The boss of three property management companies that received Covid bounce-back loans totalling £135,000 has been disqualified as a director for 12 years.
The Insolvency Service says Michael Gaughan from Glasgow took out the loans even though none of the three companies he set up were eligible to receive them.
Covid bounce-back loan rules required companies to be trading on March 1st, 2020 but Gaughan’s three firms, which were established in February 2020 , did not start doing business until April 2020.
The 40-year-old then transferred the Covid cash into a single business bank account and used the funds to buy property worth nearly £160,000 in August 2020. He then sold the property in March 2021 for just over £140,000, and on the same day transferred £100,000 of the proceeds to his personal account.
Following this, in October 2021, the three companies were liquidated, triggering an investigation by The Insolvency Service, and he has now been disqualified, although the Government body has not revealed if any of the funds have been returned.
Gaughan’s director disqualification undertakings prevent him from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the permission of the court.
Steven McGinty, Investigation Manager at The Insolvency Service says “Bounce Back Loans were made available for trading companies adversely affected by the pandemic. Brendan Gaughan should have known his companies weren’t entitled to the loans yet he took them anyway and used the funds for personal gain.
“We will not hesitate to take action against directors who have abused Covid-19 financial support like this.”
In December the National Audit Office criticised the way that this kind of bounce-back loan was administered, saying that counter-fraud measures were introduced ‘too slowly’. It also revealed that the Government’s own data suggested 11% were fraudulent worth £4.9 billion were fraudulent.