SFO investigates massive property fraud against banks
The Serious Fraud Office (SFO) is investigating a massive alleged property investment fraud against several banks that has already cost Allied Irish Banks £56m.
The banks lent money to companies controlled by the main suspect in the investigation. In Allied Irish’s case, it made loans from 2003 to 2007 against UK properties based on lease guarantees by a “blue-chip property company” whose name was used fraudulently. The borrower companies created leases for longer periods and at higher rents than the existing tenants’ real leases, increasing the value of the property.
Allied Irish found problems with its security interests over the properties in 2008 and discovered the fraud, which it reported to the authorities late last year. It also took control of the properties and sold them, resulting in a £56m write-down in its annual accounts.
The SFO said it believed other banks had been deceived by the main suspect and their associates. A spokesman for the SFO said he did not know which other institutions were affected or where they were based.
The SFO and City of London Police raided three central London properties on Wednesday to seize evidence about the alleged scam. None of the premises, which included one business address, was occupied and no arrests were made.
Allied Irish is considering legal action against several parties to try to get its money back. Ireland’s biggest bank declined to comment because the case was a continuing legal matter.
The financial and economic crisis is exposing a growing number of frauds, from the overstatement of residential property values for mortgages to Bernard Madoff’s $50bn (£34.5bn) Ponzi scheme. The alleged fraud against Allied Irish is one of a raft of big financial scams the SFO told The Independent it was investigating earlier this month, including a “mini-Madoff” scheme.
Allied Irish shares fell by up to 12 per cent yesterday but closed down 1.5 per cent at 64 euro cents (60p).
Allied Irish was the victim of one of the most notorious frauds of recent years in 2003. The bank lost nearly $700m at its US Allfirst business after John Rusnak, a trader, lost money by betting on the yen and then covered up the losses for five years with false trades.
- 1 Scottish independence: Ireland since 1919 is a lesson for Scotland in what a Yes vote means
- 2 Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
- 3 Lego breaks out of the toy box and heads for the gallery
- 4 Julian Assange and Edward Snowden join piracy mogul Kim Dotcom’s political campaign in New Zealand
- 5 Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
Jihadi John': MI5 may have identified Isis militant who killed David Haines but options limited
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: Police will be on high alert on Friday whatever the result
David Haines beheading: David Cameron says Britain will hunt down Isis 'monsters' shown in video murdering aid worker
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
Salmond accused of laughing off national debt with ‘what are they going to do: invade?’ joke
iJobs Money & Business
£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...