Panama Papers: Mossack Fonseca used by Greek who cheated AIB

The Greek fraudster Achilleas Kallakis, who cheated AIB out of hundreds of millions of pounds in one of the biggest scams ever to befall an Irish corporation, used the services of the Mossack Fonseca law firm.

Kallakis and an associate were found guilty by a London court in 2013 of defrauding AIB of £740 million using deception and forgery. They were jailed for 11 and eight years.

The two men used false documents and false claims during the period 2003 to 2008 to secure multi-million pound loans that were used to buy property in London and fund lavish lifestyles. The court was told another party to the scam, a Swiss lawyer, was not before the court because of his absence from the jurisdiction.

The scam involved the use of an array of British Virgin Islands firms that were used not just to buy property but also a private jet and a yacht. During the trial Kallakis argued that the web of offshore companies that received the loans from AIB were owned by an entity called the Hermitage Syndicated Trust, of which he was just an advisor. Despite his children being beneficiaries of the trust, Kallakis said it was the Swiss lawyer who was in charge.

Exception

The trust document stipulated trustees could in their absolute discretion add to the beneficiaries, with the exception that Kallakis could not be added.

The leaked Mossack Fonseca (MF) files show that it provided nominee directors to a company called FTS Worldwide Corporation, which acted as trustee to the Hermitage Syndicated Trust. FTS was based at the MF head office in Panama City and provided services to a range of trusts.

Kallakis and his colleague secured loans not just from AIB when amassing a huge portfolio of property in London. The leaks show MF staff, acting as nominee directors, signing loan applications to Barclays Bank on behalf of FTS, and granting power of attorney over FTS to a man in Switzerland who in turn signed documentation to be used for the Barclays loan application.

Signing documents

The leaked files show multiple instances of MF staff acting as nominee directors and signing documents without, the files indicate, being given any associated documentation explaining the background to the transactions involved.

An email string from January 2006 shows a message from a law firm in London to Williams asking for attached documents to be signed by FTS in relation to an £18.25 million loan application to Barclays for the purchase of a property on Brook Street, in London.

The email and the attachments are forwarded to the man with power of attorney in Switzerland who forwards them to the MF office in Geneva, which in turn forwards them to the MF office in Panama, where they are signed by the nominee directors. The loan document envisages that a British Virgin Islands company called Dreamscape Holdings Ltd will borrow the money, with the Hermitage Syndicated Trust going as guarantor.

The leaked files include a letter to MF by the Swiss lawyer, who did not appear in the London trial, on behalf of Dreamscape, indemnifying MF in consideration for its agreeing to appoint nominee directors to FTS in so far as its acting as trustee of Hermitage Syndicated Trust is concerned. The indemnity covers “all claims, demands, actions, suits, proceedings, costs and expenses” which might be incurred as a result of the service being provided.

It is not clear what happened in relation to the Barclays loan application. The Kallakis property portfolio in London was built up using loans from AIB, Barclays, and Bristol & West, which became part of Bank of Ireland. The Brook Street property was eventually financed by Bristol & West.

During the trial it emerged that AIB had been expanding its loan book in England during the period of the scam, with more than 50 per cent of the expansion going to Kallakis and Williams. The wider AIB group was subsequently bailed out by the Irish State.

It emerged during the trial that both accused had changed their names some years earlier, after they had been convicted of selling bogus feudal titles to Americans. Kallakis had changed his name from Stefanos Michalis Kollakis, and Williams from Martin Lewis.

The scam operated by Kallakis and Williams began to unravel in August 2008 when AIB learned Kallakis had a previous fraud conviction under the name Kollakis.

Shipping magnate

Prior to this, Kallakis had told AIB that he was close to his uncle, Pantelis Lou Kollakis, who was a genuinely wealthy shipping magnate and really related to Kallakis.

The leaked files show that MF handled the family trust of Pantelis Kollakis, which was called the Captain Stefanos Kollakis Charity Trust. A Greek- American lawyer called Paky Houriet handled relations between the trust and MF. In one document she is recorded as telling MF that she had known the Kollakis family for more than 40 years.

There is nothing in the files to indicate that the shipping magnate or Houriet had any knowledge whatsoever of the scam being operated by Kallakis, and no such suggestion is intended in any way.