Ex-directors barred from US banking

Fed decision: Two former AIB executives have been barred from working in the US banking industry by the US Federal Reserve following their role in the defrauding of AIB subsidiary Allfirst by rogue currency trader John Rusnak.

David Cronin, the former treasurer at Allfirst and former boss of Rusnak, and Robert Ray, a former senior vice-president of treasury funds management and Rusnak's immediate superior, were both prohibited from "participating in any manner" with an insured depository institution, bank or savings association holding company, the Federal Reserve said in two separate orders on Monday.

Rusnak, who lost $691 million (€555 million) as a result of irregular currency trading that he kept hidden from the bank for five years, pleaded guilty to defrauding Allfirst and was sentenced to seven years in prison in January 2003.

The affair prompted AIB to sack Mr Cronin, Mr Ray and several others in early 2002, after Rusnak's activities came to light.

The Fed said the orders were based on "alleged unsafe and unsound practices in connection with his supervision of a subordinate". However, the orders do not constitute admissions of guilt by Mr Cronin or Mr Ray.

The Fed said it would not take any further action against the two men in relation to their supervision of Rusnak. An AIB investigation found weak controls and poor management at Allfirst was part of the reason why Rusnak had not been caught sooner.

It concluded Mr Cronin was the "key weak link" in the control process and that both he and Mr Ray had "missed the big picture" in their failure to understand the details of Rusnak's activities.

AIB sold Allfirst, which was based in Baltimore in Maryland, to US bank M&T Bank in 2003.