Furlough fraud exposed as businesses cash inby
The extent of furlough fraud perpetrated over the pandemic is only now coming to light, with the cost to the nation likely reaching the billions.
The coronavirus job retention scheme finally came to a close at the end of September, after 18 months of handing out government support, but it’s only now that businesses that took advantage of the scheme while their employees carried on working are being named and shamed.
BBC Radio Four’s current affairs documentary ‘File on 4’ has exposed some of the rogue employers that exploited the government’s furlough scheme during the pandemic.
Organisations that cashed in on the scheme were revealed in the programme of using threatening techniques to suppress any whistleblowers to HMRC and telling workers that they are “100% still at work” and that the company would be “daft not to take” the money.
The Radio 4 programme was released on the same day HMRC updated guidance on taxation of Covid-19 support payments, which will enable the tax authority to collect wrongly claimed CJRS payments from directors.
‘Anything kind of goes’
The investigative programme focused first on Kash Khokhar, the owner of the digital marketing agency Kau Media Group, who wrongly claimed furlough money and used intimidation and threats of redundancy to keep employees quiet.
Using secret recordings obtained by whistleblowers, the documentary revealed how Khokhar announced to his employees over a Zoom call at the start of the pandemic that they were being furloughed.
However, as former employee ‘Lucy’ revealed, Khokhar then told the furloughed workers to continue working “because we still have campaigns live”.
Another employee, a web designer, was told by Khokhar that he was going to be working with a 20% reduced salary, but didn’t mention furlough. Shortly after an email circulated which acknowledged that he had agreed to go on furlough.
He immediately responded to the email saying that he actually agreed to a reduced salary. However, Khokhar justified keeping his employees working whilst on furlough due to “moving into a period of time that’s like wartime” where “anything kind of goes”.
The programme estimated that the digital marketing agency likely claimed around £100,000 in furlough payments.
Khokhar, to the astonishment of his employees, also struck a deal to bulk buy PPE gowns and masks from China and sold these to the UK government for £40m.
File on 4 also uncovered similar furlough misuse allegations at Brewster Partners Recruitment Group. It’s chief executive Nigel Brewster was caught on a recording saying “It’s a Government grant, you’re absolutely daft if you don’t take it”, and that he hoped that it would bring in around £140,000.
Lisa Brewster, Nigel’s wife and the managing partner of the company, was also recorded telling furloughed staff that the morning company Zoom calls will still go ahead as a “loophole” in the furlough rules means “if you choose to work, we can’t stop you.... I’m presuming nearly everybody here will be doing that”. She went on to describe the support as "a thing to get some cash because every other business is doing it" and reiterated to the employees that "We’re still 100% at work... we’re doing that because we want to and for our mental health situation."
Fake national insurance numbers
The third story had already gained national attention in the Financial Times, after a mysterious group of companies all registered to the same virtual mailbox service in London raked in between £20m and £40m from the furlough scheme.
Orchestrated by Rajanish Garibe, the scheme used phantom employees with fake national insurance numbers to claim furlough support for more than 2,000 employees. The report found that the Indian national Garibe did all this without even stepping foot in the UK.
Register for free to continue reading
It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:
View all AccountingWEB content
Comment on articles
Watch our digital shows and more
Access content now