A top Bank of Bermuda executive yesterday told the Supreme Court trial of former colleague Arnold Todd and three others that rules existed within the bank covering lending to relatives and to companies in which the loan officer had an interest.

Barry Shailer, an executive vice-president at the bank, told the court that a credit policy summary had been circulated to all lending officers at the bank in 1985.

But under cross-examination from John Perry QC, who represents Todd with barrister Kim White, Mr. Shailer admitted there was no policy forbidding lending to a relative.

Mr. Perry pointed out that Crown counsel Michael Pert QC had led evidence that Todd was related to co-accused Varnel Curtis.

Mr. Shailer said forbidding lending to a relative "would not be the policy of the bank''.

He added: "The requirement was you made the connection known to the bank so a decision could be made on credit.'' Mr. Shailer added that he could produce no specific document about lenders having shares in companies they did business with.

But he said: "Conflict of interest is a basic principle -- in the same way we don't have a document saying bank officers do not steal from the bank or walk off with the bank's property.'' Unemployed Todd, 56, of Pearman's Hill, Warwick, faces a total of 17 charges of theft, fraud and false accounting, allegedly committed between 1985 and 1990.

The Crown claims he used his position as a senior loans officer at the Bank of Bermuda to submit bogus loan applications and created a network of companies to further his schemes.

Also in the dock are importer Varnel Curtis, 49, of St. Anne's Drive, Southampton; Milton Woods, 61, of Old Road, Southampton and businessman Cecil Durham, 56, of Ramgoat Hill, Smith's Parish.

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

Earlier, Mr. Shailer claimed in court that Todd lent $350,000 to Arnest Ltd.

-- a company the Crown claims was controlled by him.

Mr. Pert later discussed credit limits for individual loan officers.

Mr. Shailer said that the 1985 credit policy said that credit could be approved by loan officers acting within pre-set limits.

If a loan was higher than the individual limit, it should have been signed by an officer with a higher limit or referred to the bank's credit committee.

Mr. Shailer said Todd's personal limit was as high as $500,000 for secured loans and $100,000 for unsecured loans at one point in the 1980s and stood at $250,000 and $100,000 respectively when he left the bank in 1990.

And he told Mr. Pert that policies had been set down in the bank in the late 1970s dealing with conflict of interest which were "well known in the bank''.

He added that later it was laid down that permission from bank bosses had to be obtained before bank officers agreed to take Government posts or directorships in local or exempt companies.

Mr. Shailer told the court he arrived in Bermuda in 1969 aged 23, starting at a "ground level'' post in the overseas section and was loans manager in 1981 -- Todd took over that post in 1983.

He admitted he did not have a Bachelor of Commerce degree like Todd and that Todd, who started as a teller, had never overtaken him in the bank hierarchy.

The trial heard earlier that Todd allegedly handled loans business in which forms were incompletely filled out and promissory notes were signed while blank.

But Mr. Shailer denied suggestions by Mr. Perry that loan application forms were "wholly incidental'' to the credit committee at the time of the alleged offences and added it was not bank policy to sign blank forms.

Mr. Shailer said that application forms had "all the relevant information collected''. Why would you not take it to a meeting, he asked.

He admitted promissory notes were occasionally signed blank, for example when a house was being built by someone and they wanted to take money out periodically, especially if the borrower lived in the outer parishes.

But he said the notes were "very securely held by the bank in a vault and the customer would clearly understand it was their risk''.

The trial continues Monday.

Barry Shailer