The way AIB sold off the £740 million property portfolio of an alleged fraudster was “very strange”, Southwark Crown Court heard yesterday.

Gary Hersham, who runs the upmarket Beauchamp Estates in Mayfair, made the comment while giving evidence at the trial of his associate, Achilleas Kallakis.

Mr Kallakis and co-defendant Alexander Williams, both 44, are accused of swindling AIB out of £740 million in property loans obtained using fake guarantees from Hong Kong Estate Agency Sun Hun Kai Properties (SHKP).

Mr Hersham, who worked with Mr Kallakis on several multimillion-pound property transactions, told Southwark Crown Court of his dealings with the alleged con man.

He told jurors that Mr Kallakis was “very shrewd” at negotiations, adding: “He liked to buy a pound for 50p.”

He had been involved with a house in Mayfair’s Grosvenor Square that had gone on to sell for £40 million, and another flat in nearby West Eaton Place, it was said.

Jurors also heard how Mr Hersham had been trying to acquire a large international property portfolio on behalf of Mr Kallakis and other investors, only for the bid to be felled by the credit crunch.

Asked by Robin Barclay, for Mr Kallakis, if he had heard that AIB had sold the property portfolio at the end of 2008, Mr Hersham said:

“Yes, it was in the public domain, it was in all the newspapers.”

‘No risk’

Mr Barclay then asked him about the terms, which are said to have involved an interest rate that was practically zero and “no risk” for buyer Green Property.

He answered: “I think Green Property were very lucky.

“It was a very strange transaction to offer someone a portfolio effectively of just under a billion pounds’ worth of property with a zero interest rate and no risk whatsoever.

“I think most people would have looked at [that] and said it was a gift from heaven.”

Mr Hersham was then questioned by prosecutor Victor Temple QC if he’d known AIB had been “faced with fraud” and “16 fraudulent guarantees”, to which he answered: “Absolutely not.”

Later in the hearing Alexander Williams, giving evidence in chief, told jurors his main role in the AIB property transactions was “chasing the papers”.

He also told of his upset at Mr Kallakis, whom he’d met at university, for missing a meeting he’d organised between AIB and an SHKP representative.

Both men deny conspiracy to defraud, forgery, fraud by false representation, money laundering and obtaining a money transfer by deception.