United Kingdom: a colossal fraud involving government-backed loans

In the UK, the government-backed loan scheme (PGE) has led to massive fraud, currently estimated at £4.9 billion (€5.8 billion). Some loans were used to finance personal expenses, and criminal organizations were also able to benefit from these funds.

Errors pointed out by former Secretary of State for Fraud Control

Like France and many other countries, the UK introduced a system of state-guaranteed " bounce back " loans at the start of the health crisis.

Their success has exceeded the UK government's forecasts: between April 2020 and March 2021, a total of £47 billion was distributed in the form of rebound loans, compared with the government's initial allocation of £26 billion.

In January 2022, the Secretary of State for Counter Fraud, Theodore Agnew, resigned after denouncing " primary school level errors " on the part of the British government, which in his view was incapable of taking measures that were nonetheless essential to prevent massive fraud.

In this way, some companies were able to obtain government-backed loans even though, after verification, they were not in business at the time of application. In addition, many companies were created in 2020 and 2021, 20% more than the average for the 5 pre-pandemic years. It is highly likely that some of these companies were set up for the sole purpose of obtaining financing.


Financing personal expenses and criminal organizations

While we don't know how much of the fraud may have benefited certain criminal organizations, we do know, thanks to revelations in the Times newspaper, that British border authorities intercepted travelers at airports carrying "large sums of money suspected of being linked to rebate loans ".

We also know that some of these rebound loans have been used to finance personal expenses, such as the purchase of cars, watches or home improvements.

At the end of March, the Insolvency Service, the British public body in charge of insolvencies, provided some examples of proven rebound loan fraud.

Two companies, LV Distributions and SIO Traders, were liquidated after their fraud was uncovered: both had provided false documents to at least 41 local authorities to obtain a £230,000 government-backed loan.

The director of a cleaning company, N&S Solutions, was able to obtain a £30,000 loan in May 2020 even though his company was insolvent and had ceased trading, making any prospect of repayment impossible.

Chunky Chicken, a takeaway food company, obtained a £50,000 loan. Problem: the two directors had actually sold their company since December 2019, and used the sum to repay a creditor who was a family member.

Some fraudulently obtained rebate loans were also spent on gambling.