The dollars were originally bought in Russia on behalf of people who were connected with the official IRA

Roger Smith, prosecutor

They four men, who deny charges of smuggling counterfeit notes and distributing them, are 36-year-old David Levin, formerly of Alvechurch and now of Arkwright Road, Hampstead; Mark Adderley, 34, of Compton Gardens, Kinver, near Kidderminster; Roventas Charalampidis, a former Russian national, 39, of Church Path in Chiswick; and Marat Musin, 36, of Rona Road, Hampstead.

Mr Roger Smith, prosecuting, said the forgeries were produced in Russia, transported to Eire and then brought to the West Midlands for laundering through banks, bureau-de-change and travel agencies.

The prosecution alleged Mr Charalampidis was stopped on the Czech-German border with $250,000 in fake dollars.

Mr Smith said: "The reason for the route was that the dollars were originally bought in Russia on behalf of people who were connected with the official IRA."

KGB connection

He said the Russian end of the operation was linked to the old KGB.

He told the court that the fake dollars were "bought by or on behalf of " the official IRA in southern Ireland.

The exact amount of the fake imports is not known, but has been estimated at �27m, said Mr Smith.

The four men, who all deny charges of smuggling counterfeit notes and distributing them, were arrested in June 2000, three of them at the White Swan pub in Harborne, Birmingham.

The trial continues.