Covid support scandal: criminals ‘gross’ up to 9 4.9 billion, as ministers and officials have no warning signs of fraud

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Billions of pounds of taxpayer money will be “lost due to fraud and error” after the government skipped key security measures and lost warning signs of rushing to lend support to Covid, an influential parliamentary committee said.

Officials from the Ministry of Enterprise, Energy and Industrial Strategy (BEIS) offered an “open target to fraudsters and embezzlers and cashed in,” according to the Commons Public Accounts Committee (PAC).

Her report warns that the latest loss of 4 4.9 billion could prove to be undervalued, as the true extent of the damage will only be revealed gradually as official valuations “meet the payments made”.

Lawmakers have found that officials are still unaware whether the millions disbursed in tax-funded Covid support loans were paid to ineligible companies or whether the eligible companies received the right amounts.

The PAC said it was concerned that fraud and error detection “so late would hamper both recovery efforts and the deterrent effect of future crises”.

Aware of the risks of fraud before issuing the loans, BEIS officials asked the ministers for guidance “in identifying some of the risks of fraud”, but “did not sufficiently identify or reflect the potential risks of organized financial crisis”.

The PAC also found that the number of new companies registered during the 2020-21 pandemic increased by more than 20% from any of the previous five years.

Despite the fact that Companies House, where new companies are registered, does not validate the information provided to them when starting a new company or does not check to confirm the existence of a person with a role in a company, BEIS told lawmakers that not knowing if he has sought or received information on company formation trends.

MEPs said these “unusual patterns” were unlikely to be present in any effort to better understand the risks of fraud. The PAC said 170,000 new companies created at the start of a national bloc “would definitely look like a warning sign that deserves more careful scrutiny.”

Lord Agniu, the former finance minister and former finance minister who resigned in response to his department’s failure to conduct key fraud checks during the pandemic, suggested that more than 1,000 companies received urgent business support despite not doing so. . pandemic.

He described the government’s inability to control fraud as a “wrong student”.

BEIS officials have donated ,8 21.8 billion to local authorities for local distribution. Under the program, municipalities are also responsible for recovering cash in cases where they have made ineligible payments. The deputies said the councils “appear to have limited incentive to do so, as they have to cover the cost of debt recovery and prosecution and all the funds recovered must be returned to the ministry”.

JAP added that the business support programs were intended to reduce the damage to businesses and the economy caused by the pandemic.

“The Department requested (and received) ministerial instructions to proceed, given the increased risk of improper payments after the distribution of this public money at the proposed interest rate and size.

“It simply came to our notice then [in a previous report, relating to the Covid Bounce Back Loan scheme] the Department acted in time to support the companies, but left the taxpayer at risk of huge losses due to fraud and mistakes “.

The commission warned that many of BEIS ‘s key areas of spending in the coming years, such as helping the public sector turn green and reach zero, will again require taxpayers’ funds to be channeled through third parties, such as through support programs. in Covid-19 companies.

“We would expect lessons learned from the Department during it
pandemic to support the design and implementation of these future programs “, he said and asked for information on how BEIS implemented the courses.

Dame Meg Hillier, president of the PAC, said: “BEIS says it saw this danger coming, but it is not really clear where the government was looking when it gave its initial response to Covid. He offered an open target to fraudsters and abusers and they redeemed.

“These lessons should have been learned from the banking crisis ten years ago.”

He added that mistakes should be erased from future crisis responses and that the government should “apply what it has learned to the current crises in terms of climate change, energy supply and cost of living”.

A BEIS spokesman said: “We continue to fight the fraud of the Covid support regime and we will not tolerate those who try to deceive consumers and taxpayers.

“These programs have been developed with unprecedented speed to protect millions of jobs and businesses. “If the government had not moved quickly, more companies would have gone bankrupt and many more jobs would have been lost.”

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