Two East Midlands businessmen have avoided incarceration after fraudulently acquiring over £80,000 via the Covid Bounce Back Loan scheme. Lee Mankelow and Muhammad Rais have been disqualified from serving as company directors for up to nine years.
The UK government rolled out the Bounce Back Loan Scheme (BBLS) in April 2020 to aid businesses negatively impacted by the COVID-19 pandemic. The BBLS aimed to provide a practical and straightforward route for small and medium-sized enterprises to secure financing. Thereby weathering the crisis.
Government Initiative to Aid Ailing Businesses
Lenders made loans available, ranging from £2,000 to a maximum of £50,000, with no interest or repayments due for the first 12 months. To qualify, businesses had to have started operations before March 2020, be based in the UK, and have suffered negative impacts from the pandemic. The application process was deliberately simple, requiring only minimal information, with the expectation of disbursing funds within a few days.
Although intended as an emergency measure to provide businesses with the necessary cash flow to survive the pandemic, the government fully guaranteed the loans, meaning that taxpayers assumed the full risk. The BBLS was applauded for its speed and accessibility, but concerns about potential misuse arose. In certain instances, illegitimate companies were established to apply for loans, or genuine businesses were used to submit fraudulent applications. This has culminated in several high-profile fraud cases, with some individuals misappropriating funds for personal benefits.
Lee Mankelow’s Illicit Loan
Mankelow alleged that his timber business qualified for a £50,000 Bounce Back Loan, which he successfully secured in June 2020. However, he transferred the £50,000 to another account on the very day he received it, thereby contradicting the loan’s terms. Mankelow maintained that the loan had been used to pay wages, dividends, bonuses, and expenses. Nonetheless, investigators found no evidence supporting these claims, leading to Mankelow’s disqualification.
Muhammad Rais falsely declared a £200,000 turnover for the preceding year to secure a £50,000 loan. Still, an investigation revealed that the actual turnover was only £74,000, making Lokma BBQ Ltd eligible for a £31,000 loan. Rais has consented to remit £8,000 to the liquidators in monthly instalments.
Implications of Fraudulent Loans
The ramifications of fraudulent loans are severe, impacting not only the businesses involved but also the taxpayers funding them. Although they avoided imprisonment, Mankelow and Rais’s dishonest actions have resulted in their disqualification from serving as company directors. With the UK now being dubbed the fraud capital of Europe, this trend is likely to persist until punitive measures for fraud are overhauled.
Lee Mankelow and Muhammad Rais’s cases underscore the necessity of upholding integrity and honesty in business transactions. The government launched the Bounce Back Loan scheme to support struggling businesses, insisting that recipients use the loans for their designated purposes. Mankelow and Rais’s investigation and subsequent disqualification highlight the zero-tolerance policy towards fraudulent activities. However, the absence of custodial sentences raises questions regarding the current fraud penalties’ effectiveness.
