Checks implemented by the council have so far revealed 144 suspicious claims, of which 133 were found to be fraudulent and stopped at source.

More than £140 million in Scottish Government Covid-related grants has been transferred to firms through Highland Council to date, making it the third-biggest local authority after Edinburgh and Glasgow in allocations, including around 40% of Scottish hospitality claims.

The business top-up scheme of £25,000 is the preferred target of fraudsters, who have also been eyeing up the business closure scheme of up to £3,000 per month.

Donna Sutherland, the council’s audit and risk manager, Donna Sutherland, revealed the figures to its Audit and Scrutiny Committee.

She said: “These are genuine fraud attempts – individuals taking details of businesses which they didn’t own, fraudsters trying to claim grants for empty properties – but we have robust checking processes in place to identify these. There’s no suggestion that it’s individuals getting things wrong or misunderstanding processes.

“It’s happening in all Scottish local authorities, also in England, and in some cases, we think it is organised groups going for bigger sums like the business top-up scheme.”

A spokeswoman for Police Scotland said it is not involved at this stage but will work with local authorities if links to serious organised crime are established.

David Richardson, Federation of Small Businesses’ Highlands & Islands development manager, said that “cold, callous fraudsters” are seeking to take advantage of those involved in schemes to support businesses during the pandemic.

He added: “Their actions, and the need to make grant schemes processes as secure as possible, explain why some have taken far longer than they should to devise, damaging businesses in the process.”

Around 50 officers were transferred from other departments to Highland’s grant administration team when lockdown began in March 2020, The Herald reports. 

Graham Mackenzie, audit and scrutiny chairman, commented: “It is to their great credit that they have been able to disburse millions of pounds in a very short space of time while still being able to spot and deny possible fraudulent applications.”

Local authorities are expected to seek recovery of overpayments, including pressing criminal charges where necessary if fraudulent claims are found.

A government spokeswoman said it working with police and other partners to reduce the ability of criminals to exploit opportunities generated by the pandemic.

She added: “This includes providing guidance to local authorities and other public sector organisations on ensuring that robust processes are in place to mitigate against the risk of fraud.”