which risked collapse amid the pandemic, the report said some beneficiaries splurged the money on even gambling, cars and watches.
Businesses could borrow up to 25 per cent of their annual turnovers, subject to the limit of 50,000, some people came up with inflated figures to fraudulently secure the maximum amount. In a few cases, non-existent entities too came up with applications for the loans.
The Times investigation found that a gambler used a £50,000 loan to fund poker games after claiming his company turned over £200,000, even though he only had £2.72 in his account.
In another instance, a sandwich seller received a £35,000 loan but spent the money on his garden, gambling and a new business which collapsed in months.
There are also cases of companies’ directors diverting the loans to their personal accounts, defeating the objectives of the government.
Experts blame the abuse of the scheme on the absence of due diligence by the authorities while granting loans.
Sunak said, “People are rightly furious that fraudsters took advantage of our vital Covid support schemes, and we are acting to make sure they pay the price.”