AIB Holds Crisis Meeting In Dublin

by Robert Lee, Tax-News.com, London

08 February 2002

The board of Ireland's largest bank, Allied Irish Banks, held a crisis meeting on Thursday in order to determine the extent of the damage caused by rogue trader, John Rusnak, and to examine why checks and balances already in place were not enough to prevent the foreign exchange trader from losing the organisation some $750 million.

There has been speculation in the financial world that Rusnak, who was employed by AIB's US unit, Allfirst Financial Inc, bet the wrong way on the Japanese yen-which has fallen 15% against the dollar since the start of 2001- and then attempted to cover the losses with fictitious trades.

The man himself has denied any accusation of theft. However, AIB board members are refusing to jump to any hasty conclusions. The crisis meeting in Dublin was called, according to AIB Chairman, Lochlan Quinn, to determine: 'the complexity of what is involved and why the systems did not work and whether some people didn't do their job.'

Chief Executive Michael Buckley reiterated this, adding that: 'We don't know whether [Rusnak] got away with anything. It's conceivable he got away with something; it's possible he may have had accomplices who got away with something.'

The US currency trader was said to have disappeared following the discovery of the fraud, but his lawyer, Bruce Lamdin, denied this. 'He's been at home with his family, quite frankly,' Mr Lamdin told Reuters.

Attorney David Irwin, who is working with Mr Lamdin on the rogue trader's behalf repeated his client's denial of theft: 'If they're claiming that he stole money, that won't pan out. I'd be surprised if they ever came up with evidence that he stole money,' he commented on Thursday.

Although AIB's share price fell by some 23% on Wednesday, the bank has dismissed comparisons with former Barings Bank trader Nick Leeson, whose unauthorised trading activities brought down his employer in 1994. 'This trader isn't bringing down this bank,' promised Pat Ryan, Treasurer for the Allied Irish Group.

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