Rico Iheagwara secured two bounce-back loans, worth £20,000 each, for his SJR Recruitment company in 2020, despite the fact that his business was not trading at the time.
Businesses were only entitled to a single loan under the scheme.
Both loans were transferred to his personal accounts with bank statements suggesting that funds were used for everyday expenses, and paid to family members.
Iheagwara confirmed that he spent the funds on rent, paying off personal finance and his children.
The Insolvency Service is seeking to recover the fraudulently obtained funds under the Proceeds of Crime Act 2002.
With the Economic Crime and Corporate Transparency Act 2023 coming into effect this September, there will soon be pressure to show that organisations are preventing fraud such as this, explained Sam Healey, partner in business crime at law firm JMW Solicitors.
He told HR magazine: “HR and other departments in an organisation, will soon be required to actively ensure they have reasonable fraud prevention procedures in place.
Read more: The devil is in the data: How HR can reduce fraud risk
“The new legislation is designed to make it easier to hold large organisations accountable for fraud committed by employees, agents, subsidiaries, or other associated persons who provide services on behalf of the organisation, individuals can still be held accountable under the Fraud Act 2002.”
Healey added that organisations should be expected to put reasonable fraud prevention procedures in place, and that HR professionals may have tasks delegated to them to ensure compliance, risk assessment, enhanced due diligence and employee monitoring.
He continued: “This will be to ensure that there is clear governance across the organisation as well as to ensure responsibility for financial crime compliance and prevention.”
Enhanced responsibilities may lead employers to change some recruitment processes, including introducing more intense pre-employment vetting checks for high-risk roles, anti-fraud training and getting leadership buy-in to endorse an organisational anti-fraud stance, Healey said.
HR departments may also need to work closely with legal and compliance teams to implement and document effective anti-fraud controls, Healey warned.
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The Companies Act 2006 places requirements on directors to ensure that they do not breach their fiduciary duties. Directors could face both criminal prosecution and director disqualification if they do not comply.
In an exclusive opinion piece for HR magazine, Rachael Tiffin, director of public sector and learning for the fraud prevention service Cifas, said that HR leaders play a pivotal role in countering both internal and external threats.
She explained that its key to spot behavioural red flags, such as avoiding annual leave (to prevent fraud detection), accessing data outside their remit, sharing passwords, or showing signs of financial distress or dissatisfaction with their role.
Tiffin advised that HR teams can mitigate fraud by enhancing vetting processes, making regular assessments, building whistleblowing channels and running consistent audits.
She added: “Clear and regularly updated workplace policies should reinforce that fraud and dishonesty will be met with serious consequences.”
