Judge says Allied Irish Bank and Bank of Scotland acted carelessly and imprudently for failing to make full inquiries
Two banks that lent more than £750m to the confidence trickster Achilleas Kallakis had been “careless and imprudent” and “do bear some degree of responsibility” for Britain’s largest mortgage fraud, a judge has said. Bankers at Allied Irish Bank and Bank of Scotland had been falling over themselves to lend to Kallakis, carrying out only cursory checks that failed to reveal he was a serial conman, not the extravagant Mayfair property baron he was purporting to be.
Judge Andrew Goymer sentenced Kallakis and his henchman Alex Williams, a forgery expert, to seven years and five years imprisonment respectively for orchestrating the audacious scam.
At Southwark crown court yesterday, he said: “AIB and BoS have undoubtedly acted carelessly and imprudently by failing to make full inquiries before advancing the money. Indeed, the latter bank was given clear and precise warnings by its lawyers about the risks of accepting assurances in a letter from an alleged co-conspirator, a Swiss lawyer. It almost beggars belief senior management chose to disregard that warning and rushed to complete the deal at all costs. It is apparent … both the defendants took full advantage of the prevailing banking culture in which corners are cut, and checks on them superficial and cursory …”
He added: “While I do not equate the position of the banks with that of car owner or householder who forgets to secure his house or car and becomes the victim of theft, the banks do bear some degree of responsibility for what happened.”
Kallakis and Williams were convicted of defrauding Bank of Scotland, now part of Lloyds, and AIB, but they also took in other lenders, borrowing millions of pounds from Bristol & West, part of Bank of Ireland, GE Capital, and Barclays.
Between 2003 and 2008 Kallakis bought properties worth £120m, between Piccadilly and Pall Mall in St James’s Square, which he planned to turn into the world’s most expensive penthouse. He also had ambitious expansion plans for 31 Brompton Square, one of the most sought-after properties in Kensington.
During the trial several bankers from AIB testified to the sophistication of Kallakis’ bogus business claims, particularly financial guarantees he claimed to have secured on his property deals. The court also heard how the same bankers had enjoyed extensive hospitality: tickets for the 2006 World Cup final, a trip on Kallakis’s yacht for the Monaco Grand Prix, and holidays in Mauritius.