Police Scotland is investigating allegations that fraudsters claimed Covid-19 business grants from the tourist board, VisitScotland.
In response to a freedom of information request lodged by The Ferret, VisitScotland said it made a report to Police Scotland on 2 March 2022 regarding “an identified instance or instances of fraud” relating to Covid grants.
VisitScotland has not disclosed the value of the grants it believes were obtained fraudulently, but said they represented less than “0.1 per cent” of the total Covid-19 support it gave out.
The body has given out £100m in grants to businesses impacted by restrictions on tourists entering Scotland following the onset of the pandemic in March 2020. It notified the Scottish Government about the police report on 9 March.
VisitScotland told The Ferret that a “very small number” of allegedly fraudulent grants had been identified when giving out top-up grants to other businesses.
Police Scotland confirmed that it had received the report from VisitScotland and that “enquiries are at an early stage”. No arrests have been made so far.
Fears over further fraud
In total, the Scottish Government gave businesses over £4.5bn between March 2020 and October 2021 to help them through the initial phase of the pandemic. A further £350m in support was announced in the winter of 2021 following the emergence of the Omicron variant.
The money gave a financial boost to companies whose earnings were impacted by restrictions introduced during the pandemic.
But there are growing concerns about how much of this money has ended up in the hands of fraudsters.
In March 2022, the government’s finance watchdog, Audit Scotland, said that it was unable to do a detailed analysis of where Covid business funding went due to gaps in the data collected by the Scottish Government.
The Audit Scotland report also noted that the government does not have an analysis of the total amounts paid out to different sectors of the economy.
The Scottish Government estimated in 2021 that between £16m and £32m of the £1.5bn of business support given out by Scotland’s local authorities was at risk of fraud.
He said: “It is right that this support was allocated as quickly and smoothly as possible during the pandemic, but this is not an excuse to cut corners and it is certainly not a free pass for fraudsters.
“Every penny of this stolen money could have gone to people facing hardship, struggling businesses, or our overstretched NHS. Any instances of fraud must be investigated and properly dealt with.
Rennie said: “In the interests of shepherding Scottish businesses through the pandemic, there was an acceptance that the Scottish Government needed to get money out of the door and into bank accounts fast to prevent jobs being lost.
“As we come out of the pandemic, there will be a need to squeeze value for money from every penny to get the economy firing again.”
VisitScotland said that during work carried out to deliver top-up payments, it identified a “very small number of potentially fraudulent applications” from an earlier round of funding. This was reported to auditors and the relevant authorities, including Scottish Government and Police Scotland.
A VisitScotland spokesperson added: “We put in place robust processes to ensure controls were built in at every stage to mitigate against any risk of fraud. Audits carried out on the process across the funds recognised the controls in place at that time as appropriate.”
The Scottish Government said it has taken “appropriate actions” to minimise fraud and error for Covid-19 business support schemes. For the biggest schemes administered by local authorities, a spokesperson explained, this included ensuring eligibility mainly rested on the non-domestic rates register, so councils could use existing data sets they hold to check the validity of applications.
“For more targeted schemes like those run by Visit Scotland, we also drew on existing understanding of the sectors most affected and the robust administrative arrangements they already have in place,” the government spokesperson added:
“There was a robust validation process for all applications which included investigating suspected fraudulent applications. Introducing new systems to administer business support funding would have potentially increased the risks of fraud and significantly delayed lifeline support being provided to businesses at a time this was required most.”
A police spokesperson said: “Officers are investigating following a report of potential fraudulent COVID grant applications having been made and enquiries are at an early stage.”
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