This article originally appeared in the FCPA Blog

The global response to the pandemic has been varied, not only in a medical context but also at a fiscal level. Governments are desperately trying to save jobs and their economies. As a result, many governments have borrowed heavily to keep their financial systems ticking over: the long-term effects of these borrowings are likely to negatively impact their respective economies for many years.

In such times, desperation can take hold. We have seen countries that are normally best of friends fighting viciously to secure stockpiles of PPE (protective equipment) for their nationals. This sense of self-preservation and fear can cloud judgments and renders normal due-diligence impotent. 

People whose role it is to procure life-saving resources have been forced to wave their normal purchasing protocols and procedures to secure desperately needed equipment and medicines.  

These were cutthroat fights, figuratively and literally, to the death in terms of those who lacked protection and caught the virus. Any dithering and indecision would see almost priceless commodities snapped up by others equally desperate to supply their people with the protection they needed. 

Governments have paid excessively and over the odds for equipment and medicines. Demand saw the value of a paper mask rise exponentially, and with this increase in supply and demand, the opportunist crooks seized upon their opportunity. Their clandestine activities have put lives at risk, with some selling PPE that was not fit for purpose, endangering lives as well as diminishing treasury reserves that could have been better used elsewhere.  

The problem is so great that the UK’s National Crime Agency has produced guidance for those who submit suspicious activity reports to try and identify the PPE fraudsters. 

The battle to combat these fraudsters and bring them to book has already begun. The U.S. Justice Department has recently announced that it will be investigating Covid-19 related frauds. Its website states:  

“As of today, the Department of Justice has publicly charged 474 defendants with criminal offenses based on fraud schemes connected to the Covid-19 pandemic. These cases involve attempts to obtain over $569 million from the U.S. government and unsuspecting individuals through fraud and have been brought in 56 federal districts around the country. These cases reflect a degree of reach, coordination, and expertise that is critical for enforcement efforts against Covid-19 related fraud to have a meaningful impact and is also emblematic of the Justice Department’s response to criminal wrongdoing.” 

The U.S. is not alone in taking these heartless criminals to task. The UK is also fighting its own battle with those who have exploited a global disaster. 

For example, two individuals have been recently arrested in Leeds, England, on suspicion of a £3.4 million ($4.8 million) furlough scheme by Her Majesty’s Revenue and Customs (HMRC). The furlough scheme covers up to 80 percent of an employee’s salary for the hours they cannot work in an attempt by the government to limit unemployment brought about by the national lockdown.

In another instance reported by the BBC, a hairdresser described how she had checked her tax record and saw that it stated that she had been receiving furlough pay for a job she had left months earlier. HMRC said that it was (at that time) investigating 21,000 such reports, with tip-offs inexorably spiraling upwards as the problem proliferated. 

Suppose we extrapolate these reports in the context of a global pandemic and problem. In that case, we are literally sitting on a COVID-fraud timebomb, so immense I cannot see how governments will ever be able to resolve it. The losses to countries worldwide will be huge, and these losses will have impacted damagingly on the worldwide death toll.  

The courts presiding over these crimes must deal with the culprits in this context, knowing that they may have indirectly cost people their lives through their greed. Fraud is never a victimless crime, and especially so where these miscreants are concerned. 


With thanks to Tony McClements, Senior Investigator at Martin Kenney & Co, for his assistance with this post. He served for 33 years with UK police forces and has specialized in Fraud & Financial Investigation since 1998. He is also a lecturer in these subjects at the University of Central Lancashire (UCLAN).

Martin is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice based in the BVI, focused on multi-jurisdictional fraud and grand corruption cases. In 2014 he was the recipient of the ACFE’s highest honor: the Cressey Award for life-time achievement in the detection and deterrence of fraud. In 2017, 2018, 2019, and 2020 he was chosen as a global elite “Thought Leader” by Who’s Who Legal and also selected as the number one offshore asset recovery lawyer worldwide over the same period.