Failure to name firms receiving Covid loans damages trust in UK, BBB court told | UK news

The failure to name which companies received state-backed loans totaling £80bn during the Covid pandemic has put Britain’s reputation as a reliable place to do business at risk, a court has heard.

The warnings from anti-corruption campaigners and a leading fraud expert came on the first day of a three-day court hearing challenging the state-owned British Business Bank (BBB) ​​and the Information Commissioner over their decision to withhold the names of loan recipients. wraps.

The hearing was prompted by concerns about the misuse of public funds by fraudsters and organized criminals. Campaigners including Spotlight on Corruption, which brought the case to court, argue that this fraud could have been partly prevented through greater transparency.

However, the BBB has argued that releasing those names would breach commercial confidentiality between borrowers and the private lenders who distributed the funds, putting borrowers at risk of becoming targets of fraud themselves.

David Clarke, a leading fraud expert and former head of the charity’s Fraud Advisory Panel, told the tribunal on Monday that money would have been saved and fraudsters deterred had the BBB (which oversaw the scheme) made it clear that it intended to publish the names of recipients when private lenders first began to distribute loans.

“The level of due diligence checks that were put in place … was woefully inadequate and could have been prevented and protected in part by sharing the names of these companies,” Clarke said. “Saying you’re going to publish is a great way to initially deter [fraudsters] … That’s what I said at the beginning of the pandemic, and it seems to be ignored.”

He suggested that publishing the information now would give credit bureaus and journalists access to a wealth of data that would help under-resourced public bodies identify potential fraud, and ensure there was public confidence in the UK as a place to do business.

“Is it right to release it to the world? If we want trade to continue, and be able to trust the system, then yes, we must publish data about businesses [who received loans]”, Clarke said.

The Business Department’s latest estimates suggest that taxpayers could be forced to cover £3.3 billion, or 4.2% of the £80 billion in loans handed out, due to fraud and error. Others fear that the sums could be much higher.

The bulk of these losses are likely to come from the popular reverse loan scheme, which had fewer checks to ensure funds were distributed to businesses quickly. The scheme handed out £47 billion, with affected business applicants able to borrow up to £50,000 each. The state is responsible for 100% of the losses if borrowers do not repay.

Representatives of Spotlight on Corruption argued that the privacy conditions attached to the loans, as a result of their affiliation with the BBB, meant that borrowers should have expected their information to be made public.

But Richard Bearman, the BBB’s director in charge of the reverse loan scheme, said disclosing the information would actually raise privacy concerns and erode trust between businesses and their commercial banks, as well as government bodies.

“These are small businesses in a moment of absolute crisis and worrying about their future … Did they foresee potential outcomes like this at the time? I very much doubt it,” Bearman said. “At the heart of it is a question of trust . And trust between … us and or the government, and with lenders and their customers.”

The tribunal continues.

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