As part of Budget 2021, Chancellor of the Exchequer Rishi Sunak added extensions to furlough, self-employed support, business grants and loans, bringing the government’s total fiscal support to more than £407bn. This makes the COVID stimulus packages the biggest round of financial aid the UK has ever delivered.
David Clarke, Chairman of Fraud Advisory Panel and Group Head, Integrity & Multilingual Due Diligence at Guildhawk, said in any disaster with money going out, fraudsters are quick to adapt. “With the pandemic, it was no surprise at all to see fraudsters attack, whether it be grants or loans, public sector or private sector,” Clarke told ICAEW Insights.
“It looks like anything up to £43bn went out as Bounce Back Loans. Estimates vary at this stage, but anything up to half of that might not get repaid and it’s possible billions of pounds were paid to people who weren’t entitled to it, making this potentially the biggest fraud in British history.”
David Clarke is a specialist in counter-fraud measures. He is a former detective chief superintendent and member of the UK government’s Fraud Review team, responsible for designing and leading the National Fraud Intelligence Bureau. Clarke is a volunteer member for the Fraud Advisory Panel, which advises government, business and the general public on fraud prevention, detection and reporting.
Lesson one: share intelligence
In March 2020, the Fraud Advisory Panel established a COVID-19 fraud watch taskforce, which Clarke chaired and ran for six months. The taskforce had 75 members, bringing together the likes of ICAEW, the Law Society, the Cabinet Office and the police.
Clarke added: “You’ve got to set up a joint taskforce of people. We didn’t do it for the government, banks and police - this was set up for other sectors that don’t normally get their voice heard in groups and who don’t know what to do in a major incident.”
Lesson two: act fast
Clarke said that the recent launch of the Taxpayer Protection Taskforce is a promising development, but the real lesson is to react quickly to stop fraud from spreading.
“You must act fast to bring people in from different sectors. That’s how you deter people, by getting intelligence shared,” said Clarke. “We shared hundreds of actionable bits of intelligence that came in.
“Getting that money out fast was great but systems weren’t prepared to get this out in a safe way – a lot of this money has gone to fraudsters.”
Lesson three: publish the data
Clarke has sent letters to the Chancellor and numerous ministers requesting the publication of Bounce Back Loans data, featuring the names of companies receiving the loans.
“I did this for a very clear reason,” he said. “When I ran the National Fraud Intelligence Bureau, we were looking at similar information for two main reasons. Firstly, we can quickly data match and see which ones are duplicate or check them against other data to see if any claims are obvious frauds. And then we can take action to find these fraudsters and take action against them.”
Despite his letter being signed by Transparency International and others, the government has so far made no commitment to publish loan data.
Lesson four: focus on recovery, not arrests
While Clarke welcomed recent news of Bounce Back Loan fraud arrests, he urged the government to focus on recovery, not prosecution.
“In the wider context, it’s more important to recover the money because it needs to go to pay down national debt”, he said. “If the conversation starts about prosecution, it takes years and it's very costly as a lot of people may have committed fraud.
“Otherwise, we're all going to be paying a lot more tax to pay for that money that was given to fraudsters,” Clarke continued. “For anybody who thinks that fraud doesn’t have many victims, ask the taxpayer when we have to pay it back. Potentially it could be £30bn in increased taxes.”
In the second part of ICAEW’s exclusive interview with David Clarke, he explores the critical role accountants play in tackling fraud as the ultimate gatekeepers.