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26/03/2009
SFO Investigates £56m 'Property Scam'
The Serious Fraud Office (SFO) has confirmed it is launching an investigation into an alleged £56 million property scam.
The SFO has 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 a major suspect in the investigation.
Yesterday the SFO and City of London Police raided three businesses and residential addresses in central London. No arrests have been made.
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 apparent existence of these additional leases increased the values of the properties, with lease payments being a direct obligation of the investment grade counterparty.
The investment grade counterparty has since indicated to AIB that the overriding leases are fraudulent.
AIB is considering legal action against a "number of parties" in respect of its deficit.
AIB, which refused to give further details said: "AIB identified the issue and referred it to the appropriate authorities. The writedown was fully accounted for in our 2008 results.
"We cannot comment further on the investigation at this stage."
The SFO has warned that further financial institutions may also have been deceived by the suspects.
(JM/BMcC)
The SFO has 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 a major suspect in the investigation.
Yesterday the SFO and City of London Police raided three businesses and residential addresses in central London. No arrests have been made.
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 apparent existence of these additional leases increased the values of the properties, with lease payments being a direct obligation of the investment grade counterparty.
The investment grade counterparty has since indicated to AIB that the overriding leases are fraudulent.
AIB is considering legal action against a "number of parties" in respect of its deficit.
AIB, which refused to give further details said: "AIB identified the issue and referred it to the appropriate authorities. The writedown was fully accounted for in our 2008 results.
"We cannot comment further on the investigation at this stage."
The SFO has warned that further financial institutions may also have been deceived by the suspects.
(JM/BMcC)
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