Business Irish

Sunday 21 September 2014

AIB conned out of millions in property fraud, trial told

Shane Hickey in London

Published 19/09/2012 | 05:00

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ALLIED Irish Banks lost millions of euro as a result of an elaborate fraud in which an apparent Greek shipping magnate and his business partner used false documents to borrow €920m to buy prime UK real estate, a court has heard.

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The retrial of Achilleas Kallakis and Alexander Williams, both charged with orchestrating the scheme in which faked guarantees were used to secure 16 loans over five years, opened in a London court yesterday.

Luxury yacht

Both men have pleaded not guilty to 23 charges of fraud and money laundering, among others, in relation to the loans they took out from AIB and Bank of Scotland for the €26m conversion of a former ferry into a luxury yacht.

The pair, who have been business partners for a number of years, along with a Swiss lawyer who is not part of the proceedings, are said to have targeted the banks with a view to a "large-scale financial fraud".

In Southwark Crown Court, prosecuting barrister Victor Temple detailed how the pair used forged rent guarantees from a reputable Hong Kong property company -- Sun Hung Kai Properties (SHKP) -- to secure the loans which amounted to £740m (€920m) between 2003 and 2008.

"It may be that the defendants hoped that their dishonesty would remain hidden and that they would be able to repay the banks in full, but at best, for reasons which will emerge, it was an extravagant, if not fanciful, hope," he said.

"In the event, the banks lent more money than they normally would have, as a result of lies and the use of forged documents as to the security for the loans -- indeed, had the banks known all the facts they would not have lent any money at all."

The total loss to AIB was "many millions of pounds" while Bank of Scotland lost just under €6m as a result of the loans.

The rent guarantees also acted to increase the value of the properties, many of which were commercial sites, which resulted in the pair having a surplus of some £77m (€96m) which was used for extravagant living, especially by Mr Kallakis, the court heard.

The businessman, who is in his early 40s, is "confident, assertive and occasionally arrogant", enjoys the trappings of wealth and has a considerable business acumen.

Bogus titles

Mr Williams however, is "self-effacing, quiet and unassuming", said Mr Temple.

In 1995, then under the names Kollakis and Lewis, both pleaded guilty to conspiracy to commit forgery in a case involving the sale of bogus honorary titles to unsuspecting Americans.

The jury heard details of some of the falsified documents which the men are alleged to have used and which were stored on a computer file entitled 'Madonna'.

When AIB discovered that the SHKP files were forgeries, Mr Williams instructed the company IT manager to "get rid of the servers".

Instead however, the manager copied the data and took it off their office premises, the court heard.

The trial is set to continue today and is expected to last a number of months.

Irish Independent

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