It's payback time for some of the bosses who cheated the Government loan scheme to help businesses through the pandemic.
Bounce Back Loans offered small and medium-sized firms the chance to borrow between £2,000 and £50,000, depending on turnover.
Parliament’s Public Accounts Committee estimates that up to 60% of all loans from the scheme, amounting to £27billion, might never be repaid.
Part of the problem, according to the committee, was that the money was lent by banks but underwritten by the Government.
This mean banks “lacked incentives to prevent, detect and correct fraud and error given it is not their money on the line”.
The Department for Business won’t give any figures on the number of pending prosecutions “as criminal investigations are still ongoing”.
But an indication of the huge scale of the problem is the steady stream of bosses now being banned by the Insolvency Service from acting as company directors.
Director drained £68k
One of the longest directorship banning orders for ripping off the Bounce Back Loan Scheme has been imposed on drainage company boss Declan Foulston.
The 34-year-old, from Keighley, West Yorks, ran Drains4You Limited and has been barred from being a director for 11 years.
On May 18 last year his company received a £40,000 loan to support his business – and later the same day transferred all but £500 into his personal account.
The Insolvency Service states that Foulston then caused his company “to fraudulently breach the conditions of the Bounce Back Loan Scheme by applying for a second loan of £28,000 when he knew or ought to have known that only one successful application was permissible under the scheme”.
Within days almost all of this second loan had also been moved into Foulston’s private bank account.
In September last year Drains4You went into liquidation owing £164,000, including the £68,000 obtained under the Government’s loan scheme.
He now works at a new drainage company, Viking Environmental Limited, where the director is his wife, Victoria.
He blamed the way he used the loan scheme on bad advice received from “the world’s worst accountant”.
“I am trying to get back on track after the mistakes that I was not in control of,” he said.
“I’m working seven days a week to pay back everything that I owe.”
Neil Bosworth of Wakefield, West Yorks, also got a nine-year ban after his building company NBPM Limited overstated its sales to get two Bounce Back Loans of £25,000 each.
Bosworth, 45, claimed an income of £500,000 for 2019 when bank records for that year showed that the real income was zero.
A nine-year ban has also been slapped on 48-year-old Yusuf Yashar Yusuf, also known as Yusuf Yashar, director of Efes Kebab & Pizza House Limited in Telford, Shrops, who got a£50,000 loan.
The Insolvency Service states that more than £20,000 was spent for his personal benefit, while another £19,000 “was paid to an associate for no apparent economic benefit to the company”.
The business went into liquidation still owing the loan as well as a £30,000 tax bill.
Former boxer handed an eight-year knockout
A string of directors have been given bans even though it could not be proven that they’d abused the loan scheme, because they either refused to hand over company accounts, or never kept proper records in the first place.
Former boxer Adam Etches ran 2020 Boxing Limited, which received a £50,000 loan.
The lack of records meant that the Insolvency Service could not establish if the loan “was validly obtained”, or discover the reason for the transfer of £100,000 from the company to unknown third parties.
Etches, 30, from Sheffield, was given an eight-year director’s ban.
Meanwhile Danny Baxter of Prospect Home Improvements Limited of Canvey Island, Essex, received a seven-year ban.
His company failed to produce records showing whether it was entitled to the £50,000 loan it received, or whether it should have registered for VAT given that it declared a turnover of £200,000 on the loan application paperwork.
There’s a similar story of missing records at Agnitio Plumbing & Heating Limited of Ebbw Vale, South Wales, which was given a £20,000 loan.
Director Rhys Jones, 30, got a seven-year ban.
As did Augustas Gujis of A&C Motor Service Limited of Manchester, which got a £50,000 loan but either did not keep company records or, if it did, failed to hand them to the liquidator.
The bookkeeping at Ari Fashions Limited of Leicester was so bad that it did not even include employee and payroll details, yet the company got a £40,000 loan.
Director Bestun Muhamad, 33, has now been given a seven-year ban, and the Insolvency Service said: “In the absence of accounting records, it is not known if Ari Fashions was eligible for the loan or if these funds were used for the benefit of the company.”
Publican used loan to pay off personal debts
Publican Margaret Lane, 64, used a Bounce Back Loan to pay off personal debts.
Her company, Peal O’Bells Lane Limited, received £25,000 in June last year and over the next eight days it was withdrawn as cash or moved to her personal bank account.
An Insolvency Service report reads: “She then used these funds to repay friends and family for personal loans made to her.
”The company, based in Holt, Wrexham, went into liquidation owing more than £80,000.
Ban: Six years.
Lying about turnover
Iurie Grigoras claimed his property company Nions Home Limited had an annual turnover of £2million when the true figure was less than £100,000.
The lie helped the business, from Corby, Northants, get a £50,000 Bounce Back Loan in May last year.
An Insolvency Service report states that almost £38,000 was “paid to Mr Grigoras and his spouse which he has stated were in respect of wages due to them both.”
When the company went into liquidation in December 2020 it still owed the full £50,000 loan, plus a VAT bill of almost £150,000.
Ban: Seven years
Swindler’s liquidation
The longest ban so far imposed on a director for abusing the loan scheme is the 12 year disqualification given to Raashid Khan, 26, who ran Ikandy Wholesale Limited in Birmingham.
He claimed a £50,000 loan but transferred all of it from the company’s account to himself just days before the business went into liquidation.
The company, which sold bulk goods from fireworks to meat, had its accounts frozen when it was due to be shutdown.
However, the Insolvency Service said that Khan forged paperwork to convince his bank that the winding-up order had been revoked, allowing him to transfer around £70,000 out of the account, including the loan.“
The Bounce Back Loan scheme was made available to help support businesses during the pandemic,” said Dave Elliott, chief investigator at the Insolvency Service.“
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.”
Hairdresser got loan for firm that was insolvent
Swansea hairdresser Jamie Hill got a £25,000 loan for his company Jamie Hill Limited despite knowing it was insolvent.
The money was paid on December 2, 2020, a month after he’d started liquidation proceedings.
Over the next two days he paid himself £21,000 from the company’s bank account and on December 23 it went into liquidation with outstanding liabilities to creditors of more than £220,000.
Ban: Six years.
Firm had shut down
Director Tahawar Saleem has been given an 11-year director’s ban for what the Insolvency Service described as a fraudulent application for a Bounce Back Loan of£50,000.
His company, TAS Home Store Limited, in Bolton, Gtr Manchester, received the money in May last year, despite bank records showing it had ceased trading more than a year earlier, in April 2019.
The bulk of the loan, £45,570, was transferred out of the company account six days after it was received.
Saleem, 61, told the liquidators that the money was used to buy personal protective equipment.
Later he gave a conflicting explanation, providing an invoice apparently showing that it was used to buy pillow and mattress protectors.
The liquidators have been unable to trace the recipient of the money.
£30k loan not repaid
Arash Zakar seems to have trouble paying his dues.
The director of Pizza & Pasta Factory Limited, from Baglan, South Wales, filed returns over four years from 2015 to 2019 which under declared VAT and corporation tax.
When the company was wound up last December it owed more than £250,000 in unpaid taxes and HMRC penalties for “deliberate inaccuracy”.
The debt also included a Bounce Back Loan of £30,000 that had not been repaid by Zakar, 38.
Ban: Six years.
