The Covid-19 pandemic has had a significant impact on the global economy, leading many businesses to rely on government support to stay afloat. One such initiative was the Covid Bounce Back Loan (BBL) scheme, designed to help companies cover their losses during the lockdowns caused by the pandemic.
A Lifeline for Businesses
The pandemic had a profound impact on businesses of all kinds, with many struggling to stay afloat. Lockdowns and restrictions imposed by governments to curb the spread of the virus forced businesses to shut down temporarily, resulting in significant revenue losses.
Moreover, many companies had to deal with supply chain disruptions, increased costs due to safety measures, and reduced demand as consumers had to cut back on their spending due to economic uncertainty. Many businesses also had to adapt to remote work and digital platforms, which required significant investments in technology and training.
Small businesses, in particular, suffered the hardest hit, as many lacked the financial resources and infrastructure to adapt to the changing business landscape. Consequently, they had to lay off workers or shut down entirely, leading to significant job losses and economic hardships.
How a Company Director from Oldham Defrauded the BBL Scheme
However, criminals have tainted the scheme by exploiting the government’s lack of proper checks and balances, leading to fraudulent activities. In this article, we will discuss a case of a company director from Oldham who misused the BBL scheme to pocket £25,000 and examine the flaws in the scheme that made it vulnerable to fraud.
Rahman, eligible for just a £2,000 loan based on his company’s turnover, falsified records to apply for £25,000. Without verifying the figures, authorities disbursed the funds. Rahman then used £20,000 for a third-party payment, labelling it “car” in the transaction.
Although Rahman argued that the car was a company expense, the Insolvency Service found him guilty of exploiting the BBL scheme and disqualified him from being a director for 11 years. However, Rahman was required to pay back only £1 to cover administrative costs, a small amount compared to the £25,000 he had stolen from the public purse.
Lack of Proper Checks and Balances
The scheme offered loans up to £50,000 to support small businesses during the pandemic. However, its urgent rollout led to inadequate checks and verification for applicants.
A major flaw in the BBL scheme was the absence of thorough checks to verify applicant information. Fraudsters, like Rahman, could inflate their turnover figures and apply for larger loans without their claims being properly scrutinised.
The lack of adequate verification enabled fraudsters to exploit the scheme’s loopholes, causing the government to lose millions of pounds. Despite knowing the risks, the government prioritised the scheme’s quick rollout over security measures. Unfortunately, this decision had severe consequences, as fraudsters targeted the scheme and exploited its vulnerabilities.
The Speed of Loan Processing and Lack of Due Diligence
Another issue with the scheme was the speed at which the loans were processed. The government’s goal was quick, easy access to funds for struggling businesses, but this speed sacrificed due diligence. Without adequate vetting, the loans attracted fraudsters who exploited the system for personal gain.
Shafiqur Rahman’s case is just one of the many where fraudsters have taken advantage of the BBL scheme. The Covid Bounce Back Loan scheme, introduced to aid businesses during the pandemic, became an easy target for criminals due to the lack of proper fraud prevention measures.
Moving forward, we must learn from past mistakes. It’s essential to improve systems, ensuring government support reaches the needy, not exploiters. To stop fraudsters, we need stricter checks and balances. This ensures funds are used as intended.
