How criminals are cashing in on Rishi’s Covid largesse: Billions handed in ’emergency loans’ to firms with minimal checking

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

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

Very good question. No doubt the judge will find the answer – which he has sought in writing by the end of the month – to be deeply disappointed.

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Debt Architect :: Chancellor Rishi Sunak (pictured), architect of COVID loan schemes, was fully aware of the risk of fraud

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The prevalence of COVID loans and aid schemes have protected the economy, but they have also acted as a giant honey pot for a swarm of fraudsters and chancellors.

The Manchester loan case came to light during the trial of five men who had already admitted to being part of a conspiracy to supply cocaine for a conspiracy to kidnap and rob an elderly businessman.

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

A gang member applied for a £25,000 ‘bounce back loan’ through a fraudulent venture. The villains were duly given cash, despite the fact that a cursory check revealed that the company had no legitimate business and had never filed a tax return.

Desperate to survive the Covid lockdown, the money given to genuine businesses so badly ill was so easily snatched away by a group of criminals.

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

Coronavirus lending, although well-intentioned, was so lax as to be an open invitation for fraud and other abuse.

Billions of pounds were given to companies with minimal scrutiny.

For once, the banks cannot be solely blamed for this, as they were acting at the behest of the government, which had a deliberate policy of abandoning any attempt at rigorous scrutiny.

Instead, the priority was for firms to get their cash doubling in quick time.

Banks were giving the green light to existing customers within a day or two, relying on ‘self-certification’ and no credit checks.

The ultra-lax regime provided a golden opportunity for fraudsters, be it small-time opportunists or sophisticated organized crime.

This made the system vulnerable to applications from firms who knew they were never going to be able to pay back the money – and from those who had no real need to borrow, but wanted to offer low-cost loans. It was too tempting to resist.

A bounce back loan, the most common form of assistance, was made available in April last year for up to £50,000.

Judge Anthony Cross QC presides over a case in which Manchester drugs gang swindled a £25,000 COVID recovery loan

Judge Anthony Cross QC presides over a case in which Manchester drugs gang swindled a £25,000 COVID recovery loan

In total, approximately £48 billion of borrowings were approved under the scheme, which is now closed to new applications.

Of this, at least £26 billion will be lost to fraudsters and borrowers who cannot repay, according to the National Audit Office, a public accounts watchdog.

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

But it was accepted as a price to be paid for preventing the greater evil of mass redundancies and wholesale trade failures.

However, no one would have envisaged that the damages being done now, or that many who have betrayed coronavirus support plans, are likely to have little in the way of retaliation.

Five men were found guilty in the Manchester case, as well as a sixth on drug charges, and sentenced to a total of more than 130 years in prison.

But fraudsters know that in many cases, they are likely to suffer little more than a slap on the wrist.

Take 26-year-old Munif Ehsan, a young man from Rotherham who set up three bogus companies and used them to fraudulently obtain £150,000 in bounce back loans.

His 21-year-old friend, Mahir Tawvid-ul-Haq, also took out a £50,000 bounce back loan, using some of it to buy himself a Rolex watch.

Until now, the only punishment the pair had received, whose behavior was revealed after an investigation by the Insolvency Service, is a long ban from acting as a director.

It is understood that no money has been recovered from them so far and no criminal proceedings are going on so far.

The giant Covid lending lifeboat launched by the Chancellor last year has saved millions of genuine businesses from going to the wall and saving the economy from irreparable damage.

Yet, this is no excuse for the sheer incompetence and laxity that allowed fraud to spread on such a large scale.

Perhaps the most depressing example of this is Greensil, the collapsed finance firm that hired former prime minister David Cameron as an advisor. When the coronavirus struck, suspicions about Greensilk were already being widely circulated in the city and beyond.

Nevertheless, when Greensil applied to be a lender, the British Business Bank, a government body administering the plans, gave their approval.

Greensil provided eight taxpayer-guaranteed loans adding up to £400 million to companies linked to the GFG Alliance, a group of companies run by steel baron Sanjeev Gupta that is being investigated by the Serious Fraud Office.

Last week MPs on the Public Accounts Committee found that due diligence done on Greensil was ‘grossly inadequate’ and said £335 million of taxpayer cash is at risk as a result.

As Meg Hillier, chairman of the committee, said, the British Business Bank had to ‘read the papers only to be aware of serious questions about Greensil’s lending model and ethical standards.’

Bounce back loans, the most common form of assistance, raised £50,000 in April last year.  was made available to

Bounce back loans, the most common form of assistance, raised £50,000 in April last year. was made available to

The government has hired a firm called Quantexa, advised by Lord Evans, the former head of MI5, to uncover the Corona loan fraud.

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