United Kingdom handed over more than $37 billion in taxpayer money to terrorists, criminal organizations, and hostile states through international aid and COVID-19 loans

A secret report prepared by the British Cabinet revealed that more than $37 billion in taxpayer money ended up in the hands of terrorists, hostile states, and criminal organizations between 2015 and 2021.

According to an investigation by The Telegraph, the dossier details how billions of pounds were diverted through development aid, COVID-19 pandemic loans, and other public programs. Recipients include groups linked to the Islamic State (IS), Russia, China, and organized crime networks.

The document, which was never made public by the previous government, shows that some of the money went to companies linked to the Kremlin, to IS terrorists in Syria who received COVID loans, and to research linked to the Chinese military. Payments were also detected to criminal gangs involved in human trafficking who collected housing and disability benefits.

Sources revealed to the British newspaper that during the previous administration, the report "was never made public to save the government from the political embarrassment of revealing the huge scale of misdirected funds."

"It is economic warfare"

Rebecca Harding, of the Center for Economic Security, noted that this case should serve as a "wake-up call" regarding the importance of economic security. "We have assumed that everybody wants the same thing as us. What we haven’t realised 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," she added.

Experts consulted by The Telegraph indicate that some of these funds were deliberately channeled. Security sources cited an Eastern European criminal network, backed by a hostile state, which allegedly orchestrated a coordinated effort to obtain British public funds and facilitate illegal immigration.

In addition, cases were detected in which "government counter-terrorism funding [was] inadvertently handed to extremists espousing anti-Western ideology."

Serious Failures in Controls

The report was commissioned in 2023 after the discovery of massive fraud in pandemic relief packages. However, it brought to light deeper structural problems in the grant-awarding processes and a lack of due diligence.

Tom Keatinge, of the think tank RUSI, co-authored a report on this issue in 2021 in which he described the lack of attention to fraud in the national security dialogue as "increasingly perverse" and called for a "greater role for the government intelligence architecture."

Keatinge told The Telegraph that there are "lots of examples" that the benefits system has become an "ATM for terrorists," although he acknowledged that the agencies distributing the funds have raised their alert level. Regarding the COVID loan program, he described it as "pretty disastrous" and warned: "If there’s a loophole, anyone can use that loophole – criminals, terrorists, anyone just making a quick buck."

A subsequent parliamentary report revealed that during the pandemic alone, more than $14.5 billion was lost due to fraud and errors.

Experts such as Professor Nicholas Ryder of Cardiff University find it "baffling" that the British government has not sufficiently linked fraud to the financing of terrorism, unlike countries such as the United States or Australia.

"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," Ryder noted.

Government Response

A spokesperson for the Cabinet Office stated that the current government is taking "unprecedented" measures against public fraud. In the past year, according to its figures, more than $10 billion has been recovered or saved thanks to increased surveillance and better detection tools.

Authorities emphasized that, by implementing "better data and hiring more expert investigators," they are now "finding and stopping this fraud faster than ever before."