Suncorp subsidiary GIO has been accused of disregarding prudential requirements in selling deposit bonds to investors – many of whom later lost their savings – as the trial of one-time property king Henry Kaye continues.

Diane Bain of Deposit Bonds Australia (DBA) told Melbourne Magistrates Court last week GIO waived deed limits set in its agreement with DBA when it sold deposit bonds to customers who used them to buy apartments from Mr Kaye.

Once Australia’s biggest investment property promoter, Mr Kaye now faces a fraud charge for obtaining a financial advantage by deception.

Under GIO’s agency deed with DBA, a maximum of two bonds could be issued per person. But Ms Bain told the court GIO had routinely allowed more bonds to be issued if customers were introduced to Mr Kaye, and a “low doc” arrangement was reached to speed up the approvals process.

She said Mr Kaye routinely phoned DBA to agitate for faster approvals, despite customers waiting only two days in some cases to receive their bonds. St George Bank provided financing for the bonds because, it says, it believed they were insured by GIO. The bank was also not aware Mr Kaye had allegedly written to GIO waiving any right to claim insurance.

The charges against Mr Kaye relate to a $17.7 million loan from St George Bank to Inkerman Developments. Mr Kaye purchased 168 off-the-plan apartments from Inkerman, which were then sold to attendees at his seminars.

A Suncorp spokesman says GIO has stopped offering deposit bonds since it came under the Suncorp banner.

“The Henry Kaye issue being heard by the Melbourne Magistrates Court pre-dates Suncorp’s ownership of GIO and relates to insurance deposit bonds, which are not provided by the current GIO organisation.”