The former head of Britain’s financial crime prosecutor has said “red flags were ignored” in the rush to distribute taxpayer-funded emergency loans to businesses during the pandemic, and questioned whether fraud was taken seriously by the government.
Parliament’s spending watchdog estimates fraud and error were likely to have cost the UK government as much as £16bn across the various Covid loan schemes, including those for small businesses.
Sir David Green, the Serious Fraud Office (SFO) director from 2012 to 2018, said there had been warning signs that should have been picked up.
“Red flags were ignored,” said Green. “Obviously, there was a political priority to get money out the door to assist individuals and businesses, to keep the economy afloat, but just because you need to get money out the door doesn’t mean you throw ordinary prudence out the window. And I think some of the red flags that were ignored tend to suggest that that is what happened.
“Examples would be the failure to cross-check with HMRC about the trading experience and turnover of a company that was claiming a Covid loan, or the fact that, I think, well over 2,000 applications for a particular type of loan came from the same business address.”
Green, who is now a partner at Cohen & Gresser, where he works defending complex fraud and other white-collar cases, expressed wider concerns that fraud was not a priority.
“I do not think that the SFO can really succeed until it is taken seriously by government,” he said. “And I think there is evidence … that the support for it is somewhat half-hearted.”
As evidence, Green cited insufficient funding to recruit and retain high-quality staff, including the disparity in pay received by the respective heads of the SFO and NCA (National Crime Agency), Britain’s equivalent to the FBI. In 2021, the top job at the NCA was advertised with a salary of £223,000, while the next head of the SFO will get £184,000.
However, Green said it was about more than money. He said there should be people embedded across government with expertise and training in identifying and preventing fraud, rather than them being confined to the SFO and pockets of HMRC and the police.
He also claimed that, at a time when fraud was “expanding daily” because of the internet, there was insufficient deterrent to those who think of committing the offence. He attributed this to delays and other issues within the justice system. “To be a proper deterrent, justice needs to be swift and fierce – it is not in relation to fraud now,” said Green.
The SFO has attracted negative headlines in the wake of collapsed prosecutions and acquittals, with even its continued existence as an independent organisation questioned. But Green defended its conviction rates as “historically perfectly respectable”, particularly given the complexity of the cases it takes on. He also said criticism was misplaced given that, unless the judge ends the case, the decision ultimately rests with the jury.
However, he did highlight problems he said were hampering the SFO, including funding and dated disclosure rules that he said “are unrealistic in the world of digital material”, requiring prosecutors to sift through “millions of documents”. The most technical fraud cases should be tried by a panel of judges or a judge assisted by experts, rather than a jury, said Green, as the demands on the public in such cases are excessive in terms of time and complexity.
A government spokesperson said: “The government has recovered more than £3.1bn of fraud losses in the last two years, including within Covid-19 schemes, but we know there is more we can do.
“That is why we are expanding the government’s counter fraud profession, developing new technologies and boosting skills and training to further protect the public purse.”
