title'' was forced to retract that assertion after he was presented with documents that proved him wrong.

Roderick Goom, head of the credit department at the Bank of Butterfield told the court on Wednesday that the Moulin Complex, which features centrally in David Diggins fraud trial, was the subject of a defective title.

He made this assertion based on a cursory sketch of a file found in Diggins' office.

Diggins, 49, of Somerset, was a senior manager responsible for all foreign and international loans at the Bank of Butterfield.

The Crown allege that he falsified the information contained in a memo and its supporting documents.

Based on that information, a loan for 1,875,000 was advanced to a Gibraltar-based company called Neway Properties Ltd. who then used the money to buy the Moulin Complex in west end.

Mr. Goom claimed that the defective title was one of several things that worried him when he looked through the Neway Properties Ltd. file that had been seized from Diggins' office.

This meant that the property required an insurance policy of 2 million to cover it.

But during cross examination from defence lawyer Julian Hall, Mr. Goom admitted that he later learned that the so called "defective title'' only related to part and not all of the Moulin Complex property.

Moreover, he admitted that he had not seen a letter from London-based solicitor Stephen Peltz that addressed the issue of the Moulin Complex.

In the letter dated November 30, 1995 to Chris Shaw of the Shaw Corporation, Mr. Peltz said he had some discussions with the Land Registrar's office and they had been persuaded to incorporate a small piece of the unregistered land into the surrounding (Moulin Complex) title for a fee.

Mr. Peltz said the effect of this action was to remove the small defect in title so that it would have been no longer necessary to go to an insurance company for a defective title policy.

Furthermore, Mr. Peltz said the Moulin Complex was registered at the Land Registry which he took to mean that they accepted that there was good title to the land.

Were that not so, he added, they would not have allowed the leasehold title to be registered.

This letter had been sent to Diggins and was included in the Neway Properties' file that was seized from his office in March 1996 after an investigation was launched into alleged improper practices on the part of the accused.

In response, Mr. Goom agreed that the letter expunged his initial concern about the "defective title'' which initially had alarmed him.

And he conceded that he had not read the entire file so it was possible that he had missed this letter.

At the beginning of his Supreme Court trial, Diggins was charged with stealing $2,812,500 and obtaining the money under false pretences and with intent to defraud, inducing Mary Faries to deliver the money to Neway Property Ltd.

without proper authorisation on August 29, 1995.

But those charges were dropped last Wednesday morning when Solicitor General Barrie Meade issued a Nolle Prosequi which meant that he was no longer prepared to proceed on either the stealing or the obtaining money by false pretences charges as they first appeared on the indictment.

Diggins now stands accused of fraudulent false accounting. It is alleged that on August 25, 1995 he falsified a report and its supporting documents.

Secondly, it is alleged that he obtained a valuable security by false pretences on August 28 and with intent to defraud caused Mary Faries to send $2,812,500 ( 1,504,991.93) to the National Westminister Bank in London.