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Thread: AIB boss faces quiz over 774m Euro loan to Greek tycoon

  1. #1
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    Thumbs down AIB boss faces quiz over 774m Euro loan to Greek tycoon

    AIB's new boss faces a grilling today over how his bank loaned over £700m (€774m) to a Greek tycoon who is charged in London with fraud, forgery and money laundering.

    Colm Doherty faces questions over what checks were made on poker-playing Achilleas Kallakis, who called himself 'the Don', before the bank approved the loans for a string of plush London properties he bought.

    The portfolio included buildings which housed the 'Daily Telegraph', parts of the Metropolitan Police, the UK Home Office's asylum processing centre and Orion House, the tallest building in London's Covent Garden.

    Mr Doherty will make his first public appearance as AIB managing director this morning when he will have to unveil about €5.3bn of bad loan losses for 2009 and the bank's first ever annual loss.

    AIB's UK corporate banking arm, which extended the loans, ended up booking a £56m loss on the loans in its 2008 accounts.

    That loss was recorded after the bank seized the properties and sold them on to Dublin-based Green Properties.

    Mr Doherty was ultimately in charge of the corporate banking business that extended the loans between 2003 and 2007, as then-head of AIB's capital markets division.

    Mr Kallakis and Alexander Williams were each charged yesterday at the City of London Magistrates' Court with two counts of conspiracy to defraud, 13 counts of forgery, five counts of fraud by false representation, two counts of money laundering and one count of obtaining a money transfer by deception.

    It stands as one of the largest such property cases ever investigated by Britain's Serious Fraud Office (SFO).

    During 2008, AIB became aware of problems with an element of its security interests in the so-called Kallakis portfolio. However, news of the alleged scam only broke the following March, when it emerged that the SFO had launched an investigation into it.

    The probe centred around claims that money had been borrowed, based on fraudulent documents showing leases to tenants in the properties had higher rents and were signed for longer periods than actually was the case.

    AIB boss faces quiz over €774m loan to tycoon - Irish, Business - Independent.ie

    What in God's name were these people thinking......or were they tipping on head shop stuff????
    The hurt of one is the hurt of all, the honour of one is the honour of all.

    Native American Indian Traditional Code of Ethics

  2. #2

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    As far as I know Doherty wasn't quizzed about this today. Or if he was there doesn't seem to be any mention of it in the media so far.

  3. #3

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    Old News as this has been reported on here last March.

    Theo provided fraudulent documents via Solicitors to state leases were worth more than they really were. Its why SFO involved and think he will end up doing porridge.

    AIB took a €56 Million hit but properties were transferred to Green Properties last year.

  4. #4

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    Indeed the story has been knocking around for a while and there's loads of unanswered questions:
    How much did AIB lend this fraudster?
    It is not clear precisely how much Kallakis, who is dubbed “The Don” for his renowned poker skills, borrowed from AIB. The bank has never disclosed what it lent him, but a source who worked closely with the Greek firebrand claims it was £707 million. Newspaper reports put his total bank lendings at £850 millio
    Why such a small write off in the accounts?
    Yet despite sinking hundreds of millions of pounds into building up Kallakis’s property portfolio, AIB was left with a relatively small loss – just £56 million. Statements from the serious fraud office reveal this was because AIB took control of the properties and sold them on to Green Property
    Why did AIB not make any statement on the affair until the SIFO investigation became public?
    It must be asked why such price-sensitive information was not shared with the Irish Stock Exchange. Why also did AIB leave it to the serious fraud office to reveal the fraud – six months after the bank apparently unearthed the problem?
    How much will the eventual write down on the fraud amount to?
    The bank’s reported loss from the property scam is £56 million but if the portfolio had been valued in late 2008, the write-down would have been far greater. On the basis of the CB Richard Ellis report, a 35.5 per cent fall in market values represents a £250 million drop on AIB’s loan of £707 million. In a fire sale scenario, the price declines may have been even more dramatic. Caught in the teeth of the worst financial crisis since the Great Depression, it is a moot point whether AIB could have sustained a write-down on that scale.
    And how did AIB manage to get so badly stung by this guy?
    It has since emerged that Kallakis, who was born under the surname Kollakis, has a track record in forgery. In 1995 he was convicted of flogging bogus British feudal titles to unsuspecting Australians, Americans and Canadians.

