The Serious Fraud Office (SFO) has confirmed it has launched an investigation into an alleged fraud on the Corporate Banking Department of Allied Irish Banks Plc, centring on a series of loans for the purchase of a number of UK investment properties.
The SFO revealed that between 2003 and 2007 Allied Irish Bank (AIB) provided loans for the purchase of a number of UK investment properties to companies controlled by an individual who is now the main suspect in its investigation.
Following an internal review by AIB on this portfolio of properties, it became apparent that the guarantees of certain lease payments on these properties by an investment grade counterparty were fraudulent.
The alleged fraud involved borrower companies creating 'overriding' leases involving the investment grade counterparty. These leases were generally for longer periods and at higher rents than the existing occupational tenants' leases.
The SFO highlighted the apparent existence of these additional leases increased the values of the properties, with lease payments being a direct obligation of the investment grade counterparty.
Searches have been conducted at a business address and two residential addresses, all in Central London. The SFO warned further financial institutions may also have been deceived by the suspects.
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