The former Chief Executive of charity HIV Scotland was charged for fraud over the weekend. The Sunday Mail revealed that ex-aide to Angus Robertson , Nathan Sparling (also known by drag alter-ego Nancy Clench), was “arrested and charged” over missing cash. No doubt he learnt from the best during his time with the SNP.

He was previously reported to police after leaving the charity in 2020. HIV Scotland was forced to close last year, having supported victims for over 30 years. In their latest accounts, the charity identified £11,000 of fraudulent expenditure, adding:

“It was identified that the former CEO had entered into a number of transactions that were not deemed to be in pursuit of the charitable aims of the company and were deemed to be fraudulent”.

Sparling was clearly a drag on company finances…

Just when you thought the government’s record on recovering taxpayer cash lost to covid fraud couldn’t get much worse, the National Audit Office has revealed that they’ve recovered just £11.4 million of the £1.1 billion in covid business grant fraud. That’s a meagre 1%.

The government had previously said they hoped to recoup a quarter of the overall figure of lost cash – the new figures show they’re falling well below that on business grant fraud. Rishi also pledged the government would do “everything we can” to go after fraudsters. Clearly that isn’t enough…

A Business and Trade spokesperson said:

“This report confirms that our COVID-19 business grant schemes helped to secure millions of businesses and livelihoods through the pandemic – supporting jobs and the economy during unprecedented times. No amount of error and fraud is acceptable, and we are continuing to work hard to recover these funds where possible.”

This is the same line we’ve been hearing for a year now, including during Rishi’s leadership campaign. Clearly it isn’t happening. The report also points out there’s “little incentive” for councils to go after fraudsters either, because “all recovered monies must be paid back to central government.” Lost to the sands of time…

Nearly three years have passed since Rishi first opened the chequebook when Covid hit. Given taxes are now at a 70-year high and there’s another strike every ten minutes, it is worth remembering just how much cash has been lost to fraud and negligence – probably never to be found – since 2020. BEIS’ annual report showed that, of the three main loan schemes available to businesses during the pandemic, the level of “fraud and error” is estimated at 8.4% – or around £985 million. HMRC now say it’s £4.5 billion. The total liabilities for all Covid loan schemes, including for businesses which later went bust, is £15.8 billion…

Now the Public Accounts Committee is once again fighting back. Committee Chair Meg Hillier has released an excoriating statement demanding the tax man gets tough, warning HRMC it has a “moral duty” to crack down on fraud and claw back more cash. According to the PAC, HMRC expects to recover just a quarter of Covid fraud losses…  

“…the public purse will continue missing out on billions of desperately needed revenues as HMRC will only employ more staff to tackle compliance over the next few years – not fast enough to dent the tax gap at a time of huge public sector spending pressures. Meanwhile taxpayers battle customer services that need improvement. The PAC has reported on the many problems in the Covid support schemes that made an open goal for fraudsters, but HMRC is settling for trying to recover less than a quarter of estimated losses in schemes such as furlough…”

During the leadership campaign, Rishi’s team claimed the fraud figure was around £7.5 billion, and that the Public Sector Fraud Authority were working around the clock. Given the figure seems to change every five minutes, and their initial target was to recoup a pathetic £180 million in its first year, Guido has serious doubts they’re up to much either. Rishi has been evasive on this issue, making excuses that he had to move at pace. Rishi was warned at the time that better checks needed to be made and the Treasury under him dismissed the warnings…

This hasn’t been made any easier by a tribunal decision last week to keep Covid Bounce Back Loan recipients secret, even though a Times investigation had uncovered dozens of fraudsters using the eye-watering £50,000 grants to “fund gambling sprees, home improvements, cars and watches”. Judge Sophie Buckley claimed the public interest angle was apparently outweighed by the risk that those named in the scheme could themselves be the targets of fraud:

“…overall we take the view that the extremely high public interest in transparency and scrutiny of these schemes is substantially met by other measures which had either taken place or were to take place.”

