This month, in Manchester Crown Court, Judge Anthony Cross QC sounded baffled – and deeply disgusted.
How, he wanted to know, had a criminal drugs gang managed to get its hands on a £25,000 coronavirus recovery loan, backed by taxpayers and intended to help struggling small businesses?
It is a very good question. The judge will no doubt find the answer – which he has demanded in writing by the end of the month – to be deeply depressing.
Loans architect:: Chancellor Rishi Sunak (pictured), the architect of the Covid loan schemes, was fully aware of the risk of fraud
The panoply of Covid loans and support schemes have protected the economy, but they have also served as gigantic honey pots for swarms of fraudsters and chancers.
The Manchester loan fiddle emerged during the trial of five men, who had already admitted being part of a conspiracy to supply cocaine, over a plot to kidnap and rob an elderly businessman.
They were using a firm called South Manchester Plastics as a front company for their criminal activities.
One gang member applied for a £25,000 ‘bounce back loan’ through the bogus enterprise. The villains were duly handed the cash, despite the fact that even a cursory check would have revealed the company had no legitimate trade and had never filed a tax return.
How utterly sickening that money intended for genuine businesses, desperate to survive the Covid lockdowns, was siphoned off so easily by a bunch of criminals.
This case is shocking, but it is far from isolated.
The granting of coronavirus loans, though well-intentioned, was so lax as to be an open invitation to fraud and other misuse.
Billions of pounds were handed to companies with minimal checking.
For once, the banks cannot entirely be blamed for this, because they were acting at the behest of the Government which had set out a deliberate policy of abandoning any attempt at stringent scrutiny.
Instead, the priority was for firms to receive their cash in double quick time.
Banks were giving a green light to loans for existing customers within a day or two, relying on ‘self-certification’ and no credit checks.
The ultra-loose regime offered a golden opportunity for fraudsters, whether small-time opportunists or sophisticated organised crime.
It also left the system vulnerable to applications from firms who knew they were unlikely ever to be able to pay the money back – and from those who had no actual need to borrow but found the offer of low cost loans too tempting to resist.
Bounce Back Loans, the most common form of help, were made available in April last year for up to £50,000.
Judge Anthony Cross QC presided over a case in which a Manchester drugs gang swindled a £25,000 Covid recovery loan
In total, nearly £48billion of borrowing was approved under the scheme, which is now closed to new applications.
No less than £26billion of that will be lost to fraudsters and borrowers who cannot repay, according to public accounts watchdog, the National Audit Office.
Everyone, including Chancellor Rishi Sunak, the architect of the Covid loan schemes, was fully aware of the risk of fraud.
But this was accepted as a price worth paying in order to avert the greater evil of mass redundancies and wholesale business failures.
No one, however, can have envisaged the size of the losses that are now emerging, or that many who cynically defrauded coronavirus support schemes are likely to get off with little in the way of reprisal.
The five men in the Manchester case were found guilty, along with a sixth who pleaded guilty to drugs charges, and sentenced to a total of more than 130 years in prison.
But fraudsters know that in many cases, they are likely to suffer little more than a slap on the wrist.
Take Muneef Ihsan, 26, a young man from Rotherham, who set up three bogus companies and used them to fraudulently obtain £150,000 in Bounce Back Loans.
His 21-year-old friend, Mahir Towid Ul Haque, also took out a £50,000 Bounce Back Loan, using some of it to buy himself a Rolex watch.
So far, the only punishments meted out to the pair, whose behaviour came to light after an investigation by the Insolvency Service, are lengthy bans from acting as a director.
It is understood that no money has yet been recovered from them and that no criminal proceedings are so far underway.
The vast Covid lending lifeboat, launched by the Chancellor last year, has saved millions of genuine businesses from going to the wall and spared the economy from incalculable harm.
Even so, it is no excuse for sheer incompetence and laxity that allowed fraud to explode on such an epic scale.
Perhaps the most depressing example of this is Greensill, the collapsed finance firm that employed former Prime Minister David Cameron as an adviser. When coronavirus struck, doubts about Greensill were already being widely aired in the City and beyond.
Regardless of this, when Greensill applied to be a lender, the British Business Bank, a government body that was administering the schemes, gave its approval.
Greensill went on to provide eight taxpayer-guaranteed loans adding up to £400million to companies linked to GFG Alliance, a group of companies run by steel baron Sanjeev Gupta, who is being investigated by the Serious Fraud Office.
MPs on the Public Accounts Committee last week found the due diligence done on Greensill was ‘woefully inadequate’ and said £335million of taxpayer cash is at increased risk as a consequence.
As Meg Hillier, the committee chairman put it, the British Business Bank ‘only had to read the papers to be aware of serious questions about Greensill’s lending model and ethical standards.’
Bounce Back Loans, the most common form of help, were made available in April last year for up to £50,000
The Government has hired a firm called Quantexa, advised by former MI5 chief Lord Evans, to uncover corona loan fraud.
But as well as the fraudulent loans bonanza, taxpayers are also set to lose around £3.5billion on three other schemes: furlough, the self-employed safety net and Eat Out to Help Out.
In a bombshell revelation at the weekend, Jim Harra, chief executive of HMRC, admitted tax authorities will only recoup less than half of the £5.8billion paid out in error or fraud under these initiatives.
This is despite the establishment of a special task force with nearly 1,300 staff this year, at a cost of £100million.
Furlough played a valuable role in propping up the economy and is one reason the employment figures are so robust now.
But again, it spawned an explosion of fraud.
Hundreds of ‘off-the-shelf’ companies appear to have been set up simply to exploit the scheme, with suggestions they have claimed millions of pounds from government coffers.
A decision to go easy on people who owe money has led to an explosion in debt to HMRC, which has risen to £42billion from £16billion pre-pandemic.
It is not clear how much of this is owed by those who won’t pay and are taking advantage of forbearance on the part of the tax authorities, as opposed to people who genuinely cannot afford their bill due to the pandemic.
For some, the pandemic prompted feelings of solidarity and community spirit. For others, it presented an opportunity to gratify their greed at the expense of their fellow citizens.
And it is all the more shameful that con artists are stealing from the public purse at a time when the country is groaning under more than $2 trillion of debt and Rishi Sunak needs every penny he can find.
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.