Recruiter fraudulently claimed £150k covid loans

Peninsula Team

March 16 2023

The director of a Surrey recruitment agency, specialising in care home staff, has been banned over false claims for two covid loans for £150,000

The money was not used for the business but for personal use, and there were no financial records available to verify the claimed turnover figures, but two separate banks still paid out the loans.

James Ireri from Surrey has been banned for seven years after abusing two different Covid loan schemes during the pandemic.

Ireri was the director of Safi Care Ltd, which traded as a recruitment business from Surrey, supplying staff to care homes, from its incorporation in February 2015 until it went into liquidation in August 2021. The company had first traded as Safi Services Ltd until March 2016.

In May 2020, Ireri applied for a £50,000 bounce back loan – the maximum amount allowable – for the company.

Bounce back loans were a government scheme to support businesses during the Covid-19 pandemic, whereby companies could apply for loans of up to 25% of their 2019 turnover, up to a maximum of £50,000.

Yet in August 2020, Ireri applied for another loan of £100,000 on behalf of Safi Care Ltd, this time from a different lender, and through a different Covid support scheme, the Coronavirus Business Interruption Loan.

Under the rules of the Covid loan schemes, eligible businesses were able to apply for a single loan under one or the other of the schemes, but not both. However, a business could obtain a second loan if the money was used to repay the first in full.

But when Safi Care Ltd went into liquidation in August 2021, the company owed more than £231,500, including the full amount of both loans.

An investigation by the Insolvency Service was triggered, but Ireri failed to provide adequate company accounts and investigators were unable to determine whether Safi Care Ltd had ever been eligible to apply for the initial bounce back loan, based on the company’s 2019 turnover.

According to Companies House, the accounts for year end 2021 were late when the company went bust. The accounts for the previous year end 30 July 2020 were filed on 19 May 2021 and showed that the company had £2,836 in its capital and reserves, with creditors totalling £8,414.

The lack of company accounts also meant that Ireri was unable to prove that he had used the loan money for the economic support of the business – another condition of the scheme.

Investigators discovered that more than £491,300 had been withdrawn from the company bank account between May 2020, when the first loan was received, and July 2021, shortly before Safi Care went into liquidation, including more than £80,000 for personal spending and around £93,900 of transfers into Ireri’s personal bank accounts.

Ireri admitted he had caused Safi Care Limited to breach the terms of two Covid support loans by failing to repay the bounce back loan after obtaining the interruption loan, and by failing to provide adequate evidence of the company’s turnover or how the loan funds were used.

Neil North, deputy head of investigation at the Insolvency Service, said: ‘Bounce back loans and Covid business interruption loans were designed to provide vital support for viable businesses through the pandemic. James Ireri abused not one, but two of these schemes.

‘His ban should serve as a warning to other directors who misuse financial support available to companies that the Insolvency Service is able to bring your actions to account and remove you from the corporate arena.’

His ban started on 8 December 2022, and lasts for seven years. The disqualification prevents him from directly or indirectly becoming involved in the promotion, formation or management of a company, without the permission of the court.

For answers to HR questions about Covid and the workplace, visit BrAInbox today where you can find answers to questions like Is there any case law on whether long Covid is a disability?

Read more from the latest BrAInbox Business News update:

Budget 2023 highlights: Returnerships and free childcare

Buildings over 30m in London to have mandatory second staircases, says Mayor of London

Majority of FTSE 100 meet minority ethnic board target

HMRC clarifies guidance on IR35 off-payroll working rules

Suggested Resources