The purported guarantees from a Hong Kong developer was “significant”, AIB said, in fuelling its decision to loan money to property tycoon Achilleas Kallakis and Alexander Williams.
The pair are accused of alleged fraud of over £60m (€75m) against AIB and Bank of Scotland. They have pleaded not guilty to 23 counts.
Speaking on the fourth day of a retrial, Micheal Cooke, a former member of AIB’s team which was based in London and advised Kallakis, said: “We took additional comfort from the Sun Hung Kai Properties (SHKP) guarantees.”
He said the significance of having the developer as security was significant.
Of the 16 properties AIB advanced £740m to acquire, the bulk were valued higher then each was worth owing to SHKP being a presumed guarantor.
Victor Temple, prosecuting, told Southwark Crown Court that the overriding lease SHKP had on India Buildings, which AIB gave a loan of £47.5m to buy in 2003, helped increase the value of the property from £43m to £62m.
Temple said AIB was loaning more money than was required for each of the transactions, so in total on all the deals, there was £77m surplus.
He said at the same time: “AIB was deceived by the combined activities of the accused. They thought that SHKP were guarantors and their interests were protected.”
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