It’s payback time for bosses who cheated the Government loan scheme to help businesses get 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.
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 shut down.
However, the Insolvency Service said that Khan forged paperwork to convince his bank that the winding-up order had been revoked, allowing him to transfer around £70,000 out of the account, including the loan.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.”
Almost as long is the banning order 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 Bounce Back 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 Companies House records list the director as his wife, Victoria.
I rang and asked to speak to the manager or director and the woman who answered said: “That’s Declan, I’ll get him to call you back.”
When Mr Foulston rang he denied being a director, saying: “I just oversee the company.”
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.”
Director Tahawar Saleem has also 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.
A trio of directors given nine-year disqualification orders include Sophia Del Core, who ran Contour Permanent Cosmetics in Baildon, near Bradford, West Yorks.
The Insolvency Service report states that the 35-year-old caused her company to “fraudulently apply for a Bounce Back Loan of £37,500 and used at least £20,000 for her personal benefit, when she knew or ought to have known that Contour was entitled to a maximum of £8,800.”
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.
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.
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.
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.
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.
Umar Javed of Raja Finest Cuisine in Barnsley, South Yorkshire, received a £25,000 Bounce Back Loan on 6 July last year.
On 7 July he transferred the money from his business to his personal account.
He claimed to have used the money to refurbish the premises but could only provide receipts for work coming to £11,070.
Ban: Six years.
Insurance company Knightsbridge Consultancy Services Limited had no assets and debts of more than £62,000 when it applied for a £15,000 Bounce Back Loan in May last year.
Despite being insolvent, it received the money, all of which apart from £20 was transferred to the personal account of director Dominik Kucharczyk, 27, of Slough, Berks.
Ban: Six years.
Kitchen company BSPK Workshop Limited transferred £27,300 from the business account to the personal account of director Sebastian Griffin on 1 October last year.
That was on the same day that Griffin, 39 and from Bognor Regis, West Sussex, met an insolvency practitioner who advised that the company was insolvent and should be placed into liquidation.
The company still owed all the £42,000 Bounce Back Loan it had received when it folded.
Ban: Six years.
Willow and Oak Bespoke Limited of Peterborough inflated its turnover figures to get a £50,000 loan, which was at least £35,000 more than it was entitled to.
In the eight months between getting the loan and going into liquidation, the company paid just over £50,000 to the directors, including Johnathan Rapley, 37.
Ban: Seven years.
Taxi company ADF Cars Limited of Huthwaite, Notts, received a £50,000 loan in October, more than twice the amount that its true turnover entitled it to claim.
Over the next few days £31,000 was paid to finance companies while almost £11,000 was taken by the two directors, Darren Robinson and Fahim Qureshi.
Just ten days after getting the loan, the directors put the company into liquidation.
Bans: Seven years each.
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.
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.”