Bear in mind, the anti-fraud Minister Lord Agnew resigned nearly a year ago over government’s “lamentable track record” over all this. He was never replaced…

With all of Rishi’s recent talk about finding efficiencies in government to balance the books, Guido’s had a look at his Treasury track record during Covid to see how it stacks up. First, Business Bounce Back Loans: according to BEIS figures, as much as £4.9 billion lent to 1.5 million companies was lost to fraud and negligence over the last two years. There are countless reports of fraudsters running away with their £50,000 cheques and splashing out on flashy watches and new cars – and more keep coming. Including cash lost to businesses that ultimately failed, that £3.9 billion figure rises to a potential eye-watering £17 billion. The scale of the problem was so enormous, anti-fraud Minister Lord Agnew actually resigned in disgust at the despatch box earlier this year…

Not to mention the billions flushed away on furlough fraud. The latest government estimates put the total losses there between £3.2 billion to £6.4 billion, with the “most likely” figure sitting at £4.5 billion. Although as National Audit Office head Gareth Davies points out on HMRC’s latest accounts, there’s still “considerable uncertainty”; a previous estimate put the figure as high as a whopping £8 billion…

Guido is aware of a specialist software company that works for the finance industry offering their services to assess credit risk and spot fraud patterns being turned away and told by the Treasury their services were not required. A costly mis-judgement for the taxpayer.

Rishi claimed, as Chancellor, that he wasn’t “ignoring” fraud and he “definitely” wasn’t writing it off. He said as much during the leadership debates, even as Kemi Badenoch insisted he didn’t take it seriously. To prove it, he pointed to the the Public Sector Fraud Authority announced in March – with £25 million of even more new money. That authority only started its investigations this month, and its initial target is to recoup just £180 million in its first year. The amount of money lost to fraud would be equivalent to taking some 5 pence off income tax. Assuming the business loan fraud cost £4.9 billion, and the job retention scheme fraud cost £6.4 billion, at this rate it would take the fraud squad just over half a century to track down the £11.3 billion lost in total…

*UPDATE:  Team Rishi get in touch to make arguments that suggest the figure is at most £7.5 billion and probably much lower than £7.5 billion. That’s still equivalent to some £2,000 per taxpayer…

In February this year, Guido shone a light on the Scottish book publishers Sandstone Press, who announced they were to release of book of Nicola Sturgeon’s greatest speeches just days after the Scottish Parliament Elections. Guido pointed out not only is their managing director Robert Davidson a big SNP supporter, his company had been given tonnes of National Lottery money via Creative Scotland. Their rivals accused them of becoming a “nationalised publisher”. Sandstone is now under investigation by Scotland’s financial crimes unit.

Sandstone faces fraud accusations over the receipt of loans and grants worth £295,000 at the taxpayers’ expense. Officers from the unit will specifically probe whether rules were broken when Highlands and Islands Enterprise (HIE) awarded grants and loans to Sandstone.

Keith Charters, managing director of one of Sandstone’s rivals even wrote to Sturgeon warning of concerns and now says it is “deeply concerning that, when we blew the whistle on how HIE had provided Sandstone with that £120,000 – when we provided the First Minister with detailed evidence of suspected wrongdoing – the response of her officials was to vilify us for daring to challenge on the basis of the evidence.” Oh Hubris…

As the probe into the disappearance of the SNP’s £660,000 referendum war chest continues, it looks like the party’s auditors are keen to protect themselves. Nestled within the SNP’s 2020 accounts, released yesterday, is an extraordinary statement from accountancy firm Johnston Carmichael LLP on the “extent to which the audit was considered capable of detecting irregularities, including fraud”. The firm claims:

“We considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following area: revenue recognition […]

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or noncompliance with regulation.”

When three members of the your own finance and audit committee have already quit over a lack of transparency, having your auditors cover their backs in case the lawyers show up is hardly a good look…