AIB board sidesteps fraud blame
ALLIED Irish Banks has laid the blame for its $691m (£485m) US foreign exchange fiasco fairly and squarely on rogue trader John Rusnak and six of his immediate superiors. None of the AIB board intends to leave the bank. Chairman Lochlann Quinn and chief executive Michael Buckley offered to resign but the rest of the board decided both men were guiltless.
The alleged fraud was committed at AIB's US business Allfirst but its chief executive Susan Keating retains her job. Allfirst chairman Frank Bramble is retiring at the age of 53 but AIB says he had planned to do so anyway. He will receive a normal retirement package, details of which will be disclosed in the 2002 annual report.
The whitewash of top management was unveiled as AIB published the findings of an investigation into Rusnak's activities by independent lawyer Eugene Ludwig.
City analysts were incredulous. 'It is the most buck-passing way of dealing with the problem that I can imagine. I find it extraordinary,' said Richard Coleman of ABN Amro.
The Irish Central Bank said it was 'seriously concerned' by the findings of Ludwig's report. 'This can't be the end of the story. We are working with the US Federal Reserve on our own investigation which will take another month or so. As of now, we are satisfied with what AIB has done, but inherently it is an interim measure,' said a spokesman.
AIB's own investigations will also continue as the bank searches for people who colluded with Rusnak. 'There is evidence of collusion,' said a spokeswoman.
Ludwig said Rusnak's activities were insufficiently scrutinised and the trading risks were not appreciated. The Baltimore-based trader ran up his losses over five years and was dismissed last month. Allfirst treasurer David Cronin and three other treasury managers have now been sacked along with the head of internal audit Michael Husich and his assistant.
Quinn said: 'The situation - which is quite incredible - is that Mr Rusnak's immediate superior and the person above that, the treasurer, went to sleep on the job.'
AIB intends to appoint someone of international repute to review its risk management and will recruit a new risk officer and a new head of internal audit from outside the bank. Proprietary trading will also cease at Allfirst and AIB's Polish subsidiary.
