Scammers accused of fleecing up to $140m from two Covid grant programs, for struggling businesses

Thousands of potentially fraudulent claims have been identified in a review into two Victorian government Covid financial support programs for struggling businesses, costing taxpayers millions.

Melbourne shut down during Covid lockdowns, with financial support provided to struggling businesses. Picture: David Caird

Scammers have been accused of fleecing up to $140m of taxpayer funds by rorting two Covid-era grant programs set up to support struggling businesses.

The Herald Sun can reveal thousands of potentially fraudulent claims have been identified as part of an independent review into two separate programs.

On Friday the Department of Jobs, Skills, Industry and Regions wrote to 4941 people demanding they supply evidence to confirm their eligibility or repay the funds.

The review into the Small Business Covid Hardship Fund – which provided $20,000 grants for businesses that experienced a reduction in turnover of at least 70 per cent – and the $4.5bn Business Costs Assistance Program – which provided multiple rounds of funding – suggested false information was submitted on thousands of applications.

Applications from people who reported involvement in the ride-share industry were over represented in the suspected fraudulent claims. Picture: David Caird

In some instances businesses that did not appear to be trading at all before the grants program started successfully applied for grants.

It is understood applications from people who reported involvement in the ride-share industry were over represented in the suspected fraudulent claims.

A Victorian government spokesperson said it had a responsibility to ensure public funds are used appropriately.

“When a once-in-100-year pandemic hit, the Victorian Government invested $10 billion to support businesses and make sure they were in a strong position when the economy reopened,” she said.

“A number of grants were available, and these particular grants were designed to support businesses whose trading was severely impacted during the pandemic.

“All grant programs are reviewed and any business that has done the right thing will not have to repay any amount of money.”

It is estimated about 2.3 per cent of grant recipients were identified as potentially fraudulent as part of the review.

A person crosses a quiet Collins St on July 24, 2021 in Covid-stricken Melbourne. Picture: Getty

In a scathing report published last year the Victorian Auditor General’s Office (VAGO) raised serious concerns about the way the grant programs were run by the former Department of Jobs.

It said while it was reasonable for a “high trust” grants scheme to operate during an unprecedented emergency, there should have been better checks and balances.

There were $18.3m in payments made to 854 applicants “in error”, which the department wrote off rather than chased down.

VAGO recommended the appointment of an independent evaluator to assess and report on the effectiveness of the grant programs and whether value for money was achieved.

In response a new grants compliance framework has been developed.

Police patrol the streets of Melbourne at the start of a 'circuit breaker' Covid lockdown imposed suddenly by the Victorian government. Picture: Getty

More than $13bn was spent on business support for Victorian businesses throughout the pandemic – with $10bn funded by the Victorian Government and $3bn funded by the Commonwealth.

On Friday a new VAGO report found Victoria’s growth in debt – which is projected to reach $187.8bn by 2027-28 – was in part used to fund the state’s Covid response.

It found Victoria took on $31.5bn in responding to the pandemic, more than 18.7 per cent of the government’s current outstanding debt.

In NSW, more than 600 charges were laid, and 14,300 businesses referred to police in a crackdown over fraudulent Covid business grant claims.

They included cases where interstate applicants claimed the grants, while other fraudulent activity included identity theft, ABN hijacking as well as falsified documentation.