Neway Properties Ltd. was granted more than 100 percent of the money that it needed to buy a "very speculative'' piece of real estate, a jury heard yesterday.

And the property -- known as the Moulin Complex in the west end of London -- was also the subject of a "defective title'' because it required an insurance policy of 2 million to cover it.

Roderick Goom, head of the credit department at the Bank of Butterfield, made these claims during David Diggins fraud trial yesterday.

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

However, the Crown alleges 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. which then used the money to buy the property in London.

Mr. Goom, an executive and Diggins' superior, said he became suspicious after he read two faxes -- he did not produce either one in court yesterday -- that came into the credit department in March 1996.

After reading the information contained in the faxes, Mr. Goom said he made further inquiries and what he learned concerned him.

The first point of concern, Mr. Goom said, was that there were considerable incoming letters and faxes about properties and loans that had not gone through the senior credit committee.

Moreover, he said Neway Properties Ltd. had been given a loan for a "very speculative'' piece of real estate. Furthermore, it turned out that the bank had loaned Neway Properties Ltd. more than 100 percent of the financing because the loan was for 1,875,000 and the property cost in region of 1,500,000.

Other issues that emerged during an examination of the Neway Properties' documents that were found in Diggins' office, Mr. Goom continued, was the realisation that Tanson Ltd., an associate company of Neway Properties Ltd.

was responsible for supplying the 175,000 deposit that was placed on the Moulin Complex.

This, Mr. Goom said, presented another difficulty because Tanson Ltd. was in serious debt to the Bank of Butterfield already.

Between Tanson Ltd. and Neway Properties Ltd. the bank was owed more than 16 million.

And Tanson Ltd., he said, has not repaid this money. As a result they are technically in default of the 14 million principal and 480,000 in interest.

The Crown alleges that Diggins deliberately falsified the information because he wanted to hide the real benefactor (Tanson Ltd.) from his superiors.

Puisne Judge Richard Ground is presiding over the trial. Solicitor General Barrie Meade and Nita Grewal appear for the Crown. Julian Hall is representing Diggins.

David Diggins