Jurors in the trial of two men accused of defrauding Allied Irish Banks out of £740 million will have to decide whether or not their actions were dishonest and if they acted on information they believed to be correct, a judge said yesterday.

Achilleas Kallakis and Alexander Williams are accused of defrauding the bailed-out bank AIB out of £740 million by applying for property loans with fake guarantees.

The pair are also accused of defrauding the Bank of Scotland, part of the HBOS group, of €29 million to convert a passenger ferry into a “super yacht”.

Summing up evidence heard over the 10-week trial, Judge Andrew Goymer told the jury at Southwark crown court that if they believed Mr Kallakis and Mr Williams knew nothing about the fake guarantees they should find them not guilty on both counts.

“The guarantees were useless. AIB set to recoup the money by repossessing the properties, but the market had collapsed and the value of the properties had gone down.

“The properties were then sold under value to a collection of companies closely connected to AIB.

“The real question is if the lenders [AIB] were told the truth or not.”

He continued: “If the defendants did not know these guarantees were untrue then they must be acquitted.”

The alleged deception was discovered by AIB in autumn 2008, forcing it to sell properties purchased by the men at a loss of “many millions of pounds”, the court previously heard.

Doubt was cast upon some of the documents the prosecution used as evidence during the court case, in particular notes produced by AIB banker Stuart Muldowney.

Mr Muldowney, who worked in AIB’s property team, was said to have backdated notes relating to transactions between the bank and Achilleas Kallakis and Alexander Williams.

Judge Goymer told the court: “You have heard that some of AIB made attempts to backdate documents.

“Mr Michael Cooke [a former senior relationship manager at AIB] admitted that it should never have happened and the integrity of the facts were not 100 per cent guaranteed because of this.”

Mr Kallakis and Mr Williams, both 44, deny conspiracy to defraud, forgery, fraud by false representation, money laundering and obtaining a money transfer by deception.

Judge Goymer will continue his summing up today and the jury is expected to begin their deliberations tomorrow.