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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

As investigations begin into fraud involving pandemic emergency loans, financial crime specialists Rahman Ravelli assesses the challenge faced by the government.

Author: Azizur Rahman  12 November 2020

Authorities have started investigating allegations of fraud relating to the UK government’s coronavirus emergency loan schemes.

The investigations began after 11 cases were reported to Action Fraud, the UK’s national reporting centre for fraud and cybercrime. Nine of the reports relate to suspected fraud involving the Bounce Back Loan Scheme (BBLS), with two concerning the Coronavirus Business Interruption Loan Scheme (CBILS).

Critics of the loan schemes have said they were vulnerable to exploitation because they were introduced with the aim of ensuring money reached businesses quickly and, as a result, led to only minimal checks being made on applicants.

BBLS involved the government providing lenders with a 100% guarantee for the loan and paying any fees and interest for the first year; with companies able to borrow between £2,000 and £50,000 or a maximum of 25% of annual turnover. The National Audit Office has said that BBLS-related fraud and defaulting on loans may cost the UK taxpayer between £15 billion and £26 billion; which is almost two-thirds of what the scheme paid out.

It is certainly true that the government has to ensure that robust procedures are in place for fraud investigation and debt collection. But given the huge amounts of finance that the government has felt compelled to use in order to prop up the economy, there are likely to be instances of money going to those who are not entitled to it.

Government departments simply did not have enough resources to adequately assess the legitimacy of all the applications in the timescale that was deemed necessary. Most will be legitimate but the lure of potentially low-risk easy money will be appealing to some.  The government had to manage the loosening of controls to allow the easy flow of funds while ensuring that significant amounts were not lost to fraud. How well they did this is likely to become clearer.

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Azizur Rahman

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Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

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