Background checks were overlooked “on a whim” at Bank of Scotland to ensure loans to convert a ferry into a “superyacht” by alleged fraudster Achilleas Kallakis were granted, a former employee of the bank told a court yesterday.

Mr Kallakis and his co-defendant Alexander Williams, both 44, face accusations that they obtained the loan from the bank, which is part of HBOS group, on the back of unreliable guarantees.

The yacht was primarily intended for personal use but would be chartered out occasionally, jurors heard.

The loan for the boat was made to Mercator Shipping Corporation, said to have been owned by the Oregon Shipping Corporation, which was in turn owned by a trust.

Southwark Crown Court was told that background checks were little more than a “box-ticking exercise” at a bank which had a “huge appetite” for property loans.

Paul Stirrat, former transaction manager at Bank of Scotland, told of the bank’s attitude to ensuring that the loan – the largest the bank’s newly formed superyacht division had then made – was provisionally agreed in June 2007.

Mr Stirrat agreed with George Carter-Stephenson QC, representing Mr Kallakis, that the Bank of Scotland at the time had “an appetite for lending” in relation to yachts and superyachts. Asked by Mr Carter-Stephenson about “independent verification” when doing background checks on Mr Kallakis and Mr Williams, Mr Stirrat said: “In an ideal world yes, but it’s not always required.”

Imagined vessel

During yesterday’s hearing the court was shown an artist’s impression of the finished yacht, along with detailed technical drawings said to have been plans for the vessel. Mr Stirrat agreed that, despite warnings, the bank did not get any independent verification.

Mr Carter-Stephenson said: “When it’s a matter of losing the business, the bank was prepared to waive its conditions at the whim of senior management.” Mr Stirrat answered: “True.”

However, the former banker said the decision to make the loan had been bolstered by Oregon Finance’s apparent UK property portfolio.

Asked by prosecutor Victor Temple QC what would have happened if he’d known that Oregon’s accounts were fakes, Mr Stirrat answered: “We would not have been able to proceed.”

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.