A solicitor has been fined for signing an inaccurate declaration that led to the erroneous release of a significant government Covid loan.
Asiya Nasim Kaleem, a solicitor at Sheffield firm Alison Law Solicitors, was fined £15,000 by the Solicitors Disciplinary Tribunal (SDT) for failing to scrutinise a declaration she signed. This document inaccurately indicated that £1m was held in her firm’s client account, prompting the release of a £1m Covid-19 Future Fund loan to a client.
The Future Fund scheme was established to assist UK-based companies financially challenged by the Covid-19 pandemic. Under its rules, a borrower needed to secure a third-party investor willing to match the requested funds. The funds from the investor were required to be deposited into a solicitor’s client account prior to any loan being released.
In January 2021, Client A engaged Alison Law Solicitors regarding a £1m loan from the Future Fund. However, Ms Kaleem signed off on the declaration despite the absence of the investor’s funds in the account, which was a prerequisite for the loan’s disbursement. Miscommunication occurred as Company A, the Future Fund, and the investor finalised a convertible loan agreement, leading to the erroneous transfer of funds.
When the Future Fund noticed the discrepancy, it initially threatened to terminate the agreement. It eventually extended the deadline for the receipt of investor funds, which Alison Law acquired by the end of March 2021. Consequently, the Future Fund did not cancel the agreement.
Ms Kaleem explained her action as a ‘genuine mistake,’ attributing it to her supervisor’s assurance, a non-lawyer partner, that she could proceed without the funds being present. She did not fully appreciate the requirement for the funds to be in the client account at the time of signing. However, the SDT emphasised that it was clear from the declaration that the funds were needed, and her acceptance of her supervisor’s word indicated a serious lapse in professional judgement.
The tribunal recognised that although Ms Kaleem was not found to have acted dishonestly or recklessly, her failure to effectively question her supervisor represented a lack of integrity. Being a solicitor, particularly as the head of civil litigation, she was expected to critically evaluate any explanations offered to her, especially as a public guarantee of £1m was involved.
Restrictions have now been imposed on Ms Kaleem’s practising certificate for two years, preventing her from holding specific roles or being responsible for client money. She was also directed to cover £25,000 in costs.
This case serves as a reminder of the vital role solicitors play in maintaining trust within the legal system, emphasising the need for diligent verification and scrutiny when handling significant financial transactions.
