Tuesday 6 December 2016

Boss defends bank's role in £700m loans to Kallakis

Emmet Oliver

Published 03/03/2010 | 05:00

AIB chief Colm Doherty brushed off accusations the bank had something to hide after it provided loans worth more than £700m (€770m) to a Greek man who is now facing fraud and forgery charges.

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Achilleas Kallakis was charged at the City of London Magistrates' Court this week in relation to property loans provided by AIB between 2003 and 2007, which resulted in a loss of £56m to the bank.

AIB took control of the properties in 2008 and they were later sold to developer Green Property who funded the transaction with an AIB loan. AIB has been accused of "warehousing'' the property portfolio via this transaction and avoiding a larger writedown than £56m on its books.

However, Mr Doherty denied this and mounted a defence of the bank saying it had brought the matter to the attention of the UK Serious Fraud Office as soon as it discovered a problem. He said there was nothing untoward about the Green Property transaction. "It was a normal, arms-length transaction approved by the board and approved by our auditors. Anybody that's looked at this is perfectly happy,'' he said.

Asked by reporters about the internal controls at the company and whether he was happy, Mr Doherty said he wasn't happy such a situation ever developed. "A number of people have left the company since then, so clearly I wasn't happy with the level of controls,'' he commented. He said he could not talk about the situation of Mr Kallakis as that matter was before the UK courts.

Division

The bank's corporate banking arm was responsible for loans advanced to Kallakis. The corporate banking arm was under capital markets, the division run by Mr Doherty in recent years. However there is no suggestion Mr Doherty had any knowledge of the problems with the loans advanced during this period.

According to the Serious Fraud Office the fraud arose when it became apparent that guarantees of certain lease payments were fraudulent.

Irish Independent

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