A recent report by the US Small Business Administration (SBA) inspector general has revealed staggering losses in the COVID-19 relief efforts, with estimates suggesting that up to $200 billion (£157 billion) may have been stolen from two large relief initiatives. The Paycheck Protection (PPP) and Covid-19 Economic Injury Disaster Loan (Covid-EIDL) programs are suspected to have been seriously compromised, with potentially fraudulent actors receiving at least 17% of the funds disbursed through the Covid-EIDL program. This amounts to an estimated loss of over $136 billion (£107 billion).
The PPP fraud estimate is significantly lower, at $64 billion (£50 billion), but still represents a substantial portion of the total funds allocated to the program. The inspector general’s report highlights the lack of an accepted system for assessing fraud in federal programs, which has led to previous analyses being described as “potential fraud” or “fraud indicators” rather than actual fraud estimates. The agency has acknowledged that it does not have a reliable method for determining the full extent of fraud in its programs.
US Small Business Administration
In response to the report, a senior SBA official disputed the new estimates, stating that the inspector general’s approach contains “serious flaws” that significantly overestimate fraud. However, the inspector general’s office has disputed this claim, stating that its approach utilizes “investigative casework, prior (inspector general) reporting, and cutting-edge data analysis” to identify fraud schemes.
The estimated losses are equivalent to 10% of the total $4.2 trillion (£3.3 trillion) in Covid relief aid disbursed by the US government to date, and highlight the significant challenges faced by federal agencies in preventing and addressing fraud in emergency funding programs. The report’s findings underscore the importance of developing a reliable method for assessing fraud in federal programs and implementing more effective measures to prevent and detect fraud in the future.
