TWO BUSINESSMEN conned an Irish bank out of more than £740 million in property loans and used the cash to fund a champagne lifestyle of private jets and yachts, a London court heard yesterday.
Achilleas Kallakis and Alexander Williams, both 44, set up a complex web of companies to raise massive bank loans for a string of commercial properties in London, it was said.
While the men did buy the properties as planned, they were accused of presenting Allied Irish Banks with a series of fake guarantees for each loan, significantly increasing the value of the deals.
Mr Kallakis, who is accused of being “in the driving seat” of the operation, is accused of persuading banks to let him borrow millions more than the asking price.
He was allegedly aided by a Swiss acquaintance Michael Becker, who is not facing trial but is accused of setting up a Swiss bank and trust fund account to help manage the loan money. This created a £77 million slush fund, some of which was spent on helicopter and private jet trips as well as on a villa in Mykonos, it was said.
However, the alleged deception was discovered by AIB in autumn of 2008, forcing it to sell the 14 properties fraudulently purchased by the men at a loss of “many millions of pounds”, the court heard.
Explaining the alleged fraud to jurors at the men’s retrial yesterday, Victor Temple QC, prosecuting, said: “In total, AIB loaned some £743 million to buy property. The actual total spent was £642 million, together with other costs of £23 million. The surplus available to the defendants was £77 million. Large sums of money were used to fund Mr Kallakis’s extravagant lifestyle and to pay for his yacht, private jet, helicopter and a new villa in Mykonos.”
Mr Temple also outlined the impact on AIB.
“At this time, AIB was 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.”
Jurors also heard how the AIB fraud began to “unravel” in 2008 after the Irish bank was contacted by another bank which had previously raised concerns about Mr Kallakis. This prompted AIB to write to one of the supposed guarantors, Hong Kong-based estate agent Sun Hung Kai Properties, to confirm the authenticity of the guarantees.
SHKP, a reputable business, had nothing to do with the guarantees, it is claimed.
However, even as pressure began to mount, Mr Kallakis continued with his “fabrication”, Mr Temple said. “He invited a number of AIB employees, including David McWilliam, to his 40th birthday party in Mykonos, which took place in late July or early August.
“In the event, no one from AIB was able to attend. Mr Kallakis seized the advantage . . . Some time later he mentioned to Mr McWilliam that if only he had come to the party, he would have met members of SHKP staff. This claim was, of course, total fabrication.”
SHKP responded to AIB in August 2008 to confirm that the guarantees were fake, it was said. That led to Mr Kallakis and Mr Williams facing an immediate investigation by the bank. On September 15th, AIB arranged a meeting with Mr Kallakis and Mr Williams during which they demanded the repayment of more than £300 million, the court heard.
The two men then allegedly claimed, for the first time, that they had been in contact only with an SHKP intermediary – not an actual member of staff. A handwriting expert also claimed that the signatures of two SHKP members on the guarantees were also almost certainly forgeries.
Both men deny the charges.
The trial continues.