    By 2008, his name and his fortunes had changed. In that year his wealth propelled him to number 325 on the Sunday Times Rich List. Kallakis was now a formidable presence on the British property scene. A four-year spending spree, funded largely by AIB, had amassed him a €1 billion portfolio that included some of London’s s********************iest real estate.
    AIB still has questions to answer over Green deal - The Irish Times - Mon, Jan 18, 2010

    It should make for a fascinating case!

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    Politics.ie Member Mitsui2's Avatar
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    Jeez, which cliche should I use?

    Their attitude of "never mind the quality, feel the width!" or the old chestnut about Greeks bearing gifts?

  6. #6

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    Flogging fake titles to American tourists one day; scamming AIB for 700 million odd the next. Sounds like there's a movie plot there somewhere.

  7. #7

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    Quote Originally Posted by PaddyJoe McGillycuddy View Post
    Flogging fake titles to American tourists one day; scamming AIB for 700 million odd the next. Sounds like there's a movie plot there somewhere.
    AIB has decent security for the properties which is why Green Properties are now running them.

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    Politics.ie Member Dreaded_Estate's Avatar
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    I wonder did Green Property get another 0% financing loan to help AIB hide the losses over a number of years.

  9. #9

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    Quote Originally Posted by PaddyJoe McGillycuddy View Post
    Indeed the story has been knocking around for a while and there's loads of unanswered questions:
    How much did AIB lend this fraudster?

    Why such a small write off in the accounts?

    Why did AIB not make any statement on the affair until the SIFO investigation became public?

    How much will the eventual write down on the fraud amount to?


    And how did AIB manage to get so badly stung by this guy?

    AIB still has questions to answer over Green deal - The Irish Times - Mon, Jan 18, 2010

    It should make for a fascinating case!
    AIB cooperated with SFO and Police in UK and since when does someone make statements about ongoing Police investigations.

    AIB is not the only bank ever to get stung
    Alliance and Leicster lost £80-100 Million on Thamesmead estates through fraud
    Mortgage Express (part of Bradford and Bingley) lost £300 million through fraud
    I know how above 2 happened and it was through fraudulent valuations from surveyors
    RBS and LLoyds have written off billions either through fraud or bad debts.

    AIB's loss has crystallised as in recovering posession of the properties and selling on to Green Properties it did this.

    This of course doesn't stop AIB using a certain firm of lawyers in London adept at finding money stashed away and they are pretty good.

  10. #10
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    Quote Originally Posted by odie1kanobe View Post
    AIB's loss has crystallised as in recovering posession of the properties and selling on to Green Properties it did this.
    Apologies if your statement is meant to be ironic. For the benefit of folk who might not have followed this story before, the issues are covered neatly in this IT article from January. Because isn't the concern that this transaction actually doesn't insulate the bank from further loss in respect of these properties.
    …. despite sinking hundreds of millions of pounds into building up Kallakis’s property portfolio, AIB was left with a relatively small loss – just £56 million. Statements from the serious fraud office reveal this was because AIB took control of the properties and sold them on to Green Property. …. The new owners of Kallakis’s former property empire are a series of Isle of Man-listed companies titled Kish One through to Kish Sixteen. ….. However, the land registry documents show a number of Kallakis’s assets were sold on for roughly the same price “The Don” himself had paid at the height of the boom. In some cases, the Kish companies forked out even more than Kallakis for the same properties. …. According to a leading property specialist, the inflated prices of the Green transaction only “make sense” if the loans are non- recourse, meaning that if the assets fall below the value of the mortgage, AIB takes the hit.
    However, banks know they have a duty of care to their clients and I'm sure that this should prevent them lending irresponsibly.

    George Lee 2 June 2006

    Ziggy

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