Covid loans were plunged into sports cars and “suitcases of cash leaving the country”, Boris Johnson ’s former counter-fraud minister declared today.
Lord Agnew lashed out at £47bn Bounce Back Loans six weeks after he resigned in protest over “schoolboy errors” in the scheme.
Around 1.5million firms obtained the loans of up to £50,000 or a quarter of annual turnover, the vast majority of them small businesses.
But the government has estimated £4.9bn of loans were fraudulent and £17bn won’t be repaid, according to the National Audit Office.
The loans - which closed for applications last March - had no fees or interest for a year, followed by a 2.5% interest rate after 12 months.
Former Treasury minister Lord Agnew admitted it was a “complete pandemic of fraud”.
He told the Lords Digital Fraud Committee: “I don't want to go back and try and be Captain Hindsight here… but there are still bits of data which would help us tackle this.”
He added: "There are hundreds of anecdotal examples of directors of these companies taking the money out of the business, putting it in their private bank accounts and going off and buying a sports car.
“Now that is a fraud. That is against the purpose of the loan.
“The banks will have the data on it. They know exactly where the money moves and when it moves, so can we please see the data and what they are doing about it?”
He added: “The same applied to money that left the country.
“How much of that £47bn hit the British banking system and then left overseas within X weeks and months?
“I mean, I sent letters of congratulations to Border Force staff who picked up suitcases of cash leaving the country. Literally.”
He added a large sum, “let’s say £10bn”, went directly back to banks to plug their own balance sheets. Lord Agnew called for a data dashboard to oversee what happened to the money.
In December the National Audit Office said Tory ministers “failed to put adequate fraud prevention measures in place” when setting up the scheme.
A national investigation team had received 2,100 reports of possible fraud by October, but only had capacity to pursue 50 cases a year.
It has been set a target of clawing back “at least £6m” over three years - 0.01% of the total handed out in Bounce Back loans.
By October there had been 43 arrests across 33 investigations and more than £3m of recoveries.
A BEIS spokesperson said: “We’re continuing to work to crack down on fraud and will not tolerate those that seek to defraud consumers and taxpayers.
“Our Covid support schemes were implemented at unprecedented speed to protect millions of jobs and businesses at a time when families needed it the most. Last year lenders reported preventing nearly £2.2 billion in potential fraud from the Bounce Back Loan Scheme.”
