Director banned for £150k Bounce Back Loan fraudby
A Rotherham-based director has been banned after setting up three companies with the sole purpose of fraudulently obtaining £150,000 worth of Bounce Back Loans (BBL).
The Insolvency Service has banned Muneef Ihsan for 13 years after an investigation discovered that the 26 year old director opened bank accounts for three companies in June 2020, solely to fleece the Covid support scheme.
Along with assistance from his friend, Ihsan sunk the companies into voluntary liquidation and the pair spent the fraudulently obtained Covid support loan on a lavish watch and transferred cash to third parties.
The BBL scheme has long been clouded with stories of fraud, and Ihsan’s ban illustrates the scale of the corruption and fraud risks which the accountancy profession has highlighted since the offset.
The BBL fraud
Ihsan obtained Covid loans as the director of three companies: Porthart Ltd, Bargain Basement 90 Ltd and Bargains Basement 90 Ltd. These were all registered at the same Rotherham address.
The director triggered an investigation from the Insolvency Service after putting all three into voluntary liquidation in September 2020, shortly after opening a bank account for each company in June 2020.
With no evidence that the companies even traded, it’s now clear that Ihsan only opened the bank accounts to get his hands on the £50,000 Covid-19 loans.
Ihsan then took £24,342 from each of the companies’ bank accounts and transferred the rest to his ‘close friend’ Mahir Towid Ul Haque.
More BBL fraud
Haque was also complicit in his BBL fraud, after he pulled a similar scheme to Ihsan by placing his supposed online sports retail company Hiitness Ltd into voluntary liquidation in November 2020.
The company, of which Haque was appointed director in May 2020, only opened a bank account in June 2020 to obtain the £50,000 Covid support loan, and the investigators could not find any evidence that the company traded during his spell as a director.
Haque transferred £16,050 to his personal account, bought a Rolex watch, withdrew a further £8,410 from the company account and shifted £12,500 to third parties.
Following an investigation from the Insolvency Service, the pair were both disqualified as directors. Ihsan, as the one that scooped up three fraudulent BBLs, received the longer ban of 13 years, while Haque faces a six year ban.
Under the punishment, neither Ihsan or Haque can now form or manage a company without permission of the court.
Robert Clarke, chief investigator for the Insolvency Service, said that the punishment sends out a “clear message” that “action will be taken to remove the directors from the corporate arena for a lengthy period of time”.
AccountingWEB contacted the Insolvency Service and asked whether criminal proceedings would follow. A spokesperson said that they were unable to confirm whether this was the case but added that if there was evidence of criminality, it would be referred to the relevant prosecutory body.
More Covid fraud uncovered
The investigation of Ihsan and Haque is seemingly the tip of the iceberg of BBL fraud as AccountingWEB heard reports from as far back as October last year that the “scale of fraud is enormous”. One anonymous reader told AccountingWEB last year that “criminal gangs have exploited the loophole [as it’s] easy to get money without much effort,” while they claimed banks were not bothered about giving away money as “the government is covering the loan”.
This case is the latest in a series of Covid fraud that has risen to the surface in the past few weeks. Earlier this month, BBC Radio 4 current affairs documentary File on 4 uncovered a number of businesses that abused the furlough scheme and justified their part in the fraud because “every other business is doing it”.