Tough action taken against company directors for COVID-19 financial abuse
The Insolvency Service has revealed that 459 directors were disqualified in 2022-23 for financial abuse of the pandemic support schemes.
Nearly half of the 932 company directors who were disqualified in 2022-23 were as a result of cheating Covid-19 financial support schemes. The average disqualification length was seven years four months, up from five years ten months in 2021-22.
The total number of director disqualifications in 2022-23 was 16% higher than in 2021-22, when 804 directors were disqualified.
Criminal prosecutions and convictions
In addition to civil enforcement action, criminal prosecutions were brought against six directors in 2022-23 for Covid-19 related misconduct. All the prosecutions resulted in a conviction and in one case resulted in immediate imprisonment.
In the three most recent cases, Bahar Dag was sentenced at St Albans Crown Court to six years and six months in prison, with her husband Baris Dagistan sentenced to two years, having both pleaded guilty to offences involving a fraudulent application for a bounce back loan.
In another case, Jubelur Rohman, sole director of Better Day Ltd, was disqualified as a director for 11 years following an investigation into his company’s £50,000 bounce back loan obtained in October 2020.
Other reasons for director disqualification
The second most common allegation for director disqualification in 2022-23 was unfair treatment of the Crown – i.e. HMRC. There were 185 disqualifications, down from 298 in the previous year.
Examples of unfair treatment of HMRC can range from cases where a director had made a conscious decision to pay other creditors and not HMRC, to cases where a director has defrauded or attempted to defraud HMRC.
The third most common allegation related to accounting matters, which saw a total of 147 disqualifications in 2022-23, up from 135 in 2020/21.
The Insolvency Service is taking firm action against financial abuse
Commenting on these latest financial abuse figures, Dave Magrath, director of investigation and enforcement at The Insolvency Service, said: ‘These fraudsters are just the latest to find out that we will not hesitate to take firm action where we uncover such abuse, and this can ultimately result in a jail sentence.
‘The purpose of the bounce back loan scheme was to support businesses during the pandemic, but it is clear a minority of company directors chose to maliciously abuse the scheme and defraud the taxpayer. Our team of experts continue to work round-the-clock to bring these criminals to justice.’
These figures demonstrate that The Insolvency Service remain focussed on acting where fraudulent activity is discovered and will take action to remove individuals from the corporate arena for a lengthy period of time.
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The information was correct at time of publishing but may now be out of date.