AIB lent £98m to ‘fraudster’ on back of dodgy guarantee

Allied Irish Bank lent £98m (€123.5m) to an alleged fraudster on the back of dodgy guarantees from a top Chinese property firm, a London court heard yesterday.

AIB lent Achilleas Kallakis and Alexander Williams £98m to buy an office block in Croydon, south London, because of guarantees supposedly obtained from Sun Hung Kai Properties [SHKP], the court was told.

The bank’s non-executive chairman Dermot Gleeson said the SHKP guarantees, which are alleged to be fake, were the “most notable” factor when it came to authorising the £98m loan to buy Apollo and Lunar House, whose tenants include the Home Office.

Mr Gleeson and his fellow directors were asked to consider the loan by AIB’s credit committee in Jun 2006 as it went above the bank’s normal limit.

The barrister said they considered SHKP’s involvement “equal to a sovereign or country saying I am the person who is going to pay”.

Such was the impact of the SHKP guarantee that Mr Gleeson said even an outbreak of legionnaires in the building wouldn’t have deterred them from loaning the money for it.

Asked by prosecutor Annabel Darlow why they had decided to approve the loan, Mr Gleeson said: “The most notable thing from my point of view was if a very highly-regarded, significant, and large Hong Kong company [like] SHKP was in effect guaranteeing the repayment [it] was probably the most important feature of the proposition.”

Asked if he had heard of SHKP before, he added: “No, AIB would have very little or no exposure to the Hong Kong stock market but I would have read up about it for this matter.”

Mr Gleeson said he had discovered SHKP was worth £20bn, was one of the top five companies on the Hong Kong stock exchange and had A or A1 stable credit ratings from Standard & Poor and Moody’s.

He added: “In layman’s terms these very high ratings suggested that this company would be a very good bet.”

He went on to call SHKP “high class” and said: “When a bank loans money they will always be very interested to see how it will come back.”

He added: “If something went front about the property, if the tenants in Croydon had some terrible dispute, if there was something terrible that we did not know [the building] had — like legionnaires disease — SHKP were always going to pick up the bill.

“Here you had this very large company saying we will pay.”

Kallakis’s bid was further bolstered when it was discovered that SHKP had previously been loaned money by top banks including Citigroup and Asian markets specialist HSBC.

Ms Darlow asked Mr Gleeson if AIB had thought SHKP were “good for the money”, to which he replied, “Absolutely”.

Asked if he had any reason to doubt the guarantees, Mr Gleeson said “Absolutely not.”

Asked what AIB’s stance would have been without the SHKP guarantees, he answered: “It would have been a completely different proposition.”

Asked about his understanding of the supposed links between Kallakis and SHKP, Mr Gleeson said ‘it was a matter for them”.

Williams and Kallakis, both 44, deny two counts of conspiracy to defraud, 13 counts of forgery, five of fraud by false representation, two of money laundering, and one count of obtaining a money transfer by deception.

The trial continues.


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