UK watchdog criticizes lack of fraud checks on COVID loans
Reuters reported on Friday that Britain's government failed to guard properly against fraud in its 47 billion-pound ($63 billion) COVID emergency lending program for small businesses, resulting in up to billions of pounds of losses. A watchdog warned on Friday that the government failed to guard appropriately against fraud.
The National Audit Office, which examines public-sector expenditure, stated that the Bounce Back Loan Scheme, which was launched in May 2020 and did not conduct credit checks or fully verify the identity of small businesses seeking for loans.
"Government prioritized getting Bounce Back Loans to small businesses quickly but failed to put adequate fraud prevention measures in place," added Gareth Davies, the NAO's comptroller and auditor general.
"One impact of these decisions is evident in the high levels of estimated fraud."
The government began the plan to combat the collapse of small businesses who had to cease trading as a result of tight lockdown restrictions at the start of the COVID-19 epidemic.
Firms could borrow up to 50,000 pounds each through banks at a fixed interest rate of 2.5%, repayable over 10 years. Initially, lenders had to give a loan decision within 24 to 48 hours.
The business ministry of Britain, which ran the initiative via the British Business Bank, a state lender, predicted that 37 percent of the loans would not be repaid and that 11 percent came from fraudulent applications in March, according to the British Business Bank.
Despite the NAO saying it had not had time to check this estimate itself, a subsequent inquiry by accountants PwC in October reduced the fraud rate to 7.5%.
Other nations are also investigating the misuse of emergency loans issued during the epidemic, as well as the misuse of emergency loans issued during the epidemic.
The United States Special Inspector General for Pandemic Recovery stated in June that Washington's loans programme was plagued by "unprecedented levels of fraud."
Meg Hillier, the chair of a cross-party Public Accounts Committee in Britain's parliament, said the government had done too little to reduce "colossal risks of fraud and error".
"It's now concentrating on recovering money from organised crime, but many of the smaller-scale fraudsters will have passed through its fingers," she said.
According to a business ministry spokesperson, loans and other assistance have aided millions of businesses in avoiding hiring off employees.
"We are working closely with lenders and enforcement authorities to minimize fraud and ensure that individuals who have committed fraud have consequences," the spokesperson said.
($1 = 0.7519 pounds)