Covid small business grant fraud investigation: 658 charges laid, 14,300 businesses referred to police in fraud crackdown

Shock figures have laid bare the extent of fraudulent claims made to a Covid-19 era business grant program with police investigating thousands of cases that rorted the system at the expense of NSW taxpayers.

Shock figures have laid bare the extent of fraudulent claims made to a Covid-19 era business grant program with police investigating thousands of cases including interstate companies that rorted the system at the expense of NSW taxpayers.

A government crack force investigating fraudulent claims made to the Covid-19 microbusiness grant program has revealed almost one in four companies that applied for funds through the program are under investigation for alleged fraud.

The small business grants program enabled companies with an annual turnover between $30,000 and $75,000 that suffered a 30 per cent decline in turnover because of Covid restrictions to qualify for $1500 fortnightly payments.

The scheme paid out more than $784m to about 63,000 businesses in what was intended to help small traders weather successive lockdowns.

NSW Customer Service and Digital Government Minister Jihad Dib has now confirmed 14,300 applications for grant funding have been referred to police as a result of compliance activity.

The pandemic hit businesses hard and saw many collapse. Picture Lachie Millard

To date, more $15m has been clawed back by the government from fraudulent and ineligible applications, $52m in fraud has been prevented, 658 charges have been laid and 140 people have been convicted of defrauding the program.

This publication understands fraudulent claims have included cases where applicants from interstate purported to be from NSW to obtain the grants.

Other fraudulent activity has included identity theft, ABN hijacking as well as falsified documentation.

Service NSW said of the 14,300 applications referred to police for investigation, about 4500 applications have been referred to interstate law enforcement agencies – indicating a significant number of applicants in other states and territories were attempting to take advantage of a program designed to support NSW-based businesses.

Mr Dib said it was “deeply disturbing that significant fraud activity has been uncovered” and that the “criminal activity took place”.

“Any further matters where suspicious activity is identified will be referred to police for further action,” he said in a statement.

Many NSW busy businesses reported sharp declines in customer numbers during the pandemic.

As part of the grants program, businesses applying for funds had been allowed to self-assess their eligibility and received funds automatically, on the proviso that their applications would be subject to future audits.

NSW Opposition Customer Service spokesman James Griffin recognised there had been “massive fraud” reported through the grant program, but raised concerns some businesses were being caught up in compliance blitz.

“Any businesses who took advantage of the micro grants should be caught and charged. Taking money from this worthwhile grant program is like stealing from a small business who actually needed the support,” he said.

NSW Customer Service Minister Jihad Dib.

“I am also aware of micro businesses, right across NSW, who have been trying their best to navigate being unfairly swept up in the fraud cases and are really struggling to get any support or information from ServiceNSW.

“Good businesses are clearly being punished for the actions of dodgy operators.”

A Service NSW spokesman in a statement said the government took attempts to defraud financial support programs “very seriously”.

The spokesman said the government has put in place measures to support businesses selected for compliance checks and had followed up with companies to ensure all evidence related to their grant applications was in place, which was a condition of the grants to ensure taxpayer funds were spent responsibly.

“Service NSW understands these checks may be challenging for some customers and support is provided for customers who are experiencing hardship or who need assistance understanding the audit requirements or sourcing business documentation.”

The compliance audits have included a focus on businesses where discrepancies in paperwork were identified with referrals made to police when serious irregularities were identified.

Originally published as Covid small business grant fraud investigation: 658 charges laid, 14,300 businesses referred to police in fraud crackdown