employee to Police out of malice.

Arthur Haycock, a senior vice-president, was speaking during the trial of former assistant manager Calvin Shabazz, who has pleaded not guilty to stealing $121,000 from the bank.

The case could be the first of its kind in Bermuda and Commonwealth history.

Crown prosecutor Ms Sharon Kenny told the court that Shabazz, 53, misled the bank by borrowing the money and saying he would use it to pay off a mortgage.

In reality he had no intention of paying the mortgage off, she said. Bank bosses did not realise what had happened until more than two years later, the court was told. Shabazz was asked to resign and did so the next day.

He still owes the bank $446,000, the court heard.

Henry Smith, also a senior vice-president, told how Shabazz joined his staff in 1984 as a senior clerk and was rapidly promoted.

In July, 1988, he was given a loan of $310,000, said Mr. Smith, arranged to pay off his mortgage.

The bank then had a "fairly loose'' policy on loans to bank officers, which has since changed.

The money was paid into Shabazz's current account and he was told the title deeds to his house would be needed as security, the court heard.

Smith said the bank should have been on its toes regarding the deeds, but they never arrived.

Himself, mortgage officer Anthony Payne and the credit operations department all "dropped the ball'' and failed to check if the mortgage had been paid.

The court heard that when Shabazz was asked why he did not pay off the mortgage after getting the loan, he said he had been "desperate''.

"I have not deliberately set out to defraud the bank,'' Smith said Shabazz told him.

Shabazz said he had been too busy directing the implementation of a new computer system to make money from his own promotions business, the court heard.

He said he used the mortgage money to pay bills and lend cash to people, Smith told the court.

Mr. Ian Kawaley, Shabazz's lawyer, suggested the case was "the first time in Bermuda's history or Commonwealth history that a person has ever been criminally charged for stealing money from their own current account''.

Haycock told the court Shabazz was nervous when confronted by himself and Smith, and had difficulty remembering events.

Questioned by Mr. Kawaley, Haycock said he could not recall any other occasion when criminal proceedings had followed someone using a loan for some other purpose.

But he told Ms Kenny that to his knowledge there was no malice behind the bank reporting Shabazz to Police.