An alleged fraudster invented a Greek accountant to help further a €29 million superyacht fraud, a court heard.

Achilleas Kallakis and Alexander Williams are accused of defrauding AIB out of £740 million in property loans. They are also alleged to have swindled €29 million from Bank of Scotland, part of the bailed-out HBOS group, to convert a passenger ferry into a superyacht.

The loan was taken out by Mercator Shipping Corporation, said to have been owned by Oregon Finance Corporation. Both companies are said to have been used to further the fraud.

Yesterday Mr Kallakis was accused of organising a false set of accounts, purportedly made by a Greek accountant called John Papas, to help further the alleged Bank of Scotland fraud.

During cross-examination, prosecutor Victor Temple QC accused Mr Kallakis of using Mr Papas as a “conduit” for false information to Bank of Scotland transaction manager Paul Stirrat, and even making him up entirely. Mr Temple asked Mr Kallakis how much Mr Papas had been paid. He replied, “I think it was £12,000.”

Mr Temple next asked Mr Kallakis if the sum had been a “payment” or “pay-off”.

He continued: “It was a pay-off. It was a payment for using him as a dishonest conduit for relaying false information to Mr Stirrat.”

Mr Kallakis replied: “But the information was not false.”

Mr Temple went on to question whether Papas was a real person, asking: “Are you saying that Mr Papas existed?”

“Of course he did,” Mr Kallakis replied.

Mr Kallakis also denied Mr Temple’s claims that he and Mr Williams had “set up” a phone call between Mr Stirrat and Mr Papas to dupe the banker, saying “That is incorrect.”

Mr Kallakis and Mr Williams both deny conspiracy to defraud, forgery, fraud by false representation, money-laundering and obtaining a money transfer by deception.

The trial continues.