AIB ‘duped’ into lending £740m

AIB was duped using “dishonest means” into lending £740m (€922m) to London property tycoon Achilleas Kallakis and his business partner Alexander Williams, jurors heard at Southwark Crown Court, London.

The duo are accused of fraud of over £60m against AIB and Bank of Scotland (BoS). They have pleaded not guilty to 23 counts, including conspiracy to fraud.

Prosecuting counsel for the Serious Fraud Office, Victor Temple, told the court £740m from AIB was advanced to firms directly or indirectly controlled by the accused, to purchase 16 buildings in Britain between 2003 and 2008.

The bank’s real estate team was introduced to Mr Kallakis in 2003 by CLP Structured Finance. “The bank was keen to develop its commercial property arm,” the prosecution said.

Properties snapped up included nine assets in London.

Mr Temple said AIB was convinced “by dishonest means to lend all this money”. Alleged measures used to persuade the bank’s four-person real estate team to lend the money, included the reassurance that Hong Kong property developer Sun Hung Kai would guarantee the rent on their properties.

However, the court heard the signatures on these guarantee letters were forged. The jury was also shown a forged letter from Credit Suisse, purportedly signed by its vice-president and stating that one of Mr Kallakis’ companies Oregon Finance, has consolidated cash in excess of $410m (€314m) and outstanding loans of $118m against a valuation of over $780m.

However, according to Mr Temple, Oregon was “worthless”. “The crown alleges these two defendants deliberately targeted two banks — AIB and BoS — with a view to committing large-scale fraud. Had the banks had all the facts, they wouldn’t have lent any money at all,” he said.

“The defendants knew full well the banks might suffer economic loss as a consequence of their dishonest behaviour.”

The court heard that in 1995, Mr Kallakis and Mr Williams pleaded guilty to charges of conspiracy to commit forgery for selling bogus titles and, two years prior, Mr Williams pleaded guilty to three offences of obtaining property by deception.

The trial continues.