PwC to examine fraud risks of UK's Covid-19 loan programme
The Government-owned British Business Bank has tapped PwC to examine cases of possible fraud in its business loan programme, which was launched to help companies impacted by the Covid-19 pandemic. The news sees PwC win further business from the bank, having previously been hired alongside Big Four competitors KPMG and Deloitte to speed up government-backed lending to struggling companies in the summer of 2020.
Even after years of solid growth in new areas, financial services and public sector projects continue to make up the lion’s share of the British consulting industry’s workload. It was little surprise in mid-2020 then, that the taxpayer-owned British Business Bank (BBB) had paid out £20 million in consulting fees, as it scrambled to hasten government-backed lending to struggling companies. Three of the Big Four – PwC, Deloitte and KPMG – won contracts to support the BBB to this end. The trio will help with the operation of emergency lending programmes that as of June had delivered £27 billion to 650,000 businesses.
The BBB is a state-owned economic development bank established by the UK Government. Its aim is to increase the supply of credit to small and medium enterprises (SMEs) as well as providing business advice services. It is structured as a public limited company and is owned by the Department for Business, Energy and Industrial Strategy.
The institution spent a total of £13 million on advisers for help with setting up and running its Future Fund, while consultants gained another £7 million for their work on the loan schemes. For example, PwC received £5.7 million for work on the Future Fund, a separate programme that will match up to £250 million of taxpayer money with private investment in start-ups. In just four weeks the firm developed an online transaction process for issuing convertible loan notes to companies that win funding.
Now, PwC has been drafted in for further assistance, this time to help the BBB examine possible cases of fraud. As reported by UK paper The Telegraph, British banks have lent about £68 billion through a trio of loan programs, with repayments backstopped by the Government. In December, the Government extended the initiatives through to March 2021, as cases of Covid-19 rose sharply, prompting further restrictions on socialising and business activity.
The BBB hired consultants to look into where borrowers are committing or attempting fraud. Lawmakers have previously raised concerns about the risk of fraud, and one estimate found defaults and fraud in the Bounce Back program for small businesses could reach 80% in the worst case.
