AIB names US banker to head losses probe
A top American banker was today preparing to head a probe by the AIB bank into the loss of more than $750m through a US subsidiary company.
The €860m deficit was confirmed last week at Allfirst Finance Inc, of Baltimore, Maryland, and the man at the centre of the affair, foreign exchange trader John Rusnak, has since been quizzed by America’s Federal Bureau of Investigation.
The loss, though not threatening the viability of Dublin-based AIB, and representing only a fraction of its capital, has been seen as exposing the group to the possibility of a hostile takeover bid by a British or other foreign concern.
After an emergency meeting last week, AIB directors said they would request an imminent independent figure to direct an investigation of the fraud and report back to them.
Today they named Eugene A Ludwig, a former comptroller of the US Currency and current managing partner of the Washington-headquartered Promontory Finance Group to head the inquiry.
He will take over an already instigated AIB investigation and report back directly to the board within 30 days.
AIB said he would be charged with:
:: Ascertaining all the facts concerning foreign exchange activities in the treasury operations of Allfirst that led to the lost
:: Describing the policies and controls applying to those operations during the period of the activities involved
:: Reporting on the manner in which the policies and controls operated - or may have failed to operate
:: And make recommendations on ‘‘necessary and desirable’’ improvements.
AIB chairman Loclann Quinn, who last week highlighted ‘‘considerable evidence’’ on collusion over the affair, described Mr Ludwig as an eminent banking expert.
He said: ‘‘We are extremely fortunate to have found a man of such skill and expertise, with great knowledge of the banking system, to head up our investigation.’’
Mr Ludwig was appointed to the currency post in Washington by former President Bill Clinton, and is credited with restoring the financial health of America’s national banking system.
The bank’s chief executive, Michael Buckley, confirming the massive loss last week, repeatedly maintained it was the result of a fraud and that the FBI had been called in.
Subsequently, lawyers for the Allfirst trader - regarded as Mr Middle America by neighbours - claimed that their client was not guilty of any fraud and had not gone on the run.
Dublin analysts said today that while AIB had followed up on their promise of an independent investigation, buy-out bid speculation would not go away.
One said: ‘‘When a bank is hit by a blow like this, it raises obvious question marks about its management and future.’’
Potential contenders for a takeover are reckoned to include the Royal Bank of Scotland, as well as other major names in the European financial arena.
