Greek poker player may deal AIB a busted flush
'The Don' charged with fraud over sizeable blue chip property investments
Published 02/03/2010 | 05:00
A GREEK poker player who liked to call himself 'the Don' and who moved in the moneyed circles of London and Monaco could yet prove to be one of the most dangerous customers AIB has ever had on its books.
Achilleas Kallakis, original name Stefanos Kollakis, was yesterday charged with two counts of conspiracy to defraud, 13 counts of forgery, five counts of fraud by false representation, two counts of money laundering and one count of obtaining a money transfer by deception. The alleged victim is Ireland's largest bank, AIB.
According to the UK Serious Fraud Office, the agency prosecuting Mr Kallakis, AIB lent money to him for five years to purchase a blue chip property portfolio.
This portfolio was purchased from some of the most senior players in British business, including the proprietors of the 'Daily Telegraph', the Barclay Brothers and private equity kings, the Reuben Brothers.
Mr Kallakis and another man, Alexander Williams, were remanded on bail yesterday until May 4.
That is probably of some relief to AIB, which must be starting to feel some embarrassment at having maintained a commercial arrangement for so long with a man facing such serious charges. In mitigation, Bank of Scotland also had a relationship with Mr Kallakis.
In 2008, according to the Serious Fraud Office account of the case, AIB grew concerned about the security that underpinned the Kallakis property empire.
Following an internal review it emerged that certain lease payments were not guaranteed as had been promised. The guarantees were allegedly fraudulent.
AIB referred the matter to the authorities and took control of the properties. The vast majority of them were later sold to Green Property, the Irish development company, with loan finance coming from AIB itself.
Once regarded as a consummate dealmaker, Mr Kallakis was a compulsive poker player and details of his winnings are still listed on the internet.
Mr Kallakis was a member of some of Britain's most exclusive social clubs and as recently as two years ago he was developing the world's most expensive penthouse apartment in St James's Square.
The Kallakis case could pose great dangers to AIB. If it goes to a full hearing and evidence is produced by the Serious Fraud Office showing how the Kallakis deals were structured, it could shine an unwelcome light (from AIB's point of view) on the kind of controls that operate at AIB as to commercial property lending.
The loans provided to the Greek man were sizeable by any standard and took place over a five-year period. No other bank built up the level of exposure to Mr Kallakis as AIB.
The other threat to AIB's reputation arises because AIB's new boss Colm Doherty ran the capital markets division over recent years, which incorporates corporate banking -- the unit that would have dealt with the Kallakis loans.
Nobody is suggesting that Mr Doherty had any knowledge of the problems with these loans, but any flaws highlighted in this division and how it operated may dent his reputation at a time when he is still trying to establish himself in his new post.
Today is Mr Doherty's first public appearance as the bank's managing director. The charging this week of Mr Kallakis couldn't have come at a worse time for the bank.