Wednesday 13 November 2019

AIB 'moved discreetly' over alleged UK loan fraud, court told

Achilleas Kallakis, left, and Alex Williams deny charges
Achilleas Kallakis, left, and Alex Williams deny charges

Shane Hickey in London

AIB moved "quickly and discreetly" to offload a series of prime UK properties at the peak of the banking crisis in 2008 after it was discovered the sites were financed with loans secured by allegedly fraudulent means.

The trial of two men accused of a raft of fraud charges, yesterday heard how the bank discovered in August 2008 that apparent guarantees on €920m worth of loans had been falsified, and the bank had to rapidly sell the properties at a loss of millions.

The discovery and subsequent sale of the properties occurred at the time when then finance minister Brian Lenihan announced the controversial bank guarantee scheme.

Achilleas Kallakis and Alexander Williams are charged with orchestrating a scheme in which faked guarantees from a reputable Hong Kong property company were used to secure loans worth €920m on 16 properties, mostly commercial premises, over five years.

Both have pleaded not guilty to 23 charges of fraud and money laundering, amongst others, surrounding the loans between 2003 and 2008.

Loss

Prosecuting barrister Victor Temple, QC, told Southwark Crown Court yesterday that any public knowledge of the sale of the sites would have resulted in their value being decreased further.

"At this time (November 2008), AIB were in a difficult position, caused entirely by the defendants' wrongdoing," he said.

"The property market was falling and AIB had to move quickly and discreetly. Any publicity as to the sale would have reduced the purchase price further and so increase AIB's loss."

The outstanding loans on 14 of the properties were sold to the Green Property Group at a loss of millions to AIB. The jury have heard how the pair used forged rent guarantees from Sun Hung Kai Properties (SHKP), a listed Hong Kong property firm.

AIB were "deceived" by the actions of the two men and a Swiss-based lawyer, and no warning signs emerged for the bank as time went on, Mr Temple said.

It was not until 2008, when the problems over the guarantees were discovered, that AIB staff met members of SHKP, who denied knowledge of the guarantees. A meeting in 2007 with an apparent member of SHKP, was in fact with an imposter recruited by the accused, the court heard.

The court also heard details of Atlas Management Corp, a firm set up to collect rents and do other management duties on the purchased properties.

Instead, however, the accounts of the company were used as the two defendants' private bank and money was used to fund Mr Kallakis's "extravagant lifestyle," Mr Temple said.

The case continues.

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