Two arrested for Covid loans scheme scam as £4.6 billion taxpayers' cash at risk from fraudsters, says study

Charles Hymas
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Two men have been arrested on suspicion of defrauding the Covid-19 bounce back loan scheme, as a think tank warned fraud and error during the crisis could cost the taxpayer £4.6 billion.  

One of the men arrested by Scotland Yard, who was in his 40s, was caught recruiting people to use their personal  details to set up limited companies and bank accounts to defraud the scheme and launder the money.  

Application forms from a number of suspected fake companies to their banks requesting “bounce back loans” were found at an address raided by police.  

The second man, in his 20s, had been arrested earlier after being intercepted by police on his way to meet the fraudster where he was going to be paid £300 to set up a bank account.

  Bounce back loans are one of the schemes identified in a study by Policy Exchange as susceptible to fraud and errors, which the think tank estimated could cost the Government £4.6 billion.  

The report, by Richard Walton, a former Met police counter-terror chief, warned that the Government rescue schemes were particularly vulnerable to fraud due to the novelty and speed with which they had been introduced and the size of the relief packages.  

His study, which was backed by former Home Secretaries Sajid Javid and David Blunkett, said the increased use of digital channels and third parties had increased the chances for fraudsters to infiltrate the system.  

He warned that the speed with which bounce back schemes had been approved and the potential to make multiple applications posed “a particular risk.” he said poor Companies House data added to the danger.  

The Coronavirus Job Retention Scheme - the most expensive and widely used support scheme - was also the most susceptible to fraud.  

Although HMRC have attempted to directly tackle fraud in this area, it is one of the most difficult schemes to monitor and HMRC had already received 1,868 claims of furlough fraud as of the end of May 2020.  

“The Government's economic response has been entirely justified but it has had the unintended consequence of opening up opportunities for fraud on a significant scale,” said Mr Walton, a senior fellow at Policy Exchange. 

  “A new Minister for Fraud and Economic Crime and a forum in the National Economic Crime Centre to coordinate the Government's response to this fraud would help to address the scale of the problem.”

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