AIB's internal inquiry likely to finish first

AIB's internal investigation into the $750 million (€856 million) Allfirst fraud is expected to be the first of up to six inquiries completed. Mr Eugene Ludwig, a senior US banker, is heading the bank's investigation and will report to the AIB board in March.

Other investigations into the fraud are being carried out by the FBI; the US Federal Reserve; the US Attorney's Office and the Central Bank of Ireland. The US Securities and Exchange Commission - which regulates the US stock markets - has not confirmed whether it has launched an independent investigation while AIB's auditors PricewaterhouseCoopers are examining its role.

The bank has not given a formal undertaking to publish the findings of Mr Ludwig's report but is expected to release part of it in order to appease shareholders.

The FBI is investigating the activities of Allfirst foreign exchange dealer, Mr John Rusnak. The inquiries include bogus option contracts discovered at the bank's Baltimore headquarters that are associated with the fraud. So far, the bureau has not brought charges against Mr Rusnak, but it has interviewed him. The trader's lawyers maintain that while the bank lost money, Mr Rusnak did not benefit from his trading.

Two officials from the Central Bank of Ireland are also in Baltimore to conduct the bank's own investigation, which is focused on the impact on AIB's Irish operation of the fraud.

The Central Bank will not make the findings of its investigation public, but it expects to have an input into Mr Ludwig's report to AIB. The Minister for Finance, Mr McCreevy has requested to a copy of the report.

The Bank, which regulates the Irish financial sector, can remove directors or other employees from AIB's Irish operations. It can also place restrictions on the bank's future expansion plans or order it to withdraw from the US market depending on its findings.

The outcomes of Federal Reserve investigations are confidential, but it does make public any enforcement action it takes. It has the power to impose hefty fines and can order a bank to shut down all or part of its business.

None of the regulatory agencies investigating Allfirst has indicated when investigations will be complete. Any charges brought by the US Attorney's Office will only come after it and the FBI build a case, which could take some time.

AIB group chief executive, Mr Michael Buckley, and the bank's head of finance, Mr Gary Kennedy, met Mr Ludwig in Baltimore yesterday. Both men are directors of Allfirst but are not expected to be interviewed by any external investigating bodies.