Frank McGrath, 59, is accused of laundering money for Silvano Turchet, who was serving time for car ringing in Kirkham Prison when the pair first met.

Turchet was later convicted of drug trafficking.

In a transcript of interviews McGrath had with investigators read to Manchester Crown Court, the former deputy leader of Preston Council said he had provided bridging loans to Turchet for a number of business opportunities, including buying a house in Wrexham.

McGrath told officers from the Serious and Organised Crime Agency (SOCA): "I took (Turchet) to be a genuine individual.

"I knew he had a criminal record but I believed him when he told me he was going straight.

"I took the view everyone is entitled to a second chance.

"I never had any indication he was involved in drugs.

"I was definitely not laundering the proceeds of his crime."

The court heard McGrath had given Turchet three blank cheques to fund the construction of an aircraft hangar in Shropshire because he "saw the potential" to make a profit if it were sold.

SOCA officers also asked McGrath about payments, totalling more than £150,000, he made to Turchet for the purchase of land in Turchet's native Italy.

McGrath told them he stood to make a profit if the land was developed and sold. He said: "I thought it was a good business venture. It looked like a good proposition."

The court heard McGrath also told SOCA officers he had helped out "many, many people" over the years with loans to get them out of financial difficulty.

McGrath, of Belton Hill, Fulwood, denies entering into a money laundering arrangement and concealing, disguising or converting criminal property.

(Proceeding)