Raashid Khan (26) has been disqualified as a director for 12 years after fraudulently claiming £50,000 through the Bounce Back Loan Scheme (BBLS) before transferring the full amount out of the company’s account to himself just days before his company went into administration.
Khan, from Birmingham, was director of Ikandy Wholesale Ltd, which bought and sold bulk goods, including fireworks and fresh meat.
Despite Ikandy Wholesale’s company accounts being frozen after it was confirmed the company was to be shut down, Khan forged a document to convince his bank that the winding up order had been revoked. This allowed him to transfer around £70,000 out of the account, including a £50,000 Bounce Back Loan, which he had secured less than two weeks previously.
Since February 2021, the Insolvency Service has successfully petitioned the Courts to wind up five limited companies that have been involved in abusing government loans, introduced to help businesses during the pandemic.
These include a furniture retailer in Manchester, and two Glasgow-based companies, for which no legitimate business activity was identified since at least January 2020.
Two of the companies secured Bounce Back Loans, at least one of which was procured on the basis of false information. One of the Glasgow-based companies also secured two Coronavirus Business Interruption Loans totalling £240,000 on the basis of false information.
Dave Elliott, Chief Investigator at the Insolvency Service, said:
The Bounce Back Loan scheme was made available to help support businesses during the pandemic. It is outrageous that some directors have been trying to abuse this support, and the action we have taken shows we take this issue extremely seriously.
I urge anyone who suspects a company has been involved in this kind of abuse, or has information about directors fraudulently obtaining Covid business support, to alert us immediately.
The Insolvency Service will also soon have extra powers to investigate Bounce Back Loan fraud in cases where the company has been dissolved.
The Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill, currently before Parliament, if passed will give the Insolvency Service powers to investigate, and if appropriate take action to disqualify directors of companies which have fraudulently claimed Bounce Back Loans but which have since been dissolved.
This power will be retrospective to allow conduct that took place before the law comes into force to be investigated.
If wrongdoing or malpractice is found, directors can face sanctions including a ban of up to 15 years, and potentially criminal prosecution.
If you suspect a business or company director has behaved fraudulently and abused government loans, you can report it to the Insolvency Service.