Written 25th January 2024 by Gareth Martin
When people hear the term economic crime, it is understandable that they inevitably think of matters such as VAT fraud, money laundering and customs and excise fraud, for example fuel/tobacco smuggling.
In fact, economic crime encompasses a much broader spectrum of offending behaviours which have not only increased but have become more novel over time, costing the UK and indeed world economy billions (£) every year.
Criminals are opportunistic and with advances in technology, fraud can now literally be committed with the touch of a button. Economic crime is not only perpetrated against or by large multi-national companies or organised crime gangs (OCGs), for example through fraudulent/insider trading or the often unreported, but increasing, ransomware attacks by OCGs which can have far-reaching consequences for companies and their customers. No, economic crime also affects individuals, often on a vast scale, for example through phishing and scam emails or the ever-popular investment or romance frauds where many unsuspecting and vulnerable people have been conned out of their life savings.
It will come as no surprise to learn that crime, and in particular economic crime, tends to increase when money is tight or during times of economic uncertainty or instability. Individuals may commit crimes in a misguided and ill-judged attempt to solve their problems whilst OCGs will often seek to exploit such situations.
Some of the most recent examples of this have been seen during the COVID-19 pandemic. As we know, the UK Government introduced a number of initiatives to combat the effects of the global pandemic, one of which was the Coronavirus Job Retention Scheme (CJRS), more commonly known as the “Furlough Scheme”. The scheme allowed eligible employers to claim grants worth up to 80% of furloughed employees’ wages so that they could retain and pay them during pandemic related lockdowns.
Whilst millions of genuine employers and indeed employees benefitted from the scheme, the reality is that it was also undoubtedly exploited by rogue employers and fraudsters. Some of the most prevalent examples will have included:
Ø Claims for former employees;
Ø Claims for non-existent employees;
Ø Claims based on overstated working hours and
Ø Claims for employees who continued to work throughout lockdown.
This scheme was not the only one to have been set up as we also had the Self -Employment Income Support Scheme which provided grant payments to eligible self-employed individuals, adversely affected by the pandemic. We also had Rishi Sunak introducing the “Eat Out to Help Out” scheme which although intended to incentivise people to eat in restaurants and cafes by giving a discount which the business could claim back from the government, actually provided another opportunity for fraudsters with some making claims despite not even serving food on the premises.
Module 2 of the UK Covid -19 Inquiry, which opened on 31 August 2023, is intended to consider the core UK decision making and political governance surrounding the pandemic and whilst this will include an assessment of issues such as the initial response, political and civil service performance
and the decision making around non-pharmaceutical measures, it is a concern for some that issues such as the exploitation of the schemes above may be nothing more than a side issue despite the billions that were paid out.
The government has been criticised, on more than one occasion, for rushing the implementation of such schemes and failing to put in place proper checks and balances to protect against fraud and even overpayments because of genuine mistakes. Despite the introduction of the likes of the Taxpayer Protection Taskforce set up to tackle such issues in 2021, but whose activities have since been wound down, the government cannot escape the fact that billions of pounds have been potentially lost. Whether that loss has been through mistakes or fraud by individuals, businesses and organised crime groups, is not really the key question rather it is whether it has been written off, as per the accusations of many.
The government and HMRC, as well as other law enforcement agencies, have been keen to state that the billions have not been written off and that those who have made false or erroneous claims may still expect to be investigated and possibly even prosecuted, as well as having the money recovered.
It is not, therefore, inconceivable or indeed unrealistic that 2024 and beyond may see an increased number of HMRC led investigations into individuals and businesses suspected of “furlough fraud”. Quite how they will meet the challenge of processing such cases through an already stretched criminal justice system is a story for another day but those who have committed or suspected to have committed such frauds should not think that this particular chapter of the Covid-19 book is closed just yet.
The team at Olliers have considerable experience dealing with the full spectrum of investigations and indeed investigators and the various tactics they deploy. Whilst we appreciate that an investigation or prosecution is never going to be a pleasant or indeed welcome experience for our clients, it is our job and our intention to make it as straightforward and stress-free as possible. If you or your business find yourself subject to proceedings, please get in touch and let our experts help you navigate the process and achieve the best possible outcome.
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Gareth joined the firm in 2023 and is an experienced criminal and regulatory solicitor with 15 years post-qualification experience. Gareth has built strong relationships with both clients and fellow professionals and is well regarded for his attention to detail, as well as, his firm but reassuring approach to the role.