A businessman accused of defrauding AIB out of £740 million had always been honest with the bank and was running a “genuine business”, a London court has been told.

Achilleas Kallakis (44) and Alexander Williams (44) are accused of creating fraudulent guarantees to get inflated property loans from AIB, buy the properties and then use surplus cash to fund a lifestyle of luxury. The two are also accused of defrauding the Bank of Scotland, part of the HBOS group, of €29 million to convert a passenger ferry into a “superyacht”.

In his closing speech yesterday, George Carter-Stephenson QC, for Mr Kallakis, said his client ran a genuine property development business backed by his family trust.

“The idea of fraud is you simply pocket, then you go,” Mr Carter-Stephenson said. “Why spend all the money on the planning permissions, why spend all the money on the refurbishments, unless of course you are dealing with a genuine business?

He said the banks were aware of Mr Kallakis’s position in the trust and were aware of the “financial engineering” used in the transactions and that Mr Kallakis did not knowingly present false documents. He said Mr Kallakis “never misled them [AIB], never misrepresented his financial wealth nor did he dishonestly produce any documentation. Whatever documentation was produced to AIB, it honestly reflected what he understood the situation to be at that time.”

Mr Carter-Stephenson said his client had not seen the material that the banks used to build their impression of him as a wealthy businessman and shipping magnate, an impression the prosecution said was largely built on fraud.

Credit application

He said some people at banks completing the credit application “may have thought a little bit of massage might help them through the credit committee”. He accused AIB of being keen to do “financial engineering” to assist its clients and alleged some bankers might have wanted to lend more to get bigger bonuses.

In his closing speech earlier, Victor Temple QC, prosecuting, said Mr Kallakis and Mr Williams used misrepresentation and deception tactics to deceive both banks.

Mr Temple said the pair set up a complex string of companies to help raise the AIB property loans, which were secured off the back of forged guarantees, falsified balance sheets and phoney letters of reference.