Businessmen guilty of mass property fraud

Greek and British businessmen at the centre of a mass property fraud have been found guilty of swindling £740m (€891m) from AIB.

Achilleas Kallakis, known as “The Don” on the international poker circuit, and Alexander Williams, both 44, were both found guilty of conspiracy to defraud AIB and conspiracy to defraud Bank of Scotland, at Southwark crown court yesterday. Both men had pleaded not guilty.

The pair were found guilty of obtaining £740m in loans from AIB between 2003 and 2007 to buy 16 properties, using deception and forged guarantees purportedly signed by Hong Kong-listed Sun Hung Kai Properties.

A jury gave a unanimous verdict and Kallakis and Williams have both been remanded in custody for sentencing today.

The jury verdict delivered yesterday comes 16 months after the case opened at Southwark crown court. The original trial collapsed in Jan 2012. The retrial began in September last year.

Jurors heard that when AIB discovered the fraud, it made a quick £650m sale of the properties from Kallakis’s portfolio in 2008 to Dublin-based Green Property.

A number of witnesses were called to the stand, including former AIB chairman Dermot Gleeson, who admitted the bank did employ “unusually favourable terms” when dealing with Green Property, but added that owing to the severity of the situation, a “rescue effort” was required.

AIB offered a total debt package of £752m to 100% finance the deal for Green Property, as well as covering costs. It was offering Green a 118% loan to value deal.

The bank also came under fire when Kallakis took to the stand. He told the court that AIB did not question his financial background or the legal agreements surrounding guarantees.

Speaking about 2006, at the height of the property boom, Kallakis said: “I was never asked from the beginning, yet alone at this time. By this stage deals were coming in thick and thin, so I was seeing [staff at AIB] at least once a week.”

During the course of the trial, details were revealed of Kallakis’ lavish lifestyle. He considered Prince Albert of Monaco a friend, took clients on luxury yacht trips, as well as whisking AIB staff to places such as Monaco, Mauritius, Mykanos, and St Petersburg as a thank you for completing deals.

AIB accrued losses of £60m on the loans. HBOS lost £5.8m on a £26m shipping loan.

Judge Andrew Goymer said: “A prison sentence of some substance is really inevitable. This is a case that in my view requires anxious consideration to get the level of sentencing correct.”

A lawyer and businessman who was closely involved in the fraud is a Swiss national and has not been charged due to his absence from the jurisdiction.