Fraudulent guarantees crucial to €123m loan, court told
Ex-AIB chair said fakes came from a 'highly regarded firm'
Published 28/09/2012 | 05:00
FORMER AIB chairman Dermot Gleeson has said guarantees from a Hong Kong property giant -- now said to be fakes -- were crucial in a decision to lend millions of euro to a man accused of a large-scale fraud against the bank.
A London court yesterday heard how a €123m (£98m) loan to Achilleas Kallakis would probably not have been approved but for the rent guarantees.
Mr Kallakis and his business partner Alexander Williams deny 23 counts of fraud and money laundering, amongst others, in relation to 16 loans worth €920m taken out from AIB between 2003 and 2008.
They are accused of having used forged rent guarantees on properties from a reputable Hong Kong property company -- Sun Hung Kai Properties (SHKP) -- to secure the loans to buy a series of high-end sites.
Yesterday, Mr Gleeson, who was the non-executive chairman of the bank until 2009, said the presence of the guarantees played a major part in the £98m loan being passed by the chairman's committee -- a body which approves exceptional loans -- in 2006.
SHKP was a firm with a £14bn market capitalisation and was seen as a "very significant and highly regarded" company in Hong Kong, he said.
When questioned in Southwark Crown Court yesterday on why the loan was agreed for the Croydon property, Mr Gleeson said it had been approved by the credit committee in the bank, it was a well-regarded site and there was a good lending history with the client -- Mr Kallakis. However, possibly the most important part of the transaction was that a company such as SHKP had promised to ensure rent payments.
High ratings by independent agencies suggested that the firm was "a very good bet in lay man's terms", he said, describing SHKP as a "really high-class party".
AIB was alerted to possible problems with the SHKP guarantee after an issue was raised by German bank Helaba about a previous conviction Mr Kallakis had under another name.
When AIB queried the guarantees with SHKP, the company said it had no knowledge of them.
The properties were sold shortly after -- in late 2008 -- by the bank to Green Property.
The jury in the trial has been told by a senior manager in the bank that in the early stages of the relationship with Mr Kallakis no contact was made with SHKP as they acted as the tenant on the property and would not normally be contacted.
Mr Gleeson said that 20 international banks, including HSBC and Citibank, had loaned at low rates to SHKC, meaning they were sure of getting their money back.
Had the rent guarantees not been in place, the loan probably would not have happened and would have been a "completely different prospect".
There was a huge difference, he said, between a property loan and funding a body the same size as a country.
The trial is set to continue today.