12 Year ban for Director who Pocketed Covid Loan Cash
A company director from Birmingham has received a 12 year ban after he fraudulently claimed £50,000 through the government’s Bounce Back Loan Scheme.
Raashid Khan, 26, was taken to court by the Insolvency Service for the fraud, which involved him transferring the money out of his company’s account into his private account, only a few days before his business went into administration.
Khan ran Ikandy Wholesale, which traded in bulk goods, including fireworks and meat. His company accounts were frozen as the business was in liquidation. Despite this, Khan forged a document that stated the winding up order had been revoked and he subsequently moved £70,000 out of the account. This included the £50,000 government loan that had only been agreed some two weeks previously.
A statement from the Insolvency Service, which is a government agency, said it had successfully petitioned the courts to wind up five other limited companies which were involved “in abusing government loans, introduced to help businesses during the pandemic.”
These included a furniture retailer in Manchester and two Glasgow companies, for which no legitimate business activity was known since at least January 2020.
Two of these companies were approved for Bounce Back Loans, at least one of which was procured on the basis of false information. One of the Glasgow companies obtained two Coronavirus Business Interruption Loans totalling £240,000 on the basis of fake information.
Dave Elliott, chief investigator at the Insolvency Service, said: “The Bounce Back Loan scheme was made available to help support businesses during the pandemic. It is outrageous that some directors have been trying to abuse this support, and the action we have taken shows we take this issue extremely seriously.
“I urge anyone who suspects a company has been involved in this kind of abuse, or has information about directors fraudulently obtaining Covid business support, to alert us immediately.”
New Bounce Back Loan Fraud Powers
Business owners should be aware that the Insolvency Service will shortly have extra powers to investigate Bounce Back Loan fraud in the cases where the company has been dissolved.
The Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill, is currently before Parliament. If passed, there will be new powers granted to the Insolvency Service to investigate and take action to disqualify directors of companies that fraudulently claimed Bounce Back Loans and have since been dissolved. The power will be retrospective so that wrongful conduct that took place before the law comes into force can be investigated.
If wrongdoing or malpractice is uncovered, directors can face sanctions that include a ban of up to 15 years and potentially criminal prosecution.