Concern at Kallakis missed payment
An alleged fraudster caused a bank “huge concern” after missing repayments on a €29 million loan borrowed to build a super-yacht, a court heard yesterday.
Achilleas Kallakis borrowed the money from Bank of Scotland – part of the bailed out HBOS group – to convert a clapped-out passenger ferry into a luxury superyacht, it was said.
However, Mr Kallakis and co-defendant Alexander Williams, who are accused of using fake guarantees to get the loan, missed a repayment just two months into the agreement in August 2008, jurors were told. The two are also accused of faking guarantees to secure £740 million in loans from AIB.
Panicked Bank of Scotland bosses chased up Mr Williams only to be told that the money was tied up in a troubled Icelandic ban. Jurors heard how he failed to meet the 10-day ultimatum given by Bank of Scotland bosses.
This was followed by a report into the vessel revealing that it was contaminated with asbestos and was effectively worthless.
Recalling discussions with Mr Williams after the first repayment bounced, Bank of Scotland’s former director of marine finance Peter Whitehead said: “Alexander Williams phoned me back and stated that the business had substantial amounts of money in deposit with an Icelandic bank.
“I pointed out that we were in the infancy of our agreement. It was not a very good start and we wanted this to be resolved very quickly. I gave them 10 days. After 10 days we did not have any payment.”
Annabel Darlow, prosecuting, asked Mr Whitehead about a report into the ferry which revealed a catalogue of costly problems including large-scale asbestos contamination. “It [the report] made very grim reading,” Mr Whitehead replied. “It gave the bank huge concern, It was a very, very damning report of the vessel.”
Mr Whitehead arranged a meeting with Mr Kallakis in early 2009. However, he told Southwark Crown Court yesterday, Mr Kallakis had behaved “aggressively” and sworn at him.
Asked by Ms Darlow about the meeting, he said: “Mr Kallakis in particular took exception to some of the questions I was asking him. He used some fairly colourful language.”
Asked how Mr Kallakis responded, he answered: “Basically by saying our loan was with Mercator with the corporate guarantee [from] Oregon and it had nothing to do with him.”
Mr Whitehead told of the “very bad effect” the episode had on the bank, with the marine finance division being shut down just months after the meeting in June 2009, leading to the loss of his and 19 other jobs.
Asked by Ms Darlow if Bank of Scotland had recovered the loan, he said: “No, it has not to my knowledge.”