Tuesday 12 December 2017

AIB financed the sales of Kallakis deals to Irish group

Bank made a loss of £56m on disposals to Green Property

Shane Hickey , in London

AIB financed the sale of a number of high-end UK properties to an Irish development firm after allegations emerged that the owner of the buildings -- who had also borrowed the cash to purchase them off the bank -- was involved in a £740m (€850m) fraud.

The bank made a loss of £56m when it sold the portfolio to Green Property following accusations against the owner, Achilleas Kallakis, that he had used false documentation to secure the loans from AIB in the first place.

Mr Kallakis (43) portrayed himself as a Greek shipping tycoon when taking out loans for 16 different landmark properties over five years, and is accused of using forged guarantees from a reputable Hong Kong property company -- Sun Hung Kai Properties (SHKP) -- to secure the monies between 2003 and 2008.

A senior staff member of AIB told a court in London yesterday that the bank had made the initial approach to Green Property, which was already a client, about the deal in late 2008. The properties were bought through a number of companies called Kish one to 14, which are owned by Green Property.

This was shortly after it emerged that SHKP knew nothing of the guarantees which Mr Kallakis said he had and which were a crucial part of the financing deal secured from the bank.

Donal O'Shea, head of property in AIB's British corporate banking unit at the time, said the negotiations for the sale of the buildings took place during a "very tight timeframe", which consisted of weeks.

The loan to Green Property had been approved by the board, the very highest level of credit committee in the bank.

Mr O'Shea said the Kallakis matter was treated in a very sensitive manner in the bank.

There was no reference to it in a document to a credit committee as this would have been seen by different people.

If the confidentiality surrounding the buildings had not been kept, it would have impacted on the value of the properties, he said, and they would have been seen as "distressed assets". He also said an insurance payout in the matter had been made.

Hot air

Mr Kallakis and his business partner Alexander Williams have pleaded not guilty to 23 charges of fraud, forgery, money laundering and others.

When AIB found out about the lack of security from SHKP, they told the two men they needed an immediate guarantee of £200m.

Yesterday, Duncan Aldred, of legal firm CMS Cameron McKenna, said the bank was interested in funding ideas put forward by Mr Kallakis, such as securing the money from Middle Eastern families, but became annoyed when it emerged they were "hot air".

The trial continues today.

Irish Independent

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