SFO Investigates the AIB Case

The Serious Fraud Office and the City police is carrying out an investigation on the claims of AIB, Ireland’s largest bank, which is supposed to have given out loans to unnamed individuals. The loans were used to buy property, which was seized and sold in 2003-2007. The fraud led to £56m loss in last year's accounts. Experts say that the AIB case is very typical of scandals that surround banks in the environment of decreased property prices. UK banks are expected to lose billions on commercial property fraud; earlier, it was concealed under rising market conditions, but now it is clear as never before. AIB identified the fraud during its internal investigation in 2008. The bank became suspicious of certain lease payments, which turned out to be fraudulent. In fact, there were no lease guarantees; rather, rental values increased the property price. The case is extremely important and revealing. In such situations, most fraudsters do pay the bank back after his or her business has grown; however in certain cases all the funds are transferred to offshore banks and the fraudster declares him or herself bankrupt. The three houses raided by the police were all located in the centre of London and were all linked to the unnamed individual, who is now the prime suspect. SFO is now investigating other cases to determine whether the suspect has deceived other financial institutions. If he did, this might turn out to be one of the largest country’s property frauds.