The SFO began investigating several London properties yesterday in relation to a portfolio of UK investment properties, which AIB has flagged up as having fraudulent guarantees. AIB says the sale of these properties resulted in a write-down of £56m.
It has also warned that the suspects of this fraud may have deceived other financial institutions.
The guarantees, on the loans provided by AIB, were made by a blue chip property company and were consequently found to be fraudulent after an internal investigation.
The borrower company is alleged to have created ‘overriding’ leases which were for longer and at higher rents than the existing tenants’ leases. These additional leases, paid by the guaranteeing firm, inflated the price of the properties.
AIB were made aware of the alleged crime after the blue chip firm discovered the leases to be fraudulent. The bank is considering legal action against a number of parties.