Hostile states and groups affiliated with organized crime and terrorism received GBP 28 billion of public funds through government loans and aid payments, according to an investigation from The Telegraph.
The report revealed a hidden government dossier showing that billions of pounds went to organized crime between 2015 and 2021.
The data disclosed vast misappropriation of public funds through foreign aid and COVID relief loans, with millions going to Russia and the Islamic State. Notably, more than GBP 28 billion went to hostile entities in Britain between 2015 to 2021, the report found.
The dossier was commissioned by the UK Cabinet Office but was buried by the previous British government to avoid political embarrassment, according to a report by The Telegraph.
The Telegraph confirmed the document’s existence, which it claimed was the first analysis showing how public funds were diverted to national security threats.
The list included grants given to companies linked to Russia, COVID loans sent to ISIS terrorists, and investment in research for companies linked to the Chinese military.
British public funds reach ISIS, China, Russia
Dr. Rebecca Harding, the CEO of the Center for Economic Security, told The Telegraph that the dossier should be a wake-up call.
“Economic warfare and economic security are more important than ever before – there have been threats from adversaries, state actors, and non-state actors that go through the business system.
“One of the problems is that we have assumed that everybody wants the same thing as us. What we haven’t realized is, when it comes to other countries… [some] want to project their economic power in a way that undermines our economic power,” she said. “It is economic warfare, and we have been naive about all of this.”
Another reported instance involved COVID relief grants being given to ISIS in Syria, and UK counter terrorism funds inadvertently ending up in the hands of anti-Western extremists.
Much of the other funds went to criminal gangs and human traffickers who were claiming housing benefits and disability allowances.
Sources noted they believed there was significant overlap between the gangs and countries hostile to Britain. They added that one organized crime network linked to Eastern Europe made a significant effort to get British public funds.
The aformentioned was reportedly trying to encourage illegal immigration to Britain, and was backed by a hostile country. Sources did not tell the Telegraph which country, however, citing sensitive intelligence.
Some of the money also went to financing terror and domestic threats within the UK.
The report was commissioned by the UK government officials in 2023 and is intended to be shared with other dignitaries. It was ordered after it was found that government relief packages during COVID were riddled with fraud.
‘ATM for terrorists’: Officials warn UK public funds not supervised carefully enough
The Cabinet Office’s findings allegedly revealed widespread issues in the system’s grant process, leading officials to withhold the report.
Tom Keatinge, the founding Director of the Center for Finance and Security (CFS) at RUSI, told The Telegraph in an interview that: “We have a history in the UK, more so probably than anywhere else in Europe, of government and industry respecting each other’s boundaries.”
He added that given the contemporary threat facing the UK, there was “a need to be more cautious about who is involved in projects that the government is funding, clearly. This is repeated and very public advice provided by the security service.”
Keatinge, who researches the financial dimension of security threats, told The Telegraph there were “lots of examples” of the UK’s benefits and grants becoming an “ATM for terrorists,” although he did add that government agencies responsible for distributing public funds had become more alert to the risk.
Professor Nicholas Ryder, a former adviser to the Home Affairs Select Committee and an expert on terrorism financing at Cardiff University, said the findings were “staggering” and that “the link between fraud and terrorist financing is very clear.”
“The major problem with the UK stance is that the government fails to recognize that particular connection between fraud and terrorist financing,” Ryder told The Telegraph.
“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.”
In response to the report, a cabinet office spokesperson said that the government was taking new steps to tackle fraud.
“This government is taking unprecedented action to tackle public sector fraud, having saved over £7.5bn of taxpayer money in the past year through aggressive fraud prevention and recovery,” a spokesperson told the Telegraph.
“By using better data and hiring more expert investigators, we are now finding and stopping this fraud faster than ever before.”
