Bank clawed back cash after making artificial loss on selling businessman's property, court told
Allied Irish Bank acted in an 'underhand' manner in a bid to profit from alleged fraudster Achilleas Kallakis's multi-million pound property portfolio, a London court has heard.
Mr Kallakis is accused of defrauding AIB out of £740m (€920m) in property loans by using fake guarantees to obtain the money.
But yesterday, his barrister claimed that Mr Kallakis had been treated unfairly by AIB as the bank tried to make a profit on the prestigious property portfolio he is alleged to have held.
Speaking just before Mr Kallakis began his evidence, his barrister George Carter-Stephenson launched a ferocious broadside against AIB and HBOS, who also claim Mr Kallakis defrauded them.
He claimed AIB had made £102m (€126m) from Mr Kallakis and his co-defendant Alexander Williams by way of charges including interest payments and arrangement fees.
He insisted Mr Kallakis was a mere 'negotiator' acting on behalf of the Hermitage Syndicated Trust, whose beneficiaries are said to be his children.
And Mr Carter-Stephenson accused AIB of having a 'cosy deal' with property firm Kish, which allowed them to sell off Mr Kallakis's property portfolio at a loss but later recoup profits.
Focusing on Mr Kallakis's attitude to AIB, Mr Carter-Stephenson said: "Knowing what he knows, he believes what they did was underhand.
"They acquired what in effect was a very valuable portfolio with assets they know they could sit on for some time and make profits from.
"Of course they, in a very cosy little deal with Kish undersold, we would submit, that portfolio creating an artificial loss but with 'clawback provision' in relation to later profits.
"This enabled them to claim from their insurance and then sit back and claim the profits.
"Profits which Achilleas Kallakis believed belonged to his children."
During his evidence in court Mr Kallakis revealed how he had met Mr Williams while at university in the late 1980s. The pair were later convicted of breaking a 700-year-old law in 1995 while flogging heraldic titles to foreigners.
He told of how they had attempted to copy a Scottish system whereby the land attached to a title could be divided up, thus creating more new titles to share, only to discover that doing so broke a law dating back to 1290.
And the alleged fraudster claimed he had even welcomed the prospect of doing community service, saying: "I was advised that the sentence would be a non-custodial one. On balance I thought community service, do some good for the community, that is a good thing anyway."
Mr Kallakis also said that he had changed his name from Stefanos Kollakis in a bid to "wipe the slate clean" after the case.
He also told jurors of his Swiss-based legal adviser Michael Becker's exacting requirements when it came to picking properties to buy, saying: "Properties had to be located within a Triple-A prime location – Mayfair, St James's and Knightsbridge."
Mr Kallakis and Mr Williams both deny conspiracy to defraud, forgery, fraud by false representation, money laundering and obtaining a money transfer by deception.
The trial continues.