In the UK, the controversy surrounding government-backed loan fraud is gathering momentum. Several billion pounds have allegedly been paid out to fraudsters, and the UK's Comptroller of Accounts considers the measures put in place by the government to recover some of these funds to be insufficient. Theodore Agnew, the Secretary of State for Combating Fraud, has just resigned.
Successful 48-hour rebate loans
Among the various government aids put in place in the UK during the pandemic, state-guaranteed loans were a great success. One scheme that particularly appealed to businesses was the so-called "rebound loans", aimed at small businesses and backed by a 100% government guarantee.
The scheme, known as the " Bounce Back Loan ", was introduced in April 2020, to alleviate the slow process of obtaining a secured loan under the conventional scheme. The loan amount could be up to 25% of a company's turnover, up to a maximum of £50,000.
Above all, these rebound loans had the specificity of being very quick to obtain, within just 48 hours. The success of this scheme was swift and massive: numerous rebound loans were granted between April 2020 and March 2021, for a total amount of £47 billion.
National Audit Office points to government failings
However, in December 2021, the British auditor, the National Audit Office, which plays a role equivalent to that of the Court of Auditors, sounded the alarm.
In its report, the National Audit Office estimates that £17 billion made available under government-backed rebate loans will not be repaid. Worse still, of this £17 billion, £4.9 billion would have been granted for fraudulent loans.
According to the National Audit Office's report "The Bounce Back Loan Scheme", the British government " prioritized speed of payment " to the detriment of security. The NAO also found that anti-fraud measures had been implemented too slowly to be effective, and that the measures taken to recover some of these funds were " inadequate ".
Theodore Agnew, Secretary of State for Counter Fraud, resigned on Monday, citing the government's inability to take the necessary action against fraudsters. According to Agnew, " grade-school mistakes were made ": in particular, he pointed to the fact that 1,000 companies were able to obtain state-guaranteed loans when they weren't even in business.
British banks fear that they will find themselves at the center of criticism and be held responsible for these failures. Some MPs have already called for the state guarantee to be revoked where loans have been granted without the banks taking sufficient measures to prevent fraud.
For his part, Finance Minister Rishi Sunak responded to the criticism by defending the government's action. On his Twitter account, he assured us that every effort would be made to recover these sums and prosecute " those who profited from the pandemic ".
1/ A lot of people are concerned about fraud in our Covid support measures and they're absolutely right to be.
- Rishi Sunak (@RishiSunak) January 26, 2022
No, I'm not ignoring it, and I'm definitely not 'writing it off' 👇