Thursday 30 October 2014

AIB viewed alleged fraudster as 'very important client', court told

Shane Hickey in London

Published 22/09/2012 | 05:00

ALLIED Irish Banks considered the man accused of masterminding a multi-million-euro fraud as a very important client and did not want to lose his business.

A court heard yesterday how Achilleas Kallakis, who borrowed €920m to buy 16 high-end UK properties over five years, portrayed himself as a Greek shipping magnate when he was dealing with the bank between 2003 and 2008.

Mr Kallakis and his business partner Alexander Williams are both charged with orchestrating a scheme in which forged guarantees from a reputable property company were used to secure the loans from AIB.

Both have pleaded not guilty to 23 charges, including fraud and money laundering, among others. AIB lost millions when it offloaded the property in the midst of the 2008 financial crisis after the alleged fraud was discovered.

Yesterday, Michael Cooke, a senior member of the lending team that dealt with Mr Kallakis, said that during the period when the loans had been taken out, the businessman was considered an "important and growing client".

It was not a relationship the bank wanted to lose, he said.

Alert

The alert was finally raised in 2008 when the bank was tipped off. Officials contacted Sun Hung Kai Properties (SHKP), a listed Hong Kong property firm, which had apparently provided the security on the buildings, and they said they knew nothing of them.

Mr Cooke said "nothing whatsoever" had happened to the properties during the lending years to make them take notice. The loans, rent and interest were being paid, and the booming property market meant that the bank's risk was diminishing, he said.

The prosecution in the case claims that Mr Kallakis comes from a modest background but portrayed himself to be part of a shipping dynasty.

Mr Cooke said the impression he had was that there was a wider shipping interest connected to Mr Kallakis in Oregon, a company that in reality had very few assets. Mr Cooke said the information he was given was that Oregon was a substantial firm, including the operation of oil shipments and cruise ships, and Mr Kallakis was a non-executive director.

In 2007, when the bank asked to meet a representative of SHKP, Mr Kallakis set up a meeting with a man called Jonathan Lee, who it is claimed was an impostor.

Mr Cooke said he found it unusual at the time that when he and a colleague handed their business cards to him, he said he had run out and had none to give in return.

The case is due to continue on Monday.

Irish Independent

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