'Grants for terrorists': £28bn of taxpayers' cash given to 'Putin, Islamic State and Eastern European crime gangs'
Grants were given to companies linked to the Russian state, Covid loans were sent to Islamic State terrorists, and companies linked to the Chinese military were invested in
Terrorists and hostile states have been handed more than £28 billion of taxpayers' money through aid payments, a secret government report has revealed.
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Handouts in the form of foreign aid and Covid relief loans were funnelled into organised crime, with millions going to Russia and Islamic State.
More than £28 billion ended up in the hands of those wishing to harm the UK between 2015 and 2021, according to the report.
The findings were buried after the investigation was commissioned by the Cabinet Office during the previous Conservative government, with funds diverted out of the UK on a large scale to fund Britain's enemies.
Grants were given to companies linked to the Russian state, Covid loans were sent to Islamic State terrorists and companies linked to the Chinese military were invested in, according to The Telegraph.
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Rebecca Harding, of the Centre for Economic Security, said the dossier should be a wake-up call that "economic warfare and economic security are more important than ever before".
The secret document was created by assessing government grants between 2015 and 2021, consulting think tanks, and using open-source reporting on foreign aid fraud.
Sources said there was also a concerted effort to obtain British public funds made by an organised crime network linked to Eastern Europe and backed by hostile state actors to encourage illegal immigration to the UK.
The Telegram said the source declined to give further details, citing sensitivities surrounding the intelligence.
Significant amounts of money also went to financing terrorism, malign states and domestic threats.
The report was commissioned by security officials in 2023 and was intended to be shared across the Foreign Office.
However, officials under the last Tory government decided not to disclose it.
Government rescue packages given out during the Covid-19 pandemic has been subject to extensive fraud.
Releasing this report would have highlighted issues with the government grant process and raised questions on the due diligence conducted on grantees.
Tom Keatinge, of the Rusi think tank said, given the landscape of threats to the UK, there was “a need to be more cautious about who is involved in projects that the government is funding, clearly.
"This is a repeated and very public advice provided by the security service”.
He said the management of the Covid loan scheme was “pretty disastrous”, adding: “If there’s a loophole, anyone can use that loophole – criminals, terrorists, anyone just making a quick buck.”
In December last year, a report to Parliament found that taxpayers had lost £10.9 billion to fraud and error during the previous government’s pandemic response.
Tom Hayhoe, the Covid counter-fraud commissioner, said the faulty system was due to weak accountability, bad-quality data and poor contracting for the losses.
Specialist fraud recovery teams have been established to track down the suspected fraudsters and recover funds lost.
During this period, Britain had one of the highest aid budgets in the world, committed to spending 0.7 per cent of gross national income on foreign aid.
Figures released by the Department for International Development suggested the government provided developing countries with:
- £12.1 billion in 2015
- £13.4 billion in 2016
- £14.1 billion in 2017
- £14.6 billion in 2018
- £15.2 billion in 2019
The amount fell during the pandemic, with £14.5 billion provided in 2020 and £11.4 billion in 2021.
Then, in 2021, the Conservative government reduced spending to 0.5 per cent of gross national income. Labour have pledged to raise foreign aid spending to 0.7 per cent.
Prof Nicholas Ryder, a former adviser to the home affairs select committee and an expert on terrorism financing at Cardiff University, told The Telegraph the findings were “staggering”, and added that “the link between fraud and terrorist financing is very clear”.
He said: “The major problem with the UK stance is that the Government fails to recognise that particular connection between fraud and terrorist financing.
“It is a threat to national security… the threat is acknowledged, but sadly, at a policy level from successive governments, that link appears not to be joined up.”
Prof Ryder said the US and Australia devoted far more resources to using fraud investigations as a mechanism to disrupt terrorism.
A Cabinet Office spokesman said: “This Government is taking unprecedented action to tackle public sector fraud, having saved over £7.5 billion of taxpayer money in the past year through aggressive fraud prevention and recovery.
“By using better data and hiring more expert investigators, we are now finding and stopping this fraud faster than ever before.”