Editor's PickForexNames of UK Covid business loan borrowers to stay secret, tribunal rules

January 5, 2023

The British government has been given the go ahead to keep concealing the names of companies which received in total more than £47bn in state-backed Covid loans, after a tribunal ruled in its favour.

The tribunal case had been brought by campaign group Spotlight on Corruption, amid concerns fraudsters and organised criminals had exploited government-guaranteed loans intended for struggling firms during the pandemic.

Spotlight claimed this fraud could have been prevented in part through greater transparency, particularly on which companies secured bounce-back loans, which had fewer checks in order to get funds to businesses at speed.

However, the tribunal backed the government-owned British Business Bank (BBB), which administered the loan schemes and had argued that disclosure would breach commercial confidentiality and risked borrowers becoming fraud targets themselves.

“We have found in relation to all schemes that there is a very strong public interest in preventing prejudice to commercial interest,” the tribunal ruled on Wednesday evening. “It is very clearly not in the public interest to release information that would lead to a really clear risk that borrowers would be exposed to targeting by fraudsters.”

Although the tribunal conceded there was some value in allowing “civil society” groups such as journalists to assist in fraud detection work, by allowing them to trawl through public disclosures, it said sufficient scrutiny was already taking place.

“The extent to which the release of a list of names adds to the detailed evaluation and scrutiny by, for example, the National Audit Office and the House of Commons public accounts committee is, in our view, extremely limited,” the tribunal said.

“Although the public interest in detecting fraud is high, the public release of the names was not necessary to facilitate that,” it added

The business department’s latest estimates suggest taxpayers could be forced to cover at least £2bn of losses due to fraud or error from the popular bounce-back loan scheme, which had fewer checks to ensure funds were distributed at speed.

The bounce-back scheme alone totalled £47bn of loans, with affected business applicants able to borrow up to £50,000 each. The government is liable for 100% of the losses if borrowers fail to repay.

The BBB said it welcomed the ruling, which followed a three-day hearing in November. “We will continue our focus within the Bank on supporting and helping to grow smaller businesses in the UK now, and in the future.”

But Spotlight on Corruption, which does not intend to appeal against the decision, said it was “disappointed that the tribunal’s emphasis on commercial confidentiality overshadowed wider considerations, particularly given that it recognised the extremely high public interest in transparency and scrutiny of the Covid loan schemes”.

The campaign group said it still believed that billions of pounds worth of taxpayer funds could have been saved if the government had immediately released names of borrowers at the start of the pandemic.

“The fraudsters who used these schemes to rip off billions of pounds from their fellow citizens at a time of national emergency face little chance of being investigated, let alone convicted,” Spotlight said. “The National Investigation Service has so far made only 49 arrests into bounce-back loan scheme fraud and opened investigations with a total value of £160m – a fraction of the amount lost to fraud.

“If we’re to stop the public purse from being similarly robbed in future state-aid schemes, the government needs to learn hard lessons from this debacle fast,” the campaign group added.

Leave a Reply

Your email address will not be published. Required fields are marked *

Disclaimer: SmartPeopleMail.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2023 SmartPeopleMail. All Rights Reserved.

IT'S YOUR OPPORTUNITY OF THE YEAR!
Subscribe for FREE today and get your daily shot of smart news about the Economy and Investing.
We are dedicated to keeping any data we collect from you — safe and secure. Here you can read our privacy policy.