A Policeman yesterday told Supreme Court how Bank of Bermuda fraud trial co-accused Cecil Durham said he paid interest on a $315,000 bank loan he never got the benefit of -- which was borrowed for a house he never bought.

Detective Sergeant Alan Cleave and Crown counsel James Candlin read out the statement given to the Police fraud squad by Durham in October 1992.

Accountant Durham told Det. Sgt. Cleave that Arnold Todd -- who he had known since they were children -- was the man he dealt with at the Bank of Bermuda.

Durham told Det. Sgt. Cleave in the statement: "I was just waiting for my banker to resolve the problem.

"He finished up with the bank -- I'm dealing with another officer now and I'm stuck with the $315,000.'' He told Police: "I made the application for the loan -- the idea of the loan is as stated. I was going to purchase a property in Hamilton Parish -- Flatts.

It was money for speculation in a property at Town Hill, Flatts.'' But he added the proposed deal never got to the closure stage.

And Durham admitted to Police that he never asked Todd who received the money.

Later in the same interview, however, Durham said he "never really made interest payments'' until Todd left the bank and also that he had to re-finance the loan through another official.

Durham also told the fraud squad officer during the cautioned statement that Todd had given him a $50,000 Bank of Bermuda manager's cheque and asked him to buy a bank draft for $40,000.

The statement continued with Durham telling officers that Todd gave him the $50,000 draft "because he wanted me to pay Delmont Talbot some money''.

Durham told Det. Sgt Cleave that he kept the remainder of the money, almost $10,000, as payment of cash owed to him by Todd.

And he said he was unaware how Todd came by the manager's cheque or what business he had with Mr. Talbot.

Det. Sgt Cleave suggested during the interview that it was an unusual way for Todd and Durham to do business.

Durham replied: "I don't know if it makes sense. It was a business deal -- I didn't question why he did it that way.'' But Puisne Judge Richard Ground warned the jury that the Police statement given by Durham could only be considered in relation to allegations against him -- not his co-accused.

Mr. Justice Ground said: "Although the statement says things about Mr. Todd, it's not admissible evidence against him and shouldn't be used against him.'' Todd, 56, of Pearman's Hill, Warwick, faces 17 counts of theft, fraud and false accounting, which allegedly took place between 1985 and 1990, when he was a senior loans officer at the Bank of Bermuda.

The prosecution claims he submitted bogus loan applications and that he used several companies to disguise his actions.

In the dock with Todd are importer Varnel Curtis, 49, of St. Anne's Drive, Southampton; hotel security chief Milton Woods, 61, of Old Road, Southampton and Durham, 56, of Ramgoat Hill, Smith's Parish.

All three face allegations relating to the counts against Todd. All four accused deny all the charges, which involve around $1.2 million.

Under questioning from Crown Counsel Michael Pert QC, Det. Sgt Cleave said top cop Vic Richmond, husband of Crown witness Anne Richmond, was in charge of the CID at the time, but exercised no control over the fraud squad raid on lawyer Charles Vaucrosson's offices.

Mrs. Richmond, a conveyancing clerk at Vaucrosson's, was off ill the day of the Police raid, a fact mentioned by defence counsel. But Det. Sgt. Cleave said only four officers involved in the case knew the plans.

The trial continues.