During the health crisis, to protect their economies and help their businesses, many countries have established an extraordinary system of guarantees. In France, there have been more than 690,000 loans guaranteed by the state (PGE), which have made it possible to salvage the cash flows of companies facing a sudden decline in their activities. In the United Kingdom, this “whatever it takes” typically took the form of a “bounce back loan”. But not all companies will use these aids as they should… Two years after introducing this system, the government has just discovered the extent of the fraud. According to information from Les Echos, on 20 May more than 4.9 billion pounds (about 5.8 billion euros) were used for personal expenses, even to finance criminal organizations.
Example with the company Brunch Box, which was made in England in 2019. According to Les Acos, he borrowed £50,000 from the state without ever making a turnover. Before the liquidation of the company, both the leaders would have paid part of the amount to their personal account. The manager of Mascot Consulting in south London is said to have “spread money on personal expenses such as renovation work at his main residence”, can we read in a notice published by the body. The British in charge of bankruptcy, by Riley Les Echos. A London construction company may have used its loan to “play poker”, he himself admitted to British officials.
Criticism of Debt Management
According to Les Echos, about 159 leaders have been banned from practicing their activity due to misuse of aid related to COVID. There could be much more in this case and the amount of fraud, which is currently estimated at £4.9 billion, could therefore be much higher. The manner in which these “rebound loans” were distributed is particularly questionable. It must be said that in order to achieve them, procedures for SMEs that could not access other assistance have been simplified as much as possible, states the Economic Newspaper. While the companies themselves verified the correctness of the details on their file, turnover was not necessarily verified, as was their actual activity or their ability to repay. The assistance could then be paid within 48 hours. So this type of loan has been a real success: 47 billion “rebound loans” were granted between April 2020 and March 2021, while the government initially thought to disburse only 26 billion.
Condemning “mistakes at the elementary school level” in the management of these loans, one of the Treasury’s state secretaries resigned in January. The unusual number of company builds during the health crisis could have put executives in their ears: 20% more on average between 2020 and 2021 than in the five years before Covid. Were some created only to receive state aid? This scared the officials. But, above all, they fear that the proceeds have been used to finance terrorism. The Times recently revealed that customs officials had intercepted briefcases filled with banknotes from these loans at British airports. For Treasury Secretary John Glenn, “banks had an obligation to conduct anti-money laundering investigations”.
get our latest news
every day, choose key information Of the day
Organizer. Zombie aficionado. Wannabe reader. Passionate writer. Twitter lover. Music scholar. Web expert.