Business Waste and abuse of corona support: 'Together it's about...

Waste and abuse of corona support: ‘Together it’s about billions of euros’ – Belgium

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The enormous financial contributions that the Flemish and federal governments came to bridge to prevent the economy from going under, also caused waste and abuse. “You shouldn’t keep silent about this.”

Everyone has heard a cheating story blowing during the lockdown. About a hairdresser who worked behind lowered shutters, for example. Peanuts, it turns out, because there are really gross abuses and a big waste of money.

Everyone has heard a cheating story blowing during the lockdown. About a hairdresser who worked behind lowered shutters, for example. Peanuts, it turns out, because there are really gross abuses and a big waste of money. “A lot of money has indeed been squandered in recent months, and if we don’t act, a lot more will be thrown over the board,” said Eric Van den Broele, senior research and development manager at business information specialist Graydon. He also works closely with the Economic Risk Management Group (ERMG), which has to monitor the economic impact of the corona crisis, is regularly asked for advice by the Flemish and federal governments, and helps to detect fraudulent companies. ‘Some abuses we are facing now already existed,’ says Van den Broele, ‘but due to the corona crisis, we see certain forms of abuse in intensified form. A lot of tax money is going to go wrong, so you shouldn’t keep silent about that. ” When Belgium closed on March 18 and economic life largely stalled, the government signaled that it would not abandon the companies. For example, the Flemish government provided a nuisance premium of 4,000 euros for companies that were obliged to close the doors. “A good measure,” says Van den Broele. “He certainly helped many, especially smaller, companies survive. But now it comes down to the government making choices, or we will soon have no more money left for schools and highways. ” Van den Broele is particularly concerned about the absence of ‘vital adjustments’ in bankruptcy legislation, in order to avoid unnecessarily many companies going bankrupt in the coming months. “After the outbreak of the corona crisis, bankruptcy procedures were frozen for a while, but that moratorium is now being ended. I expect a swelling stream of bankruptcies from this fall, “he says. Consultants will incite business leaders to declare bankruptcy as it is called, while companies that were perfectly healthy before the corona crisis but have blown away in recent months will therefore choose to clean up . The judges will quickly agree to those bankruptcies, because it is actually a purely administrative procedure. In addition, our courts are understaffed and will not be able to handle the deluge. The 2018 insolvency law also allows bankrupt entrepreneurs to make a fresh start fairly quickly, but in the current circumstances this has perverse consequences. Moreover, bankruptcy never stands alone: ​​it can cause a domino effect and drag other companies along. I take into account 50,000 bankruptcies as a result of corona. ” “What good is it that the government gives financial support to companies that subsequently declare bankruptcy?” Van den Broele continues. “That is why the government urgently needs to create a new framework, so that everyone involved – governments, administration, accountants, lawyers, unions and courts – apply the same criteria. This must be done by means of a legislative amendment, which also ensures that judges can take more steering action and can better evaluate whether bankruptcy is really necessary. Otherwise we will have an incredible waste of companies, talent and money. ” The premiums for companies and businesses that had to close because of corona were a piece of cake for one, and a (modest) jackpot for the other. For a company that only achieves a turnover of, for example, 2,000 euros in normal months, a nuisance premium of 4,000 euros is a bonus. And there was another way of spilling money. If a company has several operating seats, the number of premiums could be increased to a maximum of five per company. The result is that a whole series of companies collected a multitude of premiums. There is even the story of a man who had received a double nuisance premium and who himself reported the ‘mistake’. What turned out? He had once had tax control at his private address because his accounts were located there. He had to register that address as a separate establishment. Result: two nuisance premiums. In addition to waste, there is also blatant abuse of the aid measures, on various fronts. There is, for example, the abuse with the so-called compensation premium. Companies that recorded a loss of more than 60 percent in turnover could apply for the Flemish premium of 2000 euros. In order to achieve sufficient loss of turnover, invoices were postponed and sometimes no invoices were even drawn up at all. That is manipulation of the accounts. Then there are the ghost companies, which only exist on paper and some of which are set up to hide illegal activities. According to tax specialists, ghost companies have undoubtedly received a piece of the government cake, or have been bought by rogue organizations for that purpose. Van den Broele: ‘Of the 1.3 million companies in Belgium, there are 340,000 ghost companies: they are still registered, but they did not develop any activities in the past year. Part of this undoubtedly applied for premiums. In addition, some smart guys have also hastily set up new companies to collect premiums. Something like that costs roughly 1,600 euros – count out your profit. ‘ In addition, our country also has 60,000 companies with negative equity, which therefore only have debts. That is forbidden by law and in fact they should have been liquidated, but they are still registered and so they could apply for support. Some companies used another trick to defraud the taxpayer: officially, workers were temporarily parked in unemployment, in reality they continued to work from home, but 70 percent of their wages were paid by the government. There are also stories of company leaders who have been pressured by the union to make employees temporarily unemployed, even for a very short time. This allowed them to enjoy the Flemish water and energy subsidy of EUR 202.68, to which you are entitled once you have been temporarily unemployed for one day. ‘Sometimes it concerns small amounts of a few hundred euros here and a few thousand euros there, but it concerns a lot of cases,’ says Van den Broele. ‘To give you an idea: 200,000 aid applications have been submitted in Flanders. Of these, 25,000 are now being investigated because they are suspected. It is not without reason that Minister Hilde Crevits (CD&V) has expanded the team that examines everything from 10 to 30 people – not enough, if you ask me. At federal level, too, people have been awakened and data mining tools are being set up to detect fraud. That’s a good thing too, because when taken together, the misuse and destruction of value as a result of the corona crisis run into billions of euros. ”

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