06 July 2023 , 08:00
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A shocking new case lays bare the almost unbelievable ease with which bosses could fiddle a Government lockdown help scheme.
Davina Prasad ran an online clothes store, calling herself as “fempreneur”, while her website grandly stated she was “on a mission to empower women through fashion”.
She was also on mission to fill her company bank account with taxpayer cash from the Bounce Back Loan scheme.
This was designed to help small businesses through the pandemic by providing a loan of up to £50,000, capped at 25% of turnover.
Prasad’s company Ultamodan Limited obtained the maximum £50,000 from Santander in June 2020.
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Although only one such loan per business was permitted, the following month she went to Metro Bank to get another £50,000.
In August she got £50,000 from HSBC and the same again from Starling Bank.
Since the loans were 100% underwritten by the Government, the banks won’t be losing out.
But the taxpayer will, because when Ultamodan was wound up by a creditor in the High Court in January it still owed £196,899 for the loans, according to the Insolvency Service.
Prasad, 39, from Putney, South West London, has now been banned from being a director for 11 years.
I asked her why she had made multiple loan applications.
“I understood that I was able to do so from various financial advisers and my own research and what I understood from the website when I made the application,” Prasad said. “I wasn’t aware it was wrong until I was asked by the Insolvency Service why I did this and I said ‘because Icould’.”
She also insisted that she had repaid more than the £3,101 cited by the Insolvency Service, but could not be sure exactly how much: "It was hard for me to say how much of each loan had been paid back because I didn’t have access any more to the accounts."
The Insolvency Service report detailing her directorship disqualification makes plain: “The Bounce Bank Loan application form requires the applicant to sign a declaration which states, amongst other things, that this is the only application for a Bounce Back Loan.”
This might be an extreme case of multiple loan applications but it is not an isolated one.
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Kris Theophanous was the director of hairdressing company The Theophanous Project Limited of Walton-on-Thames, Surrey, which got a £50,000 Bounce Bank Loan in May 2020, then another one for £40,000 inJune.
The money was still owed when the company went into liquidation.
All smiles: Gary Wilson got £100,000 from the taxpayer (Facebook)Health and safety outfit GPW Consulting 1 Limited, run by Gary Wilson, of Lichfield, Staffordshire, got two £50,000 Bounce Back Loans from two different banks, which were still owed when it was liquidated with total debts of £576,102.
Jaspal Sidhu, of Wolverhampton, obtained two loans for his company Metandu Inc Limited, one from HSBC and the other from Barclays, each for the maximum £50,000.
None of the money has been repaid and the company is now inliquidation.
Asad Ullah, of Leicester textile company Jadore Angle Limited, got one loan of £30,000 from NatWest and another for the same amount from HSBC.
He then tried to get top-up loans of £20,000 from each bank, but was turned down.
Theophanous, Wilson, Sidhu and Ullah have all been given 11-year directorship bans.
Government figures show that £46.6billion was handed out through Bounce Back Loans, with £5.5billion listed as in arrears, defaulted or lost to suspected fraud.
A spokesman for the Government-owned British Business Bank, which ran the scheme, said: “As part of the application process for a Bounce Back Loan, the borrower was required to declare that they were only making one such application unless they were part of a wider group.
“A system for banks to check and prevent multiple applications was not available at the start of the scheme, but was put in place as soon as possible thereafter.
"The British Business Bank continues to provide fraud prevention and other services with data and analysis to identify and pursue fraud in the scheme.”
John O’Connell, chief executive of the TaxPayers’ Alliance, said: “Taxpayers continue to be shocked by the scale of covid fraud.
“While ministers had to act quickly during the covid crisis, taxpayers have been left on the hook for Whitehall’s failure to implement safeguards.
“The government needs to crack down on anybody who fiddled the system.